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He's (unsurprisingly) making an analogy to the dotcom bubble, which seems to me correct. There was a bubble, many non-viable companies got funded and died, and
by blast 1y ago
He's (unsurprisingly) making an analogy to the dotcom bubble, which seems to me correct. There was a bubble, many non-viable companies got funded and died, and nevertheless the internet did eventually change everything.
- zerosizedweasle 1y agoThe biggest problem is the infrastructure left behind from the Dotcom boom that laid the path for the current world (the high speed fiber) doesn't translate to computer chips. Are you still using intel chips from 1998? And the chips are such a huge cost, and being backed by debt but they depreciate in value exponentially. It's not the same because so much of the current debt fueled spending is on an asset that has very short shelf life. I think AI will be huge, I don't doubt the endgame once it matures. But the bubble now, spending huge amounts on these data centers using debt without a path to profitability (and inordinate spending on these chips) is dangerous. You can think AI will be huge and see how dangerous the current manifestation of the bubble is. A lot of people will get hurt very very badly. This is going to maim the economy in a generational way.
- hibikir 1y agoIf you look at year over year chip improvements in 2025 vs 1998, it's clear that modern hardware just has a longer shelf life than it used to. The difficulties in getting more performance for the same power expenditure are just very different than back in the day. There's still depreciation, but it's not the same. Also look at other forms of hardware, like RAM, and the bonus electrical capacity being built.
- lomase 1y agoIn 1998 to transfer a megabyte over telephone lines was expensive and 5 years later is was almost free. I have not seen the prices of GPUs, CPU or RAM going down, on the contrary, each day it gets more expensive.
- lemonlearnings 1y agoBut why not measure $ per intelligence. In 2020 you'd need a billion dollars to get your computer to write good code, now it is practically free.
- fragmede 1y agoIn 1998, 16 MiB of RAM was ~$200, in 2025, 16 GiB of ram is about $50. A Pentium II in 1998 at 459 MHz was $600. Today, a AMD Ryzen 7 9800X can be had for $500. That Ryzen is maybe 100 times as powerful as the Pentium II. What's available at what price point has changed, but it's ridiculous how much computing I can get for $150 at Best Buy, and it's also ridiculous how little I can do with that much computing power. Wirth’s law still holds: software is getting slower more rapidly than hardware is getting faster.
- rhetocj23 1y agoPersonally I think people should stop trying to reason from the past. As tempting as it is, it leads to false outcomes because you are not thinking about how this particular situation is going to impact society and the economy. Its much harder to reason this way, but isnt that the point? personally I dont want to hear or read analogies based on the past - I want to see and read stuff that comes from original thinking.
- munk-a 1y agoDoesn't that line of reasoning leave you in danger of being largely ignorant? There's a wonderful quote from Twain "History doesn't repeat itself but it often rhymes" there are two critical things I'd highlight in that quote - first off the contrast between repetition and rhyming is drawing attention to the fact that things are never exactly the same - there's just a gist of similarities - the second is that it often but doesn't always rhyme - this sure looks like a bubble but it might not be and it might be something entirely new. _That all said_ it's important to learn from history because there are clear echoes of history in events because we, people in general, don't change that fundamentally.
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- rootusrootus 1y agoIME the number of times where people have said "this time it's different" and been wrong is a lot higher than the number of times they've said "this time is the same as the last" and been wrong. In fact, it is the increasing prevalence of the idea that "this time it's different" that makes me batten down the hatches and invest somewhere with more stability.
- rhetocj23 1y agoWith all due respect, Im not here to teach people how to think. This guy gets it - https://www.youtube.com/watch?v=kxLCTA5wQow https://www.youtube.com/watch?v=kxLCTA5wQow Instead of plainly jumping on the bubble bandwagon he actually goes through a thorough analysis.
- hx8 1y agoA lot of the infrastructure made during the Dotcom boom was shortly discarded. How many dial-up modems were sold in the 90s? The current AI bubble is leading to trained models that won't be feasible to retrain for a decade or longer after the bubble bursts.
- zerosizedweasle 1y agoThe wealth the Dotcom boom left behind wasn't in dial up modems or internet over the telephone, it was in the huge amounts of high speed fiber optic networks that were laid down. I think a lot of that infrastructure is still in use today, fiber optic cables can last 30 years or more.
- triceratops 1y ago> fiber optic cables can last 30 years or more The trenches for the cables even longer than that.
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- ecommerceguy 1y agoHow much of it is still dark?
- yeasku 1y agoHonestly, not that many people had modems.
- jorts 1y agoIn the late 90s to 2001? Many people were still using modems at that time. Cable or DSL wasn't even an option for a considerable percentage of the population.
- yeasku 1y agoIn 2000 6% of the population had access to internet. In 2002 I was woking making webs and setting up linux servers and I did not have internet at home.
- simonw 1y agoThat's true for the GPUs themselves, but the data centers with their electricity infrastructure and cooling and suchlike won't become obsolete nearly as quickly.
- davnicwil 1y agothis is a good point, and it would be interesting to see the relative value of this building and housing 'plumbing' overhead Vs the chips themselves. I guess another example of the same thing is power generation capacity, although this comes online so much more slowly I'm not sure the dynamics would work in the same way.
- SoftTalker 1y agoThe data centers built in 1998 don't have nearly enough power or cooling capacity to run today's infrastructure. I'd be surprised if very many of them are even still in use. Cheaper to build new than upgrade.
- bialpio 1y agoHow come? I'd expect that efficiency gains would lower power and thus cooling demands - are we packing more servers into the same space now or losing those gains elsewhere?
- alchemism 1y agoYes - blades-of-servers replacing what was 2 or 3 rack mount servers. Both air exchange and power requirements are radically different in order to fill that rack as it was before.
- fc417fc802 1y agoIt's just an educated guess, but I expect that power density has gone up quite a bit as a form of optimization. Efficiency gains permit both lower power (mobile) and higher compute (server) parts. How tightly you pack those server parts in is an entirely different matter. How many H100s can you fit on average per 1U of space?
- wmf 1y agoThey're only replacing GPUs because investors will give "free" money to do so. Once the bubble pops people will realize that GPUs actually last a while.
- bilsbie 1y agoWe don’t have moores law anymore. Why are the chips obseleting so quickly?
- myhf 1y agoFLOP/s/$ is still increasing exponentially, even if the specific components don't match Moore's original phrasing. Markets for electronics have momentum, and estimating that momentum is how chip producers plan for investment in manufacturing capacity, and how chip consumers plan for deprecation.
- o11c 1y agoThey kind of aren't. If you actually look at "how many dollars am I spending per month on electricity", there's a good chance it's not worth upgrading even if your computer is 10 years old. Of course this does make some moderate assumptions that it was a solid build in the first place, not a flimsy laptop, not artificially made obsolete/slow, etc. Even then, "install an SSD" and "install more RAM" is most of everything. Of course, if you are a developer you should avoid doing these things so you won't get encouraged to write crappy programs.
- ch4s3 1y agoThere are probably a lot of cool and useful things you could do with a bunch of data centers full of GPUs. - better weather forecasts - modeling intermittent generation on the grid to get more solar online - drug discovery - economic modeling - low cost streaming games - simulation of all types
- amatecha 1y ago- cloud gaming service? :D
- mort96 1y agoEh not really. Maybe retro cloud gaming services. But games haven't stopped getting more demanding every year. Not only are the AI GPUs focused on achieving clusters with great compute performance per watt and dollar rather than making singular GPUs with great raster performance; even the GPUs which are powerful enough for current games won't be powerful enough for games in 5 years. Not to mean that we're still nowhere near close to solving the broadband coverage problem, especially in less developed countries like the US and most of the third world. If anything, it seems like we're moving towards satellite internet and cellular for areas outside of the urban centers, and those are terrible for latency-sensitive applications like game streaming.
- fooker 1y ago> But games haven't stopped getting more demanding every year. This is not particularly true. Even top of the line AAA games make sure they can be played on the current generation consoles which have been around for the last N years. Right now N=5. Sure you’ll get much better graphics with a high end PC, but those looking for cloud gaming would likely be satisfied with PS5 level graphics which can be pretty good.
- downrightmike 1y agoIntel chips from 2008, as there is no real improvements.
- rootusrootus 1y ago> This is going to maim the economy in a generational way. Just as I'm getting to the point where I can see retirement coming from off in the distance. Ugh.
- donmcronald 1y agoAnd a lot of the gains from the Dotcom boom are being paid back in negative value for the average person at this point. We have automated systems that waste our time when we need support, product features that should have a one-time-cost being turned into subscriptions, a complete usurping of the ability to distribute software or build compatible replacements, etc.. The Dotcom boom was probably good for everyone in some way, but it was much, much better for the extremely wealthy people that have gained control of everything.
- actionfromafar 1y agoDon’t say that, you’ll hasten the Antichrist!
- Terr_ 1y ago(For those who missed it: https://www.theverge.com/ai-artificial-intelligence/785407/peter-thiel-antichrist-tech-regulation https://www.theverge.com/ai-artificial-intelligence/785407/p... )
- hattmall 1y agoAI itself is a manifestation of that too, a huge time waster for a lot of people. Getting randomly generated wrong but sounding right information is very frustrating. Start asking AI questions you already know the answer too and the issues can become very obvious.
- xmprt 1y agoIf you're ever been to a third world country then you'd see how this is completely untrue. The dotcom boom has revolutionized the way of life for people in countries like India. Even for the average person in America, the ability to do so many activities online that would have taken hours otherwise (eg. shopping, research, DMV/government activities, etc). The fact that we see negative consequences of this like social network polarization or brainrot doesn't negate the positives that have been brought about.
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- elbasti 1y agoAbout 40% of AI infrastructure spending is the physical datacenter itself and the associated energy production. 60% is the chips. That 40% has a very long shelf life. Unfortunately, the energy component is almost entirely fossil fuels, so the global warming impact is pretty significant. At this point, geoengineering is the only thing that can earn us a bit of time to figure...idk, something out, and we can only hope the oceans don't acidify too much in the meantime.
- Naklin 1y agoInteresting. Do you have any sources for this 60/40 split? And while I agree that the infrastructure has a long shelf life, it seems to me like an AI bubble burst would greatly depreciate the value of this infrastructure as the demand for it plummets, no?
- smj-edison 1y ago> the current debt fueled spending Honestly I think the most surprising thing about this latest investment boom has been how little debt there is. VC spending and big tech's deep pockets keep banks from being too tangled in all of this, so the fallout will be much more gentle imo.
- lemonlearnings 1y agoI am not still using the same 1Mbps token ring from 1998 or the same dial up connecting to some 10Mbps backbone. I am using x86 chips though.
- mountainriver 1y agoThis won’t even come close to maiming the economy, that’s one of the more extreme takes I’ve heard. AI is already making us wildly more productive. I vibe coded 5 deep ML libraries over the last month or so. This would have taken me maybe years before when I was manually coding as an MLE. We have clearly hit the stage of exponential improvement, and to not invest basically everything we have in it would be crazy. Anyone who doesn’t see that is missing the bigger picture.
- rhetocj23 1y agoGo ahead and post what youve done fella so we can critique. Why is it all these kinds of posts never come with any attachments? We are all interested to see it m8.
- mountainriver 1y agoBecause they are private and I can’t make them public. I have no self interest here, I’m an MLE by trade and this technology threatens my job. I had been mostly opposed to vibe coding for a long time, autocomplete was fine but full agentic coding just made a mess. That’s changed now, this stuff is genuinely working on really hard problems.
- rhetocj23 1y agoSo you have nothing to show. Typical
- mountainriver 1y agoYou can go use Codex on high and try it yourself, but I'm sure you'll prove yourself right
- rhetocj23 1y agoZZZ show something or stop posting fella.
- BurningFrog 1y agoOne thing to note about modern social media is that the most negative comment tends to become the most upvoted. You can see that all across this discussion.
- tmaly 1y agomy 486sx with math co-processor is long gone.
- NathanaelRea 1y agoCompanies want GW data centers, which are a new thing that will last decades, even if GPUs are consumable and have high failure rates. Also, depending on how far it takes us, it could upgrade the electric grid, make electricity cheaper. And there will also be software infrastructure which could be durable. There will be improvements to software tooling and the ecosystem. We will have enormous pre-trained foundation models. These model weight artifacts could be copied for free, distilled, or fine tuned for a fraction of the cost.
- cgio 1y agoI think you partially answer to yourself though. Is the value in the depreciating chips, or in the huge datacenters, with cooling, energy supply, at such scale etc. ?
- kqr 1y agoWhile yes, I sure look forward to the flood of cheap graphics cards we will see 5-10 years from now. I don't need the newest card, but I don't mind the five-year old top-of-the-line at discount prices.
- rchaud 1y agoDotcom mania companies were not Internet providers. They tried making money on the internet, something people already saw as worth paying for.
- formerly_proven 1y agoThis is not really true, e.g. Cogent was basically created by buying bankrupt dotcum-bubble network providers for cents on the dollar.
- hx8 1y agoAlso AOL was a mix of dialup provider and Dotcom service. There were many other popular examples of such.
- 1234letshaveatw 1y agoI don't think it is fair to characterize AOL as a bubble baby- they were a thing before that
- yeasku 1y agoNor I dont think Coget, GX or Level-3 were dotcom companies.
- munk-a 1y agoCisco, Level3 and WorldCom all saw astronomical valuation spikes during the dotcom bubble and all three saw their stock prices and actual business prospects collapse in the aftermath of it. Perhaps the most famous implosion of all was AOL who merged (sort of) with TimeWarner gaining the lion's share of control through market cap balancing. AOL fell so destructively that it nearly wiped out all the value of the actual hard assets that TW controlled pre-merger.
- Waterluvian 1y agoVideo game crash followed by video games taking off and eclipsing most other forms of digital entertainment. Dot com crash followed by the web getting pretty popular and a bit central to business. To all those betting big on AI before the crash: Careful, Icarus.
- NedF 1y ago> Careful, Icarus. What does that even mean? pets.com was a fat loser only telling telling people that were going to fly. Amazon was Icarus, they did something. Vs weak commentators going on about the wax melting from their parents root cellar while Icarus was soaring. Most of Y Combinator are not using AI they just say that and you're worried about the people who do things?
- jrflowers 1y ago> commentators going on about the wax melting from their parents root cellar while Icarus was soaring. Icarus drowned in the sea. Even if you want to put the world into only two lumps of cellar dwellers and Icaruses it is still a group of living people on one side and a floating/semi-submerged pile of dead bodies that are literally only remembered for how stupid their deaths were on the other.
- rhetocj23 1y agoBad comparison. The leap of faith necessary in LLMs to achieve the same feat is so large its very difficult to imagine it happening. Particularly due to the well known constraints on what the technology is capable of. The whole investment thesis of LLMs is that it will be able to a) be intelligent b) produce new knowledge. If those two things that dont happen, what has been delivered is not commensurate to the risk in regards to the money invested.
- N70Phone 1y agoGiven they're referencing Icarus, they seem to agree with you. Past bubbles leaving behind something of value is indeed no guarantee the current bubble will do so. For as many times as people post "but dotcom produced Amazon" to HN, people had posted that exact argument about the Blockchain, the NFT, or the "Metaverse" bubbles.
- wslh 1y agoI would add more metrics to think about. For example, very few people used Internet in the dotcom era while now the AI use is distributed into all the population using the Internet that will probably not growth too much. In this case, if Internet population is the driver, and it will not growth significantly we are redistributing the attention. Assuming "all" society will be more productive we will all be in the same train at the relatively same speed.
- padjo 1y agoAnd what were the societal benefits of the internet?
- gitaarik 1y agoThat everybody all over the world can instantly connect with each other?
- mountainriver 1y agoThe analogy to the dot com bubble is leaky at best. AI will hit a point of exponential improvement, we are already in the outer parts of this loop. It will become so valuable so fast we struggle to comprehend it.
- shiandow 1y agoWhile this remains possible my main impression now is that progress seems to be slowing down rather than accelerating.
- dsamarin 1y agoMaybe once we get another architecture breakthrough, it won't feel so slow.
- nucleative 1y agoI'm not so sure about this. First were the models. Then the APIs. Then the cost efficiencies. Right now the tooling and automated workflows. Next will be a frantic effort to "AI-Everything". A lot of things won't make the cut, but absolutely many tasks, whole jobs, and perhaps entire subsets of industries will flip over. For example you might say no AI can write a completely tested, secure, fully functional mobile app with one prompt (yet). But look at the advancements in Cline, Claude code, MCPs, code execution environments, and other tooling in just the last 6 months. The whole monkeys typewriters shakespeare thing starts to become viable.
- madaxe_again 1y agoNot even remotely. In LLM land, the progress seems slow the past few years, but a lot has happened under the hood. Elsewhere in AI however progress has been enormous, and many projects are only now reaching the point where they are starting to have valuable outputs. Take video gen for instance - it simply did not exist outside of research labs a few years ago, and now it’s getting to the point where it’s actually useful - and that’s just a very visible example, never mind the models being applied to everything from plasma physics to kidney disease.
- bigbadfeline 1y ago> [At dotcom time] There was a bubble, many non-viable companies got funded and died, and nevertheless the internet did eventually change everything. It did, but not for the better. Quality of life and standard of living both declined while income inequality skyrocketed and that period of time is now known as The Great Divergence. > He's (unsurprisingly) making an analogy to the dotcom bubble, which seems to me correct. He's got no downside if he's wrong or doesn't deliver, he's promising an analogy to selling you a brand new bridge in exchange for taking half of your money... and you're ecstatic about it.
- AfterHIA 1y agoThank you for acknowledging this. The internet was created around a lot of lofty idealism and none of that has been realized other than opening up the world's information to a great many. It made society and the global economy worse (occidental west; Chinese middle class might disagree) and has paralleled the destabilization of geopolitics. I am not luddite but until we can, "get our moral shit together" new technologies aren't but fuel on the proverbial fire.
- bigbadfeline 1y agoGlad to be in agreement. The higher message here is that technology is no substitute for politics, cue crypto-hype which produced little more than crime and money-laundering. Without proper policies, corruption invades every strata of society.
- mensetmanusman 1y agoThe 90s bubble also had massive financial fraud and laid capital that wasn’t used at 100% utilization when it hit the ground like what we are seeing now. It’s different enough that it probably isn’t relevant.