10 ms·

Boom, bubble, bust, boom. Why should AI be different?

161 points by speckx 1y ago

zahirbmirza 1y ago
I am very grateful how the title of the actual article linked saved 40 minutes reading the whole thing.
mmooss 1y ago
To say whether it's a bubble, we need to know the value of the technology. The value of modern AI seems very high. That nobody knows how high, that they still haven't figured out applications, and that the technology and its tools are still far from refined, is normal for any new technology. If you add the value of the potential political power gained by controlling AI, then the value to the owners and investors is astronomical. Many of the investors have demonstrated a strong motivation to sacrifice money for political power, for example by supporting nationalism that undermines a global economy that they benefit enormously from. Somewhere, I read someone explaining their investment by saying 'it's the greatest transfer of power in (modern) history'. Also see: https://news.ycombinator.com/item?id=45983700 https://news.ycombinator.com/item?id=45983700
- forgetfulness 1y ago
  The implied promise was that these things were going to “revolutionize the workplace” i.e. massively automate middle class office jobs A couple of years down the road, their useful applications still are summarizing text, transferring style to text, generating code under strict supervision, and generating images that need retouching. That’s a lot to get out of a tool, but it’s dubious that investors were pouring trillions of dollars into these things thinking of automating away junior software engineers and low end design work. Edit: I forgot their other niche, that of generating homework and school test answers
  - bluefirebrand 1y ago
    > thinking of automating away junior software engineers and low end design work. And it's really still very arguable imo if it's even doing this Like you said, it still needs strict supervision. In my opinion it is not a good use of your supervisory time to be babysitting an LLM versus mentoring actual juniors
    - kergonath 1y ago
      > In my opinion it is not a good use of your supervisory time to be babysitting an LLM versus mentoring actual juniors Right. Because at least juniors are supposed to learn and at some point become senior and stop needing this kind of supervision. Also, interacting with people can be more rewarding (or not, depending on the people)…
  - ares623 1y ago
    Not only that, but it’s devaluing the sacred cows of the very same companies that are investing heavily. Search is dead or dying Social media is dead or dying Content creation is dead or dying If they cant make AI work, then they are left with AI at a level that continues to devalue their core business. They have no choice. They made a deal with the devil. And the devil means to collect. This is why I think Apple is lucky their attempt failed so bad. They dodged a bullet. They have an opportunity to guide a lost tech industry through a post AI bubble world.
  - lagosfractal42 1y ago
    GPUs have massive applications such as Alphafold, CRISPR, Medical Imaging, Meteorology. The massive planetary investment is not to make more AI chats that summarize text. That's just short sighted.
    - ares623 1y ago
      That’s copium, as the kids say nowadays. The massive planetary investment is a 100% for AI chats. All those other things are taking the crumbs where they can.
      - chickensong 1y ago
        Big business and government aren't buying supercomputer clusters and licensing models to run chats.
        munk-a 1y ago
        The really weird thing is that Big Business actually is buying supercomputer clusters to do just that. I can't really talk to the government side but a lot of businesses' early forays into AI was just slapping a chatbot on their product and hoping it'd attract a lot more business. I also think you'd be surprised how integrated really dumb chatbots are into business communication these days. I think most smart people are looking seriously at different models to try and improve the accuracy of any existing ML uses they had in their business but the new features built post-ChatGPT tend to often just be fancied up chats.
        chickensong 1y ago
        > just slapping a chatbot on their product That's happening of course, but that's not really the whole picture. Any org that already invests in R&D is likely considering or already implementing modern AI tech into their existing infrastructure. A big oil or pharmaceutical or materials company likely doesn't care much about chat bots, or any customer-facing tech for that matter.
  - DuperPower 1y ago
    its helping people be more productive but its not helping firing people which was the wet dream
  - carlosjobim 1y ago
    The value of LLM is reliable high quality translation between all languages. The economic value of this is at least trillions of dollars per year. The cultural and humanitarian value is equally gigantic, even if it can't be measured in dollars and cents.
    - munk-a 1y ago
      That is of immense social value - but manual translation services for commercial projects (like application localization) is already dirt cheap to do and automatic casual translation services for consumers would be incredibly difficult to monetize.
      - carlosjobim 1y ago
        I think your perspective might be severely limited. There exists millions of businesses outside of big IT enterprises.
        munk-a 1y ago
        I will freely admit this - but I have led a localization effort on a mobile game and worked on localization for a desktop application. I am also lucky enough to travel abroad quite a bit and am quite familiar with consumer offerings. So I would fairly limit my experience to consumer and medium-sized business uses - I have no experience with large corporate translation efforts (the largest would probably be Ubisoft or the Mouse-Ears company's gaming divisions if you consider them large) and even the small mobile game company I worked at had a budget in the millions range. It certainly hasn't been a focus of my career but I feel comfortable standing by my statement above.
        carlosjobim 1y ago
        You're only taking about IT stuff, while tourism is one of the largest global industries. Not to mention hundreds of other sectors which will benefit from better international communication.
    - 1y ago
  - simianparrot 1y ago
    The hardware also wears out really fast. And every replacement is more expensive. How long can that party keep going when none of the companies make enough revenue to cover the expenses?
  - ben_w 1y ago
    How many people graduate from a US software engineering degree each year? About 100k? If they (the 100k in the US) earn $100k each in the first year, before gaining the skills to earn more, that's $10 billion a year, every year. If you can capture that market for next 20 years, it's worth $200 billion. Except… can you capture it? A junior dev is… not exactly someone you want connecting to your business-critical database without supervision, and a real human dev will get better with a predictable rate. Will LLMs get better? The makers are betting on that, but we'll only know after the model releases, and even then after we play with them for a bit to differentiate between the record performance on whichever benchmark and the actual work we want them to do. Then there's the question of can you really keep an edge for 20 years with investments today: Sometime between 2030-2035, there's likely to be models matching 2025-SOTA performance that run on ${year}'s high-end smartphone. (Well, unless we all die in WW3 because of Russia getting desperate from its failure to remove Ukraine's sovereignty, or because China has a hot war with Taiwan and/or the USA messing with global consumer electronics supplies, but I don't think those get priced into the market…).
    - thousand_nights 1y ago
      > If you can capture that market for next 20 years, it's worth $200 billion. that's like 5% of NVIDIA's current market cap. sounds like peanuts when you lay it out like that
      - ben_w 1y ago
        Perhaps. But that's just the USA's software developers in just their first year after graduating. Software devs are 1% of the US job market, the first year after graduation is (66-21=45 years, 1/45 ~= 2%) of a working life, the US is just 4% of the world's population/25% GDP. For the 1% to matter, there have to be other jobs that LLMs can do as well as a fresh graduate. I don't know, are LLMs like someone the first year out of law school or medical school, or are those schools better than software? Certainly the home robotics' AI are nowhere near ready yet, no plumber, no driver (despite the news about new car AIs), would you trust an Optimus to cut your hair? etc. For the 2% to matter, depends how seriously you take the projections of improvements. Myself, I do not. Looks like exponential improvements come at exponential costs, and you run out of money to spend for further improvements very quickly. For the 4% to matter, depends on how fast other economies grow. 4% by population, about 25% by GDP. I believe China is still growing quite fast, likely to continue. Them getting +160% growth, and thus getting 2.6x times the money available to burn on AI tokens, over the next 20 years would be unsurprising. All in all, I don't think the USA is competent enough at large-scale projects to handle the infrastructure that this kind of AI would need, so I think it's a bubble and will burst before 2030 because of that. China seems to be able to pull off this kind of infrastructure, so may pull ahead after the US does whatever it does.
  - VirusNewbie 1y ago
    Ok, ignoring any AGI or massive advances, let's just say an LLM can help the average office worker be 15% more productive... what do you think the economic value of that is?
    - forgetfulness 1y ago
      100 billion a year, with math that’s downright delusional. So, back of the envelope math, the US GDP is 27.72T USD, 80% (22.18) corresponds to the tertiary sector. Let’s say that this is a 15% increase over a 10 years period, because YoY a boom like the computer revolution itself looks like 2% increases a year.[1]. This amounts to about 1.5% increases each year. Let’s just make the huge leap that you can just scale the productivity up of all this just by making typing out reports and emails a faster activity, and summarizing information for which you’re not facing liability if the bot gets it wrong. Yes, including the nurses, cleaners, truckers, teamsters, all of it. 1.5% of it is a cool 330 billion. How much of a cut of that productivity increase could AI companies take? 30%? That’s 100 billion in one year there. So with pie-in-the-sky math, they could break even if their obligations throughout the decade don’t amount to 1 trillion (since those 1.5T in bonds issued this year mature in longer periods) 1. https://www.bls.gov/opub/mlr/2021/article/the-us-productivity-slowdown-the-economy-wide-and-industry-level-analysis.htm https://www.bls.gov/opub/mlr/2021/article/the-us-productivit...
    - gizajob 1y ago
      They'll waste 15% more of the day.
  - mancerayder 1y ago
    You forgot - cheating on job interviews, writing resumes to be repetitive, and adding an annoying flowery tone to non-native English speakers who think AI wrote something for them that isn't AI-obvious.
    - forgetfulness 1y ago
      Many of those things were already at a “good enough” level since GPT-3.5. There’s probably a good business usecase there for companies wanting to have smoother communication with offshore teams. Could that be a game-changer? I wouldn’t discount it, but it does sound like something that has to operate at a very low margin and that doesn’t merit a lot more investment.
    - refactor_master 1y ago
      I wonder how many market inefficiencies this creates. People with worse education, people who cheated their way to a job opening compared to a better candidate, etc. Basically counteracting the productivity gains AI was supposed to bring.
      - cousinbryce 1y ago
        There’s a corollary here. People with worse educations may be able to do much higher quality work.
  - tartoran 1y ago
    > The implied promise was that these things were going to “revolutionize the workplace” i.e. massively automate middle class office jobs Promise by who? I think the bet is that it would lay off nearly everyone white collar and let AI take its place.
  - mmooss 1y ago
    That's the same mistake made with every new, and eventually successful, technology - we haven't found a valuable application yet, so the technology is not valuable. Finding the valuable application is often the hardest part. That it hasn't happened yet is meaningless. Some technologies sit on the shelf for decades. AI seems to have a lot of potential: It may be the most valuable technology ever; it may not provide more value than it does now, or something in between. Nobody actually knows. The challenge of innovation is managing that irreduceable risk. It starts by accepting risk, accepting that you don't know. One wrong way is to deny the risk - denying uncertainty - by either saying it's worthless or that success is guaranteed.
    - player1234 1y ago
      [dead]
  - thefz 1y ago
    Don't forget they are great at generating speech to text. That's all, TBH. You summarized everything.
  - thfuran 1y ago
    And propaganda.
- redwood 1y ago
  The value can be incredibly high... just like the value of the internet was incredibly high.. and it can still be a finanfial bubble. I feel like the people arguing against the bubble perspective are saying look the internet was actually valuable and so too will this.. and that's totally a valid perspective. The bubble is not about whether there's value but about whether or not the market will come down. All of the above can totally happen
  - worik 1y ago
    > The value of modern AI seems very hig Very useful, clearly. But valuable? In aggregate it seems clear that it is. But where does that value acrue? It seems to me the value will be thinly spread while the costs are concentrated. It does not seem possible that any conceivable business can pay for all the announced plans for developing data centres, nor energy available to power them. If AI systems can be developed to be trust worthy enough to act on their own, none so far (?), then I can see where the value could acrue, but as things stand?
    - mmooss 1y ago
      > It seems to me the value will be thinly spread while the costs are concentrated. Won't the value will be concentrated in the few with the scale to build competitive AIs? In a sense, costs are spread thinly across the content creators whose work has been stolen. (But of course, it is indeed incredibly concentrated in building datacenters.)
      - worik 1y ago
        > content creators whose work has been stolen. The law is an ass. Current IP laws are too restrictive, but scraping public facing websites is not theft even under those crazy laws I have no moral objection to the use of Anna's Archive to train models. A good use, if illegal. But I do recogise and condemn the hypocrisy of Meta doing it. Not surprising, just disgusting The wasting of bandwidth is annoying, so silly. We should be better organized Calling it theft is buying into the mad bad and sad IP legal thinking that has become the dominant paradigm in the West
- nitwit005 1y ago
  You can have brilliant technology and still go broke. The internet was amazingly valuable, but many of the early companies failed. Investing in internet companies was hardly a sure bet.
  - munk-a 1y ago
    There was a recent Bezos talk about the fact that (much like the dot-com) we've overspending on infrastructure that'll bubble and implode but then we'll have all this amazing infra for companies to build off of... but the process of that overspend and implosion is essentially a massive debt erasure - a lot of people are currently propping up this market with their capital and the companies they're propping up will collapse and those obligations liquidated - and that will result in massive society-wide pain. We may end up in a better place for the next generation because of this investment - but if you're a retail investor don't expect your 401k accounts to weather that burst gracefully... and, unlike the boomers, this will largely hit Millenials and Gen Z both of whom are currently under massive financial stress.
- nonameiguess 1y ago
  Arguably, it's exactly this mindset creating the problem. It's not the value of the technology that matters. It's the value of the companies. If one company was the only one that had a particular valuable technology, then that would matter, but otherwise 90% of them likely end up worthless even if the sector itself doesn't. How that washes out on net we'll have to see. I'm not gonna pretend I know more than anyone else. Just keep in mind that a major difference between now and 2000 is companies stay private a lot longer. An IPO forces you to open the books and sustain public scrutiny of the broad investor class. A still-private startup only needs to convince one funder of their value. That inevitably leads to higher variance and a greater risk of failure. That doesn't mean the whole sector is necessarily a bubble, but if it is, it can be sustained a lot longer without us knowing. A small number of people with $50 billion they need to park somewhere and no other obvious options can keep shitty ideas afloat in a way that wouldn't be possible if they had to be subjected to broader exposure. We like to believe people with $50 billion can't be wrong, but the wisdom of crowds always beats the wisdom of individual genius. Heck, AI itself taught us that same lesson!
  - mmooss 1y ago
    Both are great points.
- digdugdirk 1y ago
  Alternate viewpoint - The value of modern AI seems very high. That nobody knows how high, that they still haven't figured out applications, and that the technology and its tools are still far from refined, might be a sign that the technology shouldn't be valued this highly at all
  - mmooss 1y ago
    > That nobody knows how high, that they still haven't figured out applications, and that the technology and its tools are still far from refined, might be a sign that the technology shouldn't be valued this highly at all That might be true, but it also might be true that it's tremendously valuable. The conditions you identify exist for every new technology; obviously the outcomes vary greatly.
- usrnm 1y ago
  Absolutely nothing in your list prevents the AI from being a bubble. The Internet is an absolute marvel of engineering that completely changed the life of the majority of people in the world, and yet it crashed 25 years ago, and crashed hard. Both can be true at the same time.
  - kergonath 1y ago
    Also, video games in the 1980s.
- hyperbovine 1y ago
  > The value of modern AI seems very high. That nobody knows how high, that they still haven't figured out applications, and that the technology and its tools are still far from refined, is normal for any new technology. The same could be said for the internet. But, and I know this will be hard for younger readers to believe, I seem to recall the value proposition of the Internet being more immediately apparent at the time.
  - mmooss 1y ago
    From what I've read, people spent a long time looking for the 'killer application'. Google didn't know how to make money off its search engine. Social media didn't exist in any mass form. Internet access on phones, beyond email, didn't exist in any usable way. Proprietary, walled garden services, with their own dial-up numbers, such as AOL and CompuServe, were seen as the future. Microsoft thought their similar service (MSN?) was the way forward and didn't integrate the Internet into Windows 95. That was after Netscape's browser was released and (relative to the time, I'm sure) very popular.
    - acdha 1y ago
      The value was obvious almost immediately, but it was obscured by flashy get rich quick attempts. Google chose not to make money at first but that was a business decision, not a necessity: people were paying tons of money for ads and referrals years before they were founded. That’s part of the difference with AI now: the internet immediately generated significant value almost instantly for relatively modest investments, so there were a ton of small and mid-sized companies who saw almost immediate profits from moving catalog sales or support online, switching software distribution from mailing diskettes to downloads, etc. and some people were able to cut into established markets where the existing companies were slow to change. AI is different in two key ways: the first is the extremely high cost, which prevents a lot of the bottom-up growth we saw on the web, but the second is that it’s not a reliable technology like the web was so you can’t safely use it in the most valuable contexts. In the 90s, some people screwed up form validation badly but most people didn’t. Right now, companies would love to replace things like customer service or sales with chatbots but nobody on the market can make a system which is both safe and useful because things like prompt injection require theoretical breakdowns, not just attention to detail.
- kergonath 1y ago
  > To say whether it's a bubble, we need to know the value of the technology. Not really. I mean, not only. The value of the web is immense. And yet, the dot-com bubble was indeed a bubble. What matters is the value in the short term compared to the value of the companies in the current context. Even if AI is huge 20 years from now, it can still crash dramatically tomorrow.
  - tim333 1y ago
    I was going to say that. Also the bubble can be in some areas but not in others. I think the proposed data center build out is a bubble as in not economically justified presently, but I think money spent on AI research is reasonable.
- logsr 1y ago
  >still haven't figured out applications the real answer is that the applications for the military, surveillance, and population control are proven, and the pathways to scale those capacities are clear, so the money will pour in no matter what. the implication is that we had better come up with some more consumer/humanity friendly applications that create comparable value, or that is all we will get.
  - mmooss 1y ago
    What are the clear military applications that differ from civilian ones?
nimchimpsky 1y ago
[dead]
bdangubic 1y ago
writing a “bubble” post is new monad tutorial - gotta write one to get some street cred
- skeeter2020 1y ago
  This post argues the burst is not only inevitable it's right around the corner - never mind their principal argument being "we're terrible at predicting technology revolutions in the near term". This seems like a variation on the President's (and my CTO's) process of 1. go on record both supporting and denouncing all positions, but commit to none, 2. wait... 3. spin your previous wisdoms based on the actual outcome. A super-inconsistent & confusing track record is actually a major asset when executing this strategy!
skeeter2020 1y ago
This sort of reactionary post is a tiring as the motivating situation. Here's a big difference: aside from all the circular investments the companies at the root of AI have huge earnings and did so before the boom as well.It's convenient to say "Look at all these declines in the past month! The end is nigh!" - maybe expand your chart to 12 months or even 5 years. You can argue against Nvidia but if you do they've made you look foolish 3 pivots in a row. Are companies very expensive right now? Absolutely. Are there a lot of frothy valuations and looming failures? Probably - I think so. Is this just like the Internet bubble? Beyond the generic basics, no.
- christophilus 1y ago
  Most of them have big revenues; not earnings.
  - skeeter2020 1y ago
    that's not true; check the (edit: historical) PE ratios for the big names referenced in this post.
    - christophilus 1y ago
      Ah. Yep. They mention NVDA, MSFT, GOOG, etc. I was thinking of the startup world and OpenAI, Grok, etc. The giant cash machines of FAMOG will probably come out well positioned when the dust settles.
biff1 1y ago
There’s a bubble bubble and it will pop in 26.
chasing0entropy 1y ago
The internet was monumental and valuable, offering instant conveyance of media and data. AI is monumental, allowing instant access to near infinite data; but whether instant access is as valuable as instant conveyance yet alone five times the value, appears to be the question Honestly anyone who thinks AI has intrinsic value to rival the GDP of nations is a bagholder in denial and I'll be happy to buy your puts.
- tim333 1y ago
  "instant access to near infinite data" is Google search. AI if it gets better will be thinking / intellectual work which is a different category. I remember in the 90s people would say the internet will bring instant conveyance of media including video and people were like yeah right I can just about get one page of crappy text in a minute over the unreliable dial up modem. It's like that now with AI thinking.
wewewedxfgdf 1y ago
Yeah except I pay hard cash for multiple AI services and use them all day long.
- resize2996 1y ago
  I paid for my internet and used it all day long.
  - sbuas 1y ago
    The money paid was to access the internet not run it, that's a world of difference.
    - BirAdam 1y ago
      In the 1990s, there were plenty of closets running websites, BBSs and other internet available resources. As a percentage of total internet users, it was higher than those doing so today. So, money was paid to run portions of the internet at home by ISP subscribers.
more_corn 1y ago
Ok, so if that prediction is true what actions did you take? Identify the therefore part of the prediction and enumerate the three highest priority steps. Have you determined that the stock market will crash and bought positions accordingly? Have you sold all your nvidia stock? What are the implications in the broader economy and what steps have you taken?
- skeeter2020 1y ago
  I've thought about and asked this question. One potential idea: AI was sold as the "death of SaaS" and hit their share prices accordingly. If you think this is not true (at least in the near to mid-term) you could buy stock at (what you perceive as) a discount. I might look at a company like Constellation (a big vertically integrated portfolio of mature, decent revenue-generating SaaS) as a proxy for a fund focused on this strategy. This sort of approach is pretty aggressive and definitely contrarian to the general market, but some alternatives to mitigate the coming pain (if you believe it's near) would be shifting into a more liquid position to take advantage of tightening liquidity, i.e. big companies may see their shares tank but will likely still be able to service their debt. In the meantime you'll miss out on a market that still seems pretty strong.
- nonameiguess 1y ago
  Do you have to? I'll be 45 in a few days, but even at that age, I'm still not expecting to need anything I have invested for at least 20 years, the ratio of the value of the broad overall market then to now is still likely to be a larger multiple than for any other asset class I can expose myself to. If there's really a bubble, maybe that won't be true in 5 years, but I've yet to see a downturn that didn't recover in 20. Even if your predictions are directionally correct eventually, if you're not clairvoyant, trying to time the market is still not a great idea.
- exegete 1y ago
  I’ve got 15-20 years to retirement so I just watch the market but don’t do anything other than keep buying index funds and rebalancing periodically.
- AstroBen 1y ago
rafaelero 1y ago
Idk, we seem to be the at the cusp of autonomous driving. Transportation is like ~8% of world's GDP. Payroll is, what, 30% of that? It seems like we can already have the return on all AI investment by just conquering this one application.
- fakedang 1y ago
  Transportation AI does not remotely require any of the heavy investments obligated to run LLMs.
smrtinsert 1y ago
Maybe guard your investments, but the big question back then was "is the internet really that good, will it stick around" and the reality is it won argument hands down. The same thing will prove true about AI.
mancerayder 1y ago
I grew up in the 90's and remember being a computer nerd BEFORE the .com bubble, and starting my career precisely after it burst. Let me tell you one difference I personally am experiencing that differentiates the two. Note, this is a pro-'we're in a bubble' stance: In the late 90's and early 2000's, businesses were SALIVATING to get online, individuals were finding new ways to benefit and profit from it, and massive investment was being made to facilitate what was inevitable: an interconnected network of everything. Do you remember faxing things ? Paper mail? People half in the know were pushing the Boomers and older Gen-X types to get on with it and modernize. Now? Not only are people not CLAMORING for more AI, it's that The Powers that Be are forcing it down our throats. At work, we have mandatory AI training, we have people getting promoted for promoting extremely dubious AI solutions both internally and on our product. I log into ANY web site now, whether I'm shopping for a vacuum cleaner or logging into a vendor website, and I get AI shoved in my face, from from "assistant" I have to interact with before typing "agent" to new features I don't care about. Is there some truth, some merit? Absolutely. But my red flag I'm trying to raise is this: never did it feel FORCED in the 90's, there was a salivation from individuals to get more online, and a reluctance from institutions like elementary and high schools to get with the program. Now? Corporations large and small are shoving it down our throats. Why? Well, to justify the crazy spending. I'm no prophet and the world (and economy) are fundamentally unpredictable. But I'll say this. I'm putting my money where my mouth is, and I've put in an order to buy a 5 digit dollar amount of puts on a big 'AI' type ETF, that'll expire in the Spring. It's already wobbling and if you can't beat them, profit off of them when they stumble. There's absolutely something wrong in the current moment, even if AI is somehow the future. For one thing, the U.S. economy would probably be in a recession right now if it weren't for this insane AI spending. It's wobbled with the recent Nvidia earnings release, and I think it is going to dip (not crash, but start dipping) soon. The author wrote: "None of these companies has proven yet that AI is a good enough business to justify all this spending. But the first four are now each spending $70 billion to $100 billion a year to fund data centers and other capital intensive AI expenses. Oracle is spending roughly $20 billion a year. " In my opinion it's a theoretical arms race 'just because my competitor might win', and not based on anything certain.
- exegete 1y ago
baxtr 1y ago
No, it doesn’t. Go and actually read the crazy story about startups like Global Crossing. Crazy amount of funding, little to no revenue, no competitive moat, no demand. Compare that to today, and you see only the crazy amount of funding part is the same.
- coffeebeqn 1y ago
  How are the revenues these days? Let’s not count Nvidia since they’re the ones selling the shovels. How are the moats?
  - baxtr 1y ago
    Revenues are up massively, across the board for the big companies but interestingly enough also for startups like ChatGPT, Loveable, Cursor etc. Which is again totally different than last time where mostly startups were driving the insane valuations. For the shovels part: Actually Global Crossing tried to sell shovels. But failed since there was no demand and no moat. Now compare that to NVIDIA.
- charlierguo 1y ago
  > Crazy amount of funding, little to no revenue, no competitive moat, no demand. Doesn't this also describe Thinking Machines Lab?
  - paxys 1y ago
    What is its stock trading at?
vjvjvjvjghv 1y ago
What’s really scary is the money that’s being invested vs the .COM bubble. In the end 90s 100 million was a huge investment. Now it seems every AI company immediately a billion dollar and more valuation. There was a time when this was called “unicorn”.
stevage 1y ago
Fundamentally they seem different. The web looked like it had the potential to make lots of money but no one knew exactly how. AI literally does people's jobs for them. There's not much imagination required.
- _verandaguy 1y ago
  But currently, nobody's actually making money on AI. It's also not doing peoples' jobs for them, for the most part. AI's supporters do very loudly proclaim this, though.
  - rokhayakebe 1y ago
    What would it take to make money? Double or triple the pricing. Most of these companies messed on pricing initially. ChatGPT Plus/ Claude Plus (or whatever it is called) are $20/month. These should be $80 to $100/month products. Probably even more, $200.
    - kergonath 1y ago
      But then, how do you get the users and growth figures that justify the current boom in infrastructure build-up? A high equilibrium might be profitable to a few companies and useful to a few rich customers, but it’s far from justifying current valuations.
- AstroBen 1y ago
  Which jobs is it doing, exactly? From what I can tell at this point it's a solution looking for a problem. Incredibly impressive, not so useful
  - chermi 1y ago
    Customer service.
    - dom96 1y ago
mattmaroon 1y ago
One difference is most of the companies listed are old, long standing, well-performing businesses. Pets.com had potential, Apple, Amazon, and Google had large amounts of revenue even 3 years ago. The bubble may deflate but every company mentioned will still be standing, whereas in 1999 many of them were basically Ponzi schemes relying on further investor dollars to subsidize losses. All this AI spending will hurt some investors if the bubble pops but just make for a few bad quarters for the big tech cos.
- kergonath 1y ago
  > One difference is most of the companies listed are old, long standing, well-performing businesses. Pets.com had potential, Apple, Amazon, and Google had large amounts of revenue even 3 years ago. Plenty of old companies spiked in 2000. Companies like Microsoft, Intel, or Cisco. Shovel sellers with a history of decent profits. I mean, the NASDAQ crashed, an it is not all made of start ups. You sound in denial, but there are more similarities than you seem to realise.
shevy-java 1y ago
Hmm. The comparison makes sense in some ways, but the thing is - as much as I dislike AI, I think AI will stay, whereas the internet bubble seemed to subside without that much left from it, more or less. While I hate most of AI, it does have some use cases - the current hype will eventually subside or collapse, but I think the core use cases will most likely remain. "All but Alphabet have seen big share declines in the past month. Microsoft is down 12 percent, Amazon is down 14 percent, Meta is down 22 percent, Oracle is down 24 percent" That fluctuates anyway and profits are made by some - nothing new here. I think the world needs to detach from the stock markets though. That may not seem realistic right now, but if you look at the current US president and the ties to superrich, we really have a huge problem now. A few parasitize on the masses. That can not be sustained. It is not ethical. "It will spark a generation of innovations that we can’t yet even imagine." I am not so sure. So far I successfully avoided AI, including becoming dependent on AI - I am not. So that is good. I can not really see what "innovation" would make me want to embrace AI. Perhaps I can be forced into it, but right now I am happy avoiding it. "Because we humans are pretty good at predicting the impact of technology revolutions beyond seven to ten years." No, we really are not. "Not only does the AI bubble in 2025 feel like the internet bubble in 1999" It is still not the same. I feel the article is falling apart there. It tries too much to compare to the 1999, but it is not the same.
- deleted 1y ago
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shigawire 1y ago
I think I'm asking for the impossible here... But is anyone trying to hedge risk in their personal finances? I'm not a real "investor" (index funds only) but I am feeling more willing to forgo gains to be more risk averse just based on my own neuroses. Maybe I cash out and buy T-bills? Gold? Bullets? What's the non-crazy person equivalent?
- tempestn 1y ago
  I've always used value-tilted indexes, and am hoping that they will suffer less when the bubble pops. With that and a healthy dose of fixed income (which I chose years ago based on an assumption that the equity portion of the portfolio could drop 50% in a downturn at any time) I'm trying to stick to the plan and not try to time the market. Even though it very much feels like the bubble is near its peak (if not just past it!) I do still believe on some level that market timing is a fool's game, so I'm trying to stay convinced that the steps I've already taken are all one can rationally do.
  - mancerayder 1y ago
    What sort of fixed income that doesn't require much research? A broad bond fund? What are the implications of bond prices in this dubious interest rate environment? It seems no one knows what the Fed should or wants to do, including the Fed. And if the economy is on shaky ground, won't that be bad for bonds if companies can default?
    - tempestn 1y ago
      At least historically, the research I've seen is that one is better off keeping risk in the equity side of a portfolio, not trying to eek out gains on the fixed income side. So that would suggest sticking with intermediate duration, government bond (funds). You're not expecting it to earn much, but it should hold its value over the long term. This will reduce the expected return of the portfolio, but the goal is to get volatility to a level you can stomach, allowing you to ride out fluctuations on the equity side. Because even though we can all look at the current situation and say the stock market appears overvalued, we can't know how much higher it will go, when we've hit the top, or once it starts declining, when we've hit the bottom. Even experts do no better than luck would dictate at that game.
pedalpete 1y ago
I wonder if we need a new term rather than bubble for these types of short-term over-invested sectors. The Tulip mania (if it existed) was a bubble. It popped, it's never coming back. BeanieBabies was a bubble for the same reason. NFT art remains to be seen, but I think it was likely a bubble. The internet was over-invested and decreased significantly when looking on a timeline of 5-7 years. But outside of that, if you were to take the valuation of internet companies, it is greater than during the period we call the bubble. We'll see the same with AI. There will most likely be a drop in valuations when looking at a medium term timescale, but long-term, I expect AI companies will be worth far more than they are today. When the markets drop on a monthly scale, but then rebound, we don't call that a bubble, so why do we call this sub-decade decline a bubble? Do you think we should have another term for this? Same with the housing bubble, yes, it popped and lots of people got hurt, but those who were able to hang-on, I think, ended up ok, and on a moderately decent timeline.
- tim333 1y ago
  >... Tulip mania ... never coming back. Poor old much maligned tulips. The mania isn't coming back but the tulip industry had endured for nearly four hundred years and Holland produces billions of tulip bulbs each year. Some of the more conservative tulip buyers in mania days probably even did ok out of it.
kittikitti 1y ago
This is another doomer article about AI. The author openly admits to using AI for the article and the irony isn't lost on me. How long will we be hearing about the AI bubble?
- georgemcbay 1y ago
  People continued to use the internet during and after the very real ".com" bubble burst. LLMs can be useful tools in the right situations and the valuations for companies involved with them can be wildly and irrationally inflated at the same time.
molave 1y ago
From what I remember, in past bubbles that burst, everyone thought stocks will go up forever. So, if people are wondering out loud (with widespread traction) if there's a bubble, there's probably not one. It may be self-fulfilling. The awareness of a potential bubble influences us to be more cautious.
- swatcoder 1y ago
  No, there's never been a time where everyone was saying "stocks will go up forever" then. Even in the late 90's, as momentum was accumulating towards what would eventually burst as the dot-com bubble, a Very Central Figure in the whole thing was warning about "irrational exuberance" in the market but didn't have safe tools do anything about it. For the last most explosive bubbles -- "dot-com" (~2000) and "housing" (~2008) -- you can go back and find all sorts of warnings and critiques and fretting and skepticism in newspapers, academic and industry journals, blogs, television, personal ephemera, etc. And not too far from almost all the examples you find, you'll also find somebody blowing off the skepticism. The tricky part is that you can more or less find similar dialog in all those sources even when there didn't turn out to be a looming collapse. There's just always people worrying about collapse or hard correction when the markets are running hot and always people blowing them off, and sometimes worriers prove right. Eventually. And sometimes they don't, and the underlying economy either catches up with the market or government policy successfully props it up for long enough that some other concern dominates or some other industry can absorb the over-allocated investment. Basically, it turns out your heuristic for spotting a bubble faces too much noise and isn't actually all that informative at all.
hnburnsy 1y ago
Pets.com→Chewy Webvan → Instacart, DoorDash, Amazon Fresh Kozmo.com → Postmates, Uber Eats, Gopuff Boo.com (fashion) → Farfetch, Net-a-Porter, ASOS Broadcast.com → YouTube, Netflix, Twitch The dot-com bubble didn’t prove the internet was a fad — it proved the internet was inevitable, but the valuations assumed adoption would happen in 2 years instead of 15–20. To me it feels like the AI inevitability will be much quicker.
- bluefirebrand 1y ago
  > To me it feels like the AI inevitability will be much quicker. AI is accelerating "let them eat cake" at rates never seen before in history, so I imagine the violence will follow soon after
  - dudeinjapan 1y ago
    Yeah but AI can also generate a picture of any cake you prompt it.
- softwaredoug 1y ago
  On the RHS, post hype, the second movers could work on the boring, unsexy problems in those domains nobody wanted to solve. And solve them extremely well. Then build a moat around that. There is also a customer adoption curve of technology that lags far behind the technologist adoption curve. For example video on the Web failed a long time, until it didn't, when Youtube began to succeed. The problem became "boring" to technologists in some ways, but consumers gradually caught up.
- deleted 1y ago
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- ruszki 1y ago
  If technology had been the same for the past 20 years, basically none of these would have existed, or would be even close as large as today. We needed way faster cable and mobile internet, and smartphones. Probably even smaller laptops. It was possible to predict these more or less, however, it was impossible to predict when or whether people start to really utilize the internet. Even now, we needed COVID to have another shift regarding this. The general acceptance of “internet first” kind of worldview maybe would have never happened without forcing us to have.
toephu2 1y ago
The fact that I'm getting rate-limited every day even though my company has enterprise-level subscriptions to gemini, chatgpt, etc. tells me this bubble is far from popping. I predict within a year 80%+ of devs will be using LLMs to write most of their code for them.
- asdff 1y ago
  If it is so certain that will happen this year, why didn't it happen already last year, or the year before that? By most peoples measures the codegen hasn't improved. Some believe the newly released models are even a regression on the old in favor of saving costs.
  - TheAceOfHearts 1y ago
    The tooling for autonomous programming agents are still improving and being iterated upon. Developing integrations with various systems and learning how to most effectively make use of agents is an ongoing and open problem. Adoption has actually been reasonably fast.
- iammrpayments 1y ago
  If they are rate limiting you, it means they already started enshitfying the product before it is even profitable
  - simianwords 1y ago
    Why would they enshittifiy?
    - thefz 1y ago
      Because that's peak extraction for the enshittifier
  - maximus-decimus 1y ago
    I interpret it more that they're losing money on it and are trying to limit the bleeding.
ManuelKiessling 1y ago
I know this is semantics pedantry, but there has never been an „Internet bubble“, only an „Internet-related stock market bubble“. It’s not as if there were ten million people using and/or building on the Internet, and then this bubble popped and for some years there were only ten thousand people on the Internet. And I think the same is true for „AI usage/adoption“.
pinkmuffinere 1y ago
> And Coreweave, the former crypto miner turned data center service provider, unveiled in its IPO documents earlier this year that it has borrowed so much money that its debt payments represent 25 percent of its revenues. Wow, what a sentence. It starts out bad and just gets worse.
ghm2180 1y ago
I have a noob question. How can developed economies where populations levels have plateaued continue to be expected to post positive GDPs (and therefore add net new goods and services) yoy? Homes as assets should pass on, higher cost services of today would be replaced by lower cost which only temporarily would increase units sold(but should eventually plateau because #units/person is not going to change). No component of the GDP will move. If the fertility rate of developed economies is less than 2.1 then there should be wealth and asset accumulation among the younger people over time. The demand for newer goods and services from the people who get richer is inelastic: most goods and service's prices dont matter to the rich they buy them any ways, and it continues to keep becoming more inelastic. So within like a several years the demand should just collapse as wealth accumulates a lot and people work less and become more price insensitive. Immigration is set to remain low to developed nations for the next 3-5 years. This seems to be quite evident in Japan and EU already(though in the EU if you adjust the productivity for work hours the GDP becomes same as America's). So why do people assume developed countries would even buy this much more new stuff. 1.5 trillion$ worth of new things over the next 5 years?
- vorpalhex 1y ago
  Your entire premise is simply incorrect, through and through. Discard it entirely and begin again. You have a hundred people, they have a GDP of N. Tomorrow, their productivity doubles because of a technological innovation. Your GDP is 2N. Prices matter extensively to the rich and poor. The cost of a given compute capacity has gone from "literally the entire United States can't afford it" to "my lightbulb has this much compute because it's cheaper than choosing a dumber processor". What happens tomorrow if eg ChatGPT 5.1 performance becomes doable for $500 of tech? $50? Swap this for grain harvesting, waste bin collection, etc if you don't like the LLM case.
  - arexxbifs 1y ago
    > What happens tomorrow if eg ChatGPT 5.1 performance becomes doable for $500 of tech? $50? The bubble would burst and the US economy would face a recession?
Havoc 1y ago
It being a general purpose tech is what gives me pause
BeachGuy007 1y ago
Agreed

161 points by speckx 1y ago

I am very grateful how the title of the actual article linked saved 40 minutes reading the whole thing.

To say whether it's a bubble, we need to know the value of the technology. The value of modern AI seems very high. That nobody knows how high, that they still haven't figured out applications, and that the technology and its tools are still far from refined, is normal for any new technology. If you add the value of the potential political power gained by controlling AI, then the value to the owners and investors is astronomical. Many of the investors have demonstrated a strong motivation to sacrifice money for political power, for example by supporting nationalism that undermines a global economy that they benefit enormously from. Somewhere, I read someone explaining their investment by saying 'it's the greatest transfer of power in (modern) history'. Also see: https://news.ycombinator.com/item?id=45983700 https://news.ycombinator.com/item?id=45983700

forgetfulness 1y ago
The implied promise was that these things were going to “revolutionize the workplace” i.e. massively automate middle class office jobs A couple of years down the road, their useful applications still are summarizing text, transferring style to text, generating code under strict supervision, and generating images that need retouching. That’s a lot to get out of a tool, but it’s dubious that investors were pouring trillions of dollars into these things thinking of automating away junior software engineers and low end design work. Edit: I forgot their other niche, that of generating homework and school test answers
- bluefirebrand 1y ago
  > thinking of automating away junior software engineers and low end design work. And it's really still very arguable imo if it's even doing this Like you said, it still needs strict supervision. In my opinion it is not a good use of your supervisory time to be babysitting an LLM versus mentoring actual juniors
  - kergonath 1y ago
    > In my opinion it is not a good use of your supervisory time to be babysitting an LLM versus mentoring actual juniors Right. Because at least juniors are supposed to learn and at some point become senior and stop needing this kind of supervision. Also, interacting with people can be more rewarding (or not, depending on the people)…
- ares623 1y ago
  Not only that, but it’s devaluing the sacred cows of the very same companies that are investing heavily. Search is dead or dying Social media is dead or dying Content creation is dead or dying If they cant make AI work, then they are left with AI at a level that continues to devalue their core business. They have no choice. They made a deal with the devil. And the devil means to collect. This is why I think Apple is lucky their attempt failed so bad. They dodged a bullet. They have an opportunity to guide a lost tech industry through a post AI bubble world.
- lagosfractal42 1y ago
  GPUs have massive applications such as Alphafold, CRISPR, Medical Imaging, Meteorology. The massive planetary investment is not to make more AI chats that summarize text. That's just short sighted.
  - ares623 1y ago
    That’s copium, as the kids say nowadays. The massive planetary investment is a 100% for AI chats. All those other things are taking the crumbs where they can.
    - chickensong 1y ago
      Big business and government aren't buying supercomputer clusters and licensing models to run chats.
      - munk-a 1y ago
        The really weird thing is that Big Business actually is buying supercomputer clusters to do just that. I can't really talk to the government side but a lot of businesses' early forays into AI was just slapping a chatbot on their product and hoping it'd attract a lot more business. I also think you'd be surprised how integrated really dumb chatbots are into business communication these days. I think most smart people are looking seriously at different models to try and improve the accuracy of any existing ML uses they had in their business but the new features built post-ChatGPT tend to often just be fancied up chats.
        chickensong 1y ago
        > just slapping a chatbot on their product That's happening of course, but that's not really the whole picture. Any org that already invests in R&D is likely considering or already implementing modern AI tech into their existing infrastructure. A big oil or pharmaceutical or materials company likely doesn't care much about chat bots, or any customer-facing tech for that matter.
- DuperPower 1y ago
  its helping people be more productive but its not helping firing people which was the wet dream
- carlosjobim 1y ago
  The value of LLM is reliable high quality translation between all languages. The economic value of this is at least trillions of dollars per year. The cultural and humanitarian value is equally gigantic, even if it can't be measured in dollars and cents.
  - munk-a 1y ago
    That is of immense social value - but manual translation services for commercial projects (like application localization) is already dirt cheap to do and automatic casual translation services for consumers would be incredibly difficult to monetize.
    - carlosjobim 1y ago
      I think your perspective might be severely limited. There exists millions of businesses outside of big IT enterprises.
      - munk-a 1y ago
        I will freely admit this - but I have led a localization effort on a mobile game and worked on localization for a desktop application. I am also lucky enough to travel abroad quite a bit and am quite familiar with consumer offerings. So I would fairly limit my experience to consumer and medium-sized business uses - I have no experience with large corporate translation efforts (the largest would probably be Ubisoft or the Mouse-Ears company's gaming divisions if you consider them large) and even the small mobile game company I worked at had a budget in the millions range. It certainly hasn't been a focus of my career but I feel comfortable standing by my statement above.
        carlosjobim 1y ago
        You're only taking about IT stuff, while tourism is one of the largest global industries. Not to mention hundreds of other sectors which will benefit from better international communication.
  - 1y ago
- simianparrot 1y ago
  The hardware also wears out really fast. And every replacement is more expensive. How long can that party keep going when none of the companies make enough revenue to cover the expenses?
- ben_w 1y ago
  How many people graduate from a US software engineering degree each year? About 100k? If they (the 100k in the US) earn $100k each in the first year, before gaining the skills to earn more, that's $10 billion a year, every year. If you can capture that market for next 20 years, it's worth $200 billion. Except… can you capture it? A junior dev is… not exactly someone you want connecting to your business-critical database without supervision, and a real human dev will get better with a predictable rate. Will LLMs get better? The makers are betting on that, but we'll only know after the model releases, and even then after we play with them for a bit to differentiate between the record performance on whichever benchmark and the actual work we want them to do. Then there's the question of can you really keep an edge for 20 years with investments today: Sometime between 2030-2035, there's likely to be models matching 2025-SOTA performance that run on ${year}'s high-end smartphone. (Well, unless we all die in WW3 because of Russia getting desperate from its failure to remove Ukraine's sovereignty, or because China has a hot war with Taiwan and/or the USA messing with global consumer electronics supplies, but I don't think those get priced into the market…).
  - thousand_nights 1y ago
    > If you can capture that market for next 20 years, it's worth $200 billion. that's like 5% of NVIDIA's current market cap. sounds like peanuts when you lay it out like that
    - ben_w 1y ago
      Perhaps. But that's just the USA's software developers in just their first year after graduating. Software devs are 1% of the US job market, the first year after graduation is (66-21=45 years, 1/45 ~= 2%) of a working life, the US is just 4% of the world's population/25% GDP. For the 1% to matter, there have to be other jobs that LLMs can do as well as a fresh graduate. I don't know, are LLMs like someone the first year out of law school or medical school, or are those schools better than software? Certainly the home robotics' AI are nowhere near ready yet, no plumber, no driver (despite the news about new car AIs), would you trust an Optimus to cut your hair? etc. For the 2% to matter, depends how seriously you take the projections of improvements. Myself, I do not. Looks like exponential improvements come at exponential costs, and you run out of money to spend for further improvements very quickly. For the 4% to matter, depends on how fast other economies grow. 4% by population, about 25% by GDP. I believe China is still growing quite fast, likely to continue. Them getting +160% growth, and thus getting 2.6x times the money available to burn on AI tokens, over the next 20 years would be unsurprising. All in all, I don't think the USA is competent enough at large-scale projects to handle the infrastructure that this kind of AI would need, so I think it's a bubble and will burst before 2030 because of that. China seems to be able to pull off this kind of infrastructure, so may pull ahead after the US does whatever it does.
- VirusNewbie 1y ago
  Ok, ignoring any AGI or massive advances, let's just say an LLM can help the average office worker be 15% more productive... what do you think the economic value of that is?
  - forgetfulness 1y ago
    100 billion a year, with math that’s downright delusional. So, back of the envelope math, the US GDP is 27.72T USD, 80% (22.18) corresponds to the tertiary sector. Let’s say that this is a 15% increase over a 10 years period, because YoY a boom like the computer revolution itself looks like 2% increases a year.[1]. This amounts to about 1.5% increases each year. Let’s just make the huge leap that you can just scale the productivity up of all this just by making typing out reports and emails a faster activity, and summarizing information for which you’re not facing liability if the bot gets it wrong. Yes, including the nurses, cleaners, truckers, teamsters, all of it. 1.5% of it is a cool 330 billion. How much of a cut of that productivity increase could AI companies take? 30%? That’s 100 billion in one year there. So with pie-in-the-sky math, they could break even if their obligations throughout the decade don’t amount to 1 trillion (since those 1.5T in bonds issued this year mature in longer periods) 1. https://www.bls.gov/opub/mlr/2021/article/the-us-productivity-slowdown-the-economy-wide-and-industry-level-analysis.htm https://www.bls.gov/opub/mlr/2021/article/the-us-productivit...
  - gizajob 1y ago
    They'll waste 15% more of the day.
- mancerayder 1y ago
  You forgot - cheating on job interviews, writing resumes to be repetitive, and adding an annoying flowery tone to non-native English speakers who think AI wrote something for them that isn't AI-obvious.
  - forgetfulness 1y ago
    Many of those things were already at a “good enough” level since GPT-3.5. There’s probably a good business usecase there for companies wanting to have smoother communication with offshore teams. Could that be a game-changer? I wouldn’t discount it, but it does sound like something that has to operate at a very low margin and that doesn’t merit a lot more investment.
  - refactor_master 1y ago
    I wonder how many market inefficiencies this creates. People with worse education, people who cheated their way to a job opening compared to a better candidate, etc. Basically counteracting the productivity gains AI was supposed to bring.
    - cousinbryce 1y ago
      There’s a corollary here. People with worse educations may be able to do much higher quality work.
- tartoran 1y ago
  > The implied promise was that these things were going to “revolutionize the workplace” i.e. massively automate middle class office jobs Promise by who? I think the bet is that it would lay off nearly everyone white collar and let AI take its place.
- mmooss 1y ago
  That's the same mistake made with every new, and eventually successful, technology - we haven't found a valuable application yet, so the technology is not valuable. Finding the valuable application is often the hardest part. That it hasn't happened yet is meaningless. Some technologies sit on the shelf for decades. AI seems to have a lot of potential: It may be the most valuable technology ever; it may not provide more value than it does now, or something in between. Nobody actually knows. The challenge of innovation is managing that irreduceable risk. It starts by accepting risk, accepting that you don't know. One wrong way is to deny the risk - denying uncertainty - by either saying it's worthless or that success is guaranteed.
  - player1234 1y ago
    [dead]
- thefz 1y ago
  Don't forget they are great at generating speech to text. That's all, TBH. You summarized everything.
- thfuran 1y ago
  And propaganda.
redwood 1y ago
The value can be incredibly high... just like the value of the internet was incredibly high.. and it can still be a finanfial bubble. I feel like the people arguing against the bubble perspective are saying look the internet was actually valuable and so too will this.. and that's totally a valid perspective. The bubble is not about whether there's value but about whether or not the market will come down. All of the above can totally happen
- worik 1y ago
  > The value of modern AI seems very hig Very useful, clearly. But valuable? In aggregate it seems clear that it is. But where does that value acrue? It seems to me the value will be thinly spread while the costs are concentrated. It does not seem possible that any conceivable business can pay for all the announced plans for developing data centres, nor energy available to power them. If AI systems can be developed to be trust worthy enough to act on their own, none so far (?), then I can see where the value could acrue, but as things stand?
  - mmooss 1y ago
    > It seems to me the value will be thinly spread while the costs are concentrated. Won't the value will be concentrated in the few with the scale to build competitive AIs? In a sense, costs are spread thinly across the content creators whose work has been stolen. (But of course, it is indeed incredibly concentrated in building datacenters.)
    - worik 1y ago
      > content creators whose work has been stolen. The law is an ass. Current IP laws are too restrictive, but scraping public facing websites is not theft even under those crazy laws I have no moral objection to the use of Anna's Archive to train models. A good use, if illegal. But I do recogise and condemn the hypocrisy of Meta doing it. Not surprising, just disgusting The wasting of bandwidth is annoying, so silly. We should be better organized Calling it theft is buying into the mad bad and sad IP legal thinking that has become the dominant paradigm in the West
nitwit005 1y ago
You can have brilliant technology and still go broke. The internet was amazingly valuable, but many of the early companies failed. Investing in internet companies was hardly a sure bet.
- munk-a 1y ago
  There was a recent Bezos talk about the fact that (much like the dot-com) we've overspending on infrastructure that'll bubble and implode but then we'll have all this amazing infra for companies to build off of... but the process of that overspend and implosion is essentially a massive debt erasure - a lot of people are currently propping up this market with their capital and the companies they're propping up will collapse and those obligations liquidated - and that will result in massive society-wide pain. We may end up in a better place for the next generation because of this investment - but if you're a retail investor don't expect your 401k accounts to weather that burst gracefully... and, unlike the boomers, this will largely hit Millenials and Gen Z both of whom are currently under massive financial stress.
nonameiguess 1y ago
Arguably, it's exactly this mindset creating the problem. It's not the value of the technology that matters. It's the value of the companies. If one company was the only one that had a particular valuable technology, then that would matter, but otherwise 90% of them likely end up worthless even if the sector itself doesn't. How that washes out on net we'll have to see. I'm not gonna pretend I know more than anyone else. Just keep in mind that a major difference between now and 2000 is companies stay private a lot longer. An IPO forces you to open the books and sustain public scrutiny of the broad investor class. A still-private startup only needs to convince one funder of their value. That inevitably leads to higher variance and a greater risk of failure. That doesn't mean the whole sector is necessarily a bubble, but if it is, it can be sustained a lot longer without us knowing. A small number of people with $50 billion they need to park somewhere and no other obvious options can keep shitty ideas afloat in a way that wouldn't be possible if they had to be subjected to broader exposure. We like to believe people with $50 billion can't be wrong, but the wisdom of crowds always beats the wisdom of individual genius. Heck, AI itself taught us that same lesson!
- mmooss 1y ago
  Both are great points.
digdugdirk 1y ago
Alternate viewpoint - The value of modern AI seems very high. That nobody knows how high, that they still haven't figured out applications, and that the technology and its tools are still far from refined, might be a sign that the technology shouldn't be valued this highly at all
- mmooss 1y ago
  > That nobody knows how high, that they still haven't figured out applications, and that the technology and its tools are still far from refined, might be a sign that the technology shouldn't be valued this highly at all That might be true, but it also might be true that it's tremendously valuable. The conditions you identify exist for every new technology; obviously the outcomes vary greatly.
usrnm 1y ago
Absolutely nothing in your list prevents the AI from being a bubble. The Internet is an absolute marvel of engineering that completely changed the life of the majority of people in the world, and yet it crashed 25 years ago, and crashed hard. Both can be true at the same time.
- kergonath 1y ago
  Also, video games in the 1980s.
hyperbovine 1y ago
> The value of modern AI seems very high. That nobody knows how high, that they still haven't figured out applications, and that the technology and its tools are still far from refined, is normal for any new technology. The same could be said for the internet. But, and I know this will be hard for younger readers to believe, I seem to recall the value proposition of the Internet being more immediately apparent at the time.
- mmooss 1y ago
  From what I've read, people spent a long time looking for the 'killer application'. Google didn't know how to make money off its search engine. Social media didn't exist in any mass form. Internet access on phones, beyond email, didn't exist in any usable way. Proprietary, walled garden services, with their own dial-up numbers, such as AOL and CompuServe, were seen as the future. Microsoft thought their similar service (MSN?) was the way forward and didn't integrate the Internet into Windows 95. That was after Netscape's browser was released and (relative to the time, I'm sure) very popular.
  - acdha 1y ago
    The value was obvious almost immediately, but it was obscured by flashy get rich quick attempts. Google chose not to make money at first but that was a business decision, not a necessity: people were paying tons of money for ads and referrals years before they were founded. That’s part of the difference with AI now: the internet immediately generated significant value almost instantly for relatively modest investments, so there were a ton of small and mid-sized companies who saw almost immediate profits from moving catalog sales or support online, switching software distribution from mailing diskettes to downloads, etc. and some people were able to cut into established markets where the existing companies were slow to change. AI is different in two key ways: the first is the extremely high cost, which prevents a lot of the bottom-up growth we saw on the web, but the second is that it’s not a reliable technology like the web was so you can’t safely use it in the most valuable contexts. In the 90s, some people screwed up form validation badly but most people didn’t. Right now, companies would love to replace things like customer service or sales with chatbots but nobody on the market can make a system which is both safe and useful because things like prompt injection require theoretical breakdowns, not just attention to detail.
kergonath 1y ago
> To say whether it's a bubble, we need to know the value of the technology. Not really. I mean, not only. The value of the web is immense. And yet, the dot-com bubble was indeed a bubble. What matters is the value in the short term compared to the value of the companies in the current context. Even if AI is huge 20 years from now, it can still crash dramatically tomorrow.
- tim333 1y ago
  I was going to say that. Also the bubble can be in some areas but not in others. I think the proposed data center build out is a bubble as in not economically justified presently, but I think money spent on AI research is reasonable.
logsr 1y ago
>still haven't figured out applications the real answer is that the applications for the military, surveillance, and population control are proven, and the pathways to scale those capacities are clear, so the money will pour in no matter what. the implication is that we had better come up with some more consumer/humanity friendly applications that create comparable value, or that is all we will get.
- mmooss 1y ago
  What are the clear military applications that differ from civilian ones?

nimchimpsky 1y ago

[dead]

bdangubic 1y ago

writing a “bubble” post is new monad tutorial - gotta write one to get some street cred

skeeter2020 1y ago
This post argues the burst is not only inevitable it's right around the corner - never mind their principal argument being "we're terrible at predicting technology revolutions in the near term". This seems like a variation on the President's (and my CTO's) process of 1. go on record both supporting and denouncing all positions, but commit to none, 2. wait... 3. spin your previous wisdoms based on the actual outcome. A super-inconsistent & confusing track record is actually a major asset when executing this strategy!

skeeter2020 1y ago

This sort of reactionary post is a tiring as the motivating situation. Here's a big difference: aside from all the circular investments the companies at the root of AI have huge earnings and did so before the boom as well.It's convenient to say "Look at all these declines in the past month! The end is nigh!" - maybe expand your chart to 12 months or even 5 years. You can argue against Nvidia but if you do they've made you look foolish 3 pivots in a row. Are companies very expensive right now? Absolutely. Are there a lot of frothy valuations and looming failures? Probably - I think so. Is this just like the Internet bubble? Beyond the generic basics, no.

christophilus 1y ago
Most of them have big revenues; not earnings.
- skeeter2020 1y ago
  that's not true; check the (edit: historical) PE ratios for the big names referenced in this post.
  - christophilus 1y ago
    Ah. Yep. They mention NVDA, MSFT, GOOG, etc. I was thinking of the startup world and OpenAI, Grok, etc. The giant cash machines of FAMOG will probably come out well positioned when the dust settles.

biff1 1y ago

There’s a bubble bubble and it will pop in 26.

chasing0entropy 1y ago

The internet was monumental and valuable, offering instant conveyance of media and data. AI is monumental, allowing instant access to near infinite data; but whether instant access is as valuable as instant conveyance yet alone five times the value, appears to be the question Honestly anyone who thinks AI has intrinsic value to rival the GDP of nations is a bagholder in denial and I'll be happy to buy your puts.

tim333 1y ago
"instant access to near infinite data" is Google search. AI if it gets better will be thinking / intellectual work which is a different category. I remember in the 90s people would say the internet will bring instant conveyance of media including video and people were like yeah right I can just about get one page of crappy text in a minute over the unreliable dial up modem. It's like that now with AI thinking.

wewewedxfgdf 1y ago

Yeah except I pay hard cash for multiple AI services and use them all day long.

resize2996 1y ago
I paid for my internet and used it all day long.
- sbuas 1y ago
  The money paid was to access the internet not run it, that's a world of difference.
  - BirAdam 1y ago
    In the 1990s, there were plenty of closets running websites, BBSs and other internet available resources. As a percentage of total internet users, it was higher than those doing so today. So, money was paid to run portions of the internet at home by ISP subscribers.

more_corn 1y ago

Ok, so if that prediction is true what actions did you take? Identify the therefore part of the prediction and enumerate the three highest priority steps. Have you determined that the stock market will crash and bought positions accordingly? Have you sold all your nvidia stock? What are the implications in the broader economy and what steps have you taken?

skeeter2020 1y ago
I've thought about and asked this question. One potential idea: AI was sold as the "death of SaaS" and hit their share prices accordingly. If you think this is not true (at least in the near to mid-term) you could buy stock at (what you perceive as) a discount. I might look at a company like Constellation (a big vertically integrated portfolio of mature, decent revenue-generating SaaS) as a proxy for a fund focused on this strategy. This sort of approach is pretty aggressive and definitely contrarian to the general market, but some alternatives to mitigate the coming pain (if you believe it's near) would be shifting into a more liquid position to take advantage of tightening liquidity, i.e. big companies may see their shares tank but will likely still be able to service their debt. In the meantime you'll miss out on a market that still seems pretty strong.
nonameiguess 1y ago
Do you have to? I'll be 45 in a few days, but even at that age, I'm still not expecting to need anything I have invested for at least 20 years, the ratio of the value of the broad overall market then to now is still likely to be a larger multiple than for any other asset class I can expose myself to. If there's really a bubble, maybe that won't be true in 5 years, but I've yet to see a downturn that didn't recover in 20. Even if your predictions are directionally correct eventually, if you're not clairvoyant, trying to time the market is still not a great idea.
exegete 1y ago
I’ve got 15-20 years to retirement so I just watch the market but don’t do anything other than keep buying index funds and rebalancing periodically.
AstroBen 1y ago

rafaelero 1y ago

Idk, we seem to be the at the cusp of autonomous driving. Transportation is like ~8% of world's GDP. Payroll is, what, 30% of that? It seems like we can already have the return on all AI investment by just conquering this one application.

fakedang 1y ago
Transportation AI does not remotely require any of the heavy investments obligated to run LLMs.

smrtinsert 1y ago

Maybe guard your investments, but the big question back then was "is the internet really that good, will it stick around" and the reality is it won argument hands down. The same thing will prove true about AI.

mancerayder 1y ago

I grew up in the 90's and remember being a computer nerd BEFORE the .com bubble, and starting my career precisely after it burst. Let me tell you one difference I personally am experiencing that differentiates the two. Note, this is a pro-'we're in a bubble' stance: In the late 90's and early 2000's, businesses were SALIVATING to get online, individuals were finding new ways to benefit and profit from it, and massive investment was being made to facilitate what was inevitable: an interconnected network of everything. Do you remember faxing things ? Paper mail? People half in the know were pushing the Boomers and older Gen-X types to get on with it and modernize. Now? Not only are people not CLAMORING for more AI, it's that The Powers that Be are forcing it down our throats. At work, we have mandatory AI training, we have people getting promoted for promoting extremely dubious AI solutions both internally and on our product. I log into ANY web site now, whether I'm shopping for a vacuum cleaner or logging into a vendor website, and I get AI shoved in my face, from from "assistant" I have to interact with before typing "agent" to new features I don't care about. Is there some truth, some merit? Absolutely. But my red flag I'm trying to raise is this: never did it feel FORCED in the 90's, there was a salivation from individuals to get more online, and a reluctance from institutions like elementary and high schools to get with the program. Now? Corporations large and small are shoving it down our throats. Why? Well, to justify the crazy spending. I'm no prophet and the world (and economy) are fundamentally unpredictable. But I'll say this. I'm putting my money where my mouth is, and I've put in an order to buy a 5 digit dollar amount of puts on a big 'AI' type ETF, that'll expire in the Spring. It's already wobbling and if you can't beat them, profit off of them when they stumble. There's absolutely something wrong in the current moment, even if AI is somehow the future. For one thing, the U.S. economy would probably be in a recession right now if it weren't for this insane AI spending. It's wobbled with the recent Nvidia earnings release, and I think it is going to dip (not crash, but start dipping) soon. The author wrote: "None of these companies has proven yet that AI is a good enough business to justify all this spending. But the first four are now each spending $70 billion to $100 billion a year to fund data centers and other capital intensive AI expenses. Oracle is spending roughly $20 billion a year. " In my opinion it's a theoretical arms race 'just because my competitor might win', and not based on anything certain.

exegete 1y ago

baxtr 1y ago

No, it doesn’t. Go and actually read the crazy story about startups like Global Crossing. Crazy amount of funding, little to no revenue, no competitive moat, no demand. Compare that to today, and you see only the crazy amount of funding part is the same.

coffeebeqn 1y ago
How are the revenues these days? Let’s not count Nvidia since they’re the ones selling the shovels. How are the moats?
- baxtr 1y ago
  Revenues are up massively, across the board for the big companies but interestingly enough also for startups like ChatGPT, Loveable, Cursor etc. Which is again totally different than last time where mostly startups were driving the insane valuations. For the shovels part: Actually Global Crossing tried to sell shovels. But failed since there was no demand and no moat. Now compare that to NVIDIA.
charlierguo 1y ago
> Crazy amount of funding, little to no revenue, no competitive moat, no demand. Doesn't this also describe Thinking Machines Lab?
- paxys 1y ago
  What is its stock trading at?

vjvjvjvjghv 1y ago

What’s really scary is the money that’s being invested vs the .COM bubble. In the end 90s 100 million was a huge investment. Now it seems every AI company immediately a billion dollar and more valuation. There was a time when this was called “unicorn”.

stevage 1y ago

Fundamentally they seem different. The web looked like it had the potential to make lots of money but no one knew exactly how. AI literally does people's jobs for them. There's not much imagination required.

_verandaguy 1y ago
But currently, nobody's actually making money on AI. It's also not doing peoples' jobs for them, for the most part. AI's supporters do very loudly proclaim this, though.
- rokhayakebe 1y ago
  What would it take to make money? Double or triple the pricing. Most of these companies messed on pricing initially. ChatGPT Plus/ Claude Plus (or whatever it is called) are $20/month. These should be $80 to $100/month products. Probably even more, $200.
  - kergonath 1y ago
    But then, how do you get the users and growth figures that justify the current boom in infrastructure build-up? A high equilibrium might be profitable to a few companies and useful to a few rich customers, but it’s far from justifying current valuations.
AstroBen 1y ago
Which jobs is it doing, exactly? From what I can tell at this point it's a solution looking for a problem. Incredibly impressive, not so useful
- chermi 1y ago
  Customer service.
  - dom96 1y ago

mattmaroon 1y ago

One difference is most of the companies listed are old, long standing, well-performing businesses. Pets.com had potential, Apple, Amazon, and Google had large amounts of revenue even 3 years ago. The bubble may deflate but every company mentioned will still be standing, whereas in 1999 many of them were basically Ponzi schemes relying on further investor dollars to subsidize losses. All this AI spending will hurt some investors if the bubble pops but just make for a few bad quarters for the big tech cos.

kergonath 1y ago
> One difference is most of the companies listed are old, long standing, well-performing businesses. Pets.com had potential, Apple, Amazon, and Google had large amounts of revenue even 3 years ago. Plenty of old companies spiked in 2000. Companies like Microsoft, Intel, or Cisco. Shovel sellers with a history of decent profits. I mean, the NASDAQ crashed, an it is not all made of start ups. You sound in denial, but there are more similarities than you seem to realise.

shevy-java 1y ago

Hmm. The comparison makes sense in some ways, but the thing is - as much as I dislike AI, I think AI will stay, whereas the internet bubble seemed to subside without that much left from it, more or less. While I hate most of AI, it does have some use cases - the current hype will eventually subside or collapse, but I think the core use cases will most likely remain. "All but Alphabet have seen big share declines in the past month. Microsoft is down 12 percent, Amazon is down 14 percent, Meta is down 22 percent, Oracle is down 24 percent" That fluctuates anyway and profits are made by some - nothing new here. I think the world needs to detach from the stock markets though. That may not seem realistic right now, but if you look at the current US president and the ties to superrich, we really have a huge problem now. A few parasitize on the masses. That can not be sustained. It is not ethical. "It will spark a generation of innovations that we can’t yet even imagine." I am not so sure. So far I successfully avoided AI, including becoming dependent on AI - I am not. So that is good. I can not really see what "innovation" would make me want to embrace AI. Perhaps I can be forced into it, but right now I am happy avoiding it. "Because we humans are pretty good at predicting the impact of technology revolutions beyond seven to ten years." No, we really are not. "Not only does the AI bubble in 2025 feel like the internet bubble in 1999" It is still not the same. I feel the article is falling apart there. It tries too much to compare to the 1999, but it is not the same.

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shigawire 1y ago

I think I'm asking for the impossible here... But is anyone trying to hedge risk in their personal finances? I'm not a real "investor" (index funds only) but I am feeling more willing to forgo gains to be more risk averse just based on my own neuroses. Maybe I cash out and buy T-bills? Gold? Bullets? What's the non-crazy person equivalent?

tempestn 1y ago
I've always used value-tilted indexes, and am hoping that they will suffer less when the bubble pops. With that and a healthy dose of fixed income (which I chose years ago based on an assumption that the equity portion of the portfolio could drop 50% in a downturn at any time) I'm trying to stick to the plan and not try to time the market. Even though it very much feels like the bubble is near its peak (if not just past it!) I do still believe on some level that market timing is a fool's game, so I'm trying to stay convinced that the steps I've already taken are all one can rationally do.
- mancerayder 1y ago
  What sort of fixed income that doesn't require much research? A broad bond fund? What are the implications of bond prices in this dubious interest rate environment? It seems no one knows what the Fed should or wants to do, including the Fed. And if the economy is on shaky ground, won't that be bad for bonds if companies can default?
  - tempestn 1y ago
    At least historically, the research I've seen is that one is better off keeping risk in the equity side of a portfolio, not trying to eek out gains on the fixed income side. So that would suggest sticking with intermediate duration, government bond (funds). You're not expecting it to earn much, but it should hold its value over the long term. This will reduce the expected return of the portfolio, but the goal is to get volatility to a level you can stomach, allowing you to ride out fluctuations on the equity side. Because even though we can all look at the current situation and say the stock market appears overvalued, we can't know how much higher it will go, when we've hit the top, or once it starts declining, when we've hit the bottom. Even experts do no better than luck would dictate at that game.

pedalpete 1y ago

I wonder if we need a new term rather than bubble for these types of short-term over-invested sectors. The Tulip mania (if it existed) was a bubble. It popped, it's never coming back. BeanieBabies was a bubble for the same reason. NFT art remains to be seen, but I think it was likely a bubble. The internet was over-invested and decreased significantly when looking on a timeline of 5-7 years. But outside of that, if you were to take the valuation of internet companies, it is greater than during the period we call the bubble. We'll see the same with AI. There will most likely be a drop in valuations when looking at a medium term timescale, but long-term, I expect AI companies will be worth far more than they are today. When the markets drop on a monthly scale, but then rebound, we don't call that a bubble, so why do we call this sub-decade decline a bubble? Do you think we should have another term for this? Same with the housing bubble, yes, it popped and lots of people got hurt, but those who were able to hang-on, I think, ended up ok, and on a moderately decent timeline.

tim333 1y ago
>... Tulip mania ... never coming back. Poor old much maligned tulips. The mania isn't coming back but the tulip industry had endured for nearly four hundred years and Holland produces billions of tulip bulbs each year. Some of the more conservative tulip buyers in mania days probably even did ok out of it.

kittikitti 1y ago

This is another doomer article about AI. The author openly admits to using AI for the article and the irony isn't lost on me. How long will we be hearing about the AI bubble?

georgemcbay 1y ago
People continued to use the internet during and after the very real ".com" bubble burst. LLMs can be useful tools in the right situations and the valuations for companies involved with them can be wildly and irrationally inflated at the same time.

molave 1y ago

From what I remember, in past bubbles that burst, everyone thought stocks will go up forever. So, if people are wondering out loud (with widespread traction) if there's a bubble, there's probably not one. It may be self-fulfilling. The awareness of a potential bubble influences us to be more cautious.

swatcoder 1y ago
No, there's never been a time where everyone was saying "stocks will go up forever" then. Even in the late 90's, as momentum was accumulating towards what would eventually burst as the dot-com bubble, a Very Central Figure in the whole thing was warning about "irrational exuberance" in the market but didn't have safe tools do anything about it. For the last most explosive bubbles -- "dot-com" (~2000) and "housing" (~2008) -- you can go back and find all sorts of warnings and critiques and fretting and skepticism in newspapers, academic and industry journals, blogs, television, personal ephemera, etc. And not too far from almost all the examples you find, you'll also find somebody blowing off the skepticism. The tricky part is that you can more or less find similar dialog in all those sources even when there didn't turn out to be a looming collapse. There's just always people worrying about collapse or hard correction when the markets are running hot and always people blowing them off, and sometimes worriers prove right. Eventually. And sometimes they don't, and the underlying economy either catches up with the market or government policy successfully props it up for long enough that some other concern dominates or some other industry can absorb the over-allocated investment. Basically, it turns out your heuristic for spotting a bubble faces too much noise and isn't actually all that informative at all.

hnburnsy 1y ago

Pets.com→Chewy Webvan → Instacart, DoorDash, Amazon Fresh Kozmo.com → Postmates, Uber Eats, Gopuff Boo.com (fashion) → Farfetch, Net-a-Porter, ASOS Broadcast.com → YouTube, Netflix, Twitch The dot-com bubble didn’t prove the internet was a fad — it proved the internet was inevitable, but the valuations assumed adoption would happen in 2 years instead of 15–20. To me it feels like the AI inevitability will be much quicker.

bluefirebrand 1y ago
> To me it feels like the AI inevitability will be much quicker. AI is accelerating "let them eat cake" at rates never seen before in history, so I imagine the violence will follow soon after
- dudeinjapan 1y ago
  Yeah but AI can also generate a picture of any cake you prompt it.
softwaredoug 1y ago
On the RHS, post hype, the second movers could work on the boring, unsexy problems in those domains nobody wanted to solve. And solve them extremely well. Then build a moat around that. There is also a customer adoption curve of technology that lags far behind the technologist adoption curve. For example video on the Web failed a long time, until it didn't, when Youtube began to succeed. The problem became "boring" to technologists in some ways, but consumers gradually caught up.
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ruszki 1y ago
If technology had been the same for the past 20 years, basically none of these would have existed, or would be even close as large as today. We needed way faster cable and mobile internet, and smartphones. Probably even smaller laptops. It was possible to predict these more or less, however, it was impossible to predict when or whether people start to really utilize the internet. Even now, we needed COVID to have another shift regarding this. The general acceptance of “internet first” kind of worldview maybe would have never happened without forcing us to have.

toephu2 1y ago

The fact that I'm getting rate-limited every day even though my company has enterprise-level subscriptions to gemini, chatgpt, etc. tells me this bubble is far from popping. I predict within a year 80%+ of devs will be using LLMs to write most of their code for them.

asdff 1y ago
If it is so certain that will happen this year, why didn't it happen already last year, or the year before that? By most peoples measures the codegen hasn't improved. Some believe the newly released models are even a regression on the old in favor of saving costs.
- TheAceOfHearts 1y ago
  The tooling for autonomous programming agents are still improving and being iterated upon. Developing integrations with various systems and learning how to most effectively make use of agents is an ongoing and open problem. Adoption has actually been reasonably fast.
iammrpayments 1y ago
If they are rate limiting you, it means they already started enshitfying the product before it is even profitable
- simianwords 1y ago
  Why would they enshittifiy?
  - thefz 1y ago
    Because that's peak extraction for the enshittifier
- maximus-decimus 1y ago
  I interpret it more that they're losing money on it and are trying to limit the bleeding.

ManuelKiessling 1y ago

I know this is semantics pedantry, but there has never been an „Internet bubble“, only an „Internet-related stock market bubble“. It’s not as if there were ten million people using and/or building on the Internet, and then this bubble popped and for some years there were only ten thousand people on the Internet. And I think the same is true for „AI usage/adoption“.

pinkmuffinere 1y ago

> And Coreweave, the former crypto miner turned data center service provider, unveiled in its IPO documents earlier this year that it has borrowed so much money that its debt payments represent 25 percent of its revenues. Wow, what a sentence. It starts out bad and just gets worse.

ghm2180 1y ago

I have a noob question. How can developed economies where populations levels have plateaued continue to be expected to post positive GDPs (and therefore add net new goods and services) yoy? Homes as assets should pass on, higher cost services of today would be replaced by lower cost which only temporarily would increase units sold(but should eventually plateau because #units/person is not going to change). No component of the GDP will move. If the fertility rate of developed economies is less than 2.1 then there should be wealth and asset accumulation among the younger people over time. The demand for newer goods and services from the people who get richer is inelastic: most goods and service's prices dont matter to the rich they buy them any ways, and it continues to keep becoming more inelastic. So within like a several years the demand should just collapse as wealth accumulates a lot and people work less and become more price insensitive. Immigration is set to remain low to developed nations for the next 3-5 years. This seems to be quite evident in Japan and EU already(though in the EU if you adjust the productivity for work hours the GDP becomes same as America's). So why do people assume developed countries would even buy this much more new stuff. 1.5 trillion$ worth of new things over the next 5 years?

vorpalhex 1y ago
Your entire premise is simply incorrect, through and through. Discard it entirely and begin again. You have a hundred people, they have a GDP of N. Tomorrow, their productivity doubles because of a technological innovation. Your GDP is 2N. Prices matter extensively to the rich and poor. The cost of a given compute capacity has gone from "literally the entire United States can't afford it" to "my lightbulb has this much compute because it's cheaper than choosing a dumber processor". What happens tomorrow if eg ChatGPT 5.1 performance becomes doable for $500 of tech? $50? Swap this for grain harvesting, waste bin collection, etc if you don't like the LLM case.
- arexxbifs 1y ago
  > What happens tomorrow if eg ChatGPT 5.1 performance becomes doable for $500 of tech? $50? The bubble would burst and the US economy would face a recession?

Havoc 1y ago

It being a general purpose tech is what gives me pause

BeachGuy007 1y ago

Agreed