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IBM CEO says there is 'no way' spending on AI data centers will pay off
- thenthenthen 10mo agothe mining industry enters the chat
- verdverm 11mo agoIBM CEO is steering a broken ship and it's not improved course, not someone who's words you should take seriously. 1. The missed the AI wave (hired me to teach watson law only to lay me off 5 wks later, one cause of the serious talent issues over there) 2. They bought most of their data center (companies), they have no idea about building and operating one, not at the scale the "competitors" are operating at
- nabla9 11mo agoEveryone should read his argument carefully. Ponder them in silence and accept or reject them in based on the strength of the arguments.
- nyc_data_geek1 11mo agoIBM can be a hot mess, and the CEO may not be wrong about this. These things are not mutually exclusive.
- scarmig 11mo agoHis argument follows almost directly, and trivially, from his central premise: a 0% or 1% chance of reaching AGI. Yeah, if you assume technology will stagnate over the next decade and AGI is essentially impossible, these investments will not be profitable. Sam Altman himself wouldn't dispute that. But it's a controversial premise, and one that there's no particular reason to think that the... CEO of IBM would have any insight into.
- skeeter2020 11mo agothen it seems like neither Sam Altman (pro) or IBM (proxy con) have credible or even really interesting or insightful evidence, theories ... even suggestions for what's likely to happen? i.e. We should stop listening to all of them?
- scarmig 11mo agoAgreed. It's essentially a giant gamble with a big payoff, and they're both talking their books.
- verdverm 11mo agowe don't need AGI to use all that compute we need businesses who are willing to pay for ai / compute at prices where both sides are making money I for one could 10x my AI usage if the results on my side pan out. Spending $100 on ai today has ROI, will 10x that still have ROI for me in a couple years? probably, I expect agentic teams to increase in capability and more of my work. Then the question is can I turn that increase productivity into more revenues (>$1000 / month, one more client would cover this and then some)
- PunchyHamster 11mo agoIt's a very reasonable claim to make, but yes, average denizen of peanut gallery can spot this is a bubble from a mile way, doensn't need "insight" of napkin math done by some CEO that's not even in the industry. Tho he's probably not too happy that they sold the server business to Lenovo, could at least earn something on selling shovels
- malux85 11mo agoSorry that happened to you, I have been there too, When a company is hiring and laying off like that it’s a serious red flag, the one that did that to me is dead now
- verdverm 11mo agoIt was nearly 10 years ago and changed the course of my career for the better make lemonade as they say!
- duxup 11mo agoIs his math wrong?
- verdverm 11mo agoAre the numbers he's claiming accurate? They seem like big numbers pulled out of the air, certainly much large than the numbers we've actually seen committed to (not even deployed yet).
- observationist 11mo agoIBM CEO has sour grapes. IBM's HPC products were enterprise oriented slop products banked on their reputation, and the ROI torched their credibility when compute costs started getting taken seriously. Watson and other products got smeared into kafkaesque arbitrary branding for other product suites, and they were nearly all painful garbage - mobile device management standing out as a particularly grotesque system to use. Now, IBM lacks any legitimate competitive edge in any of the bajillion markets they tried to target, no credibility in any of their former flagship domains, and nearly every one of their products is hot garbage that costs too much, often by orders of magnitude, compared to similar functionality you can get from things like open source or even free software offered and serviced by other companies. They blew a ton of money on HPC before there was any legitimate reason to do so. Watson on Jeopardy was probably the last legitimately impressive thing they did, and all of their tech and expertise has been outclassed since.
- kenjackson 11mo agoI don't understand the math about how we compute $80b for a gigawatt datacenter. What's the costs in that $80b? I literally don't understand how to get to that number -- I'm not questioning its validity. What percent is power consumption, versus land cost, versus building and infrastructure, versus GPU, versus people, etc...
- wmf 11mo agohttps://www.investing.com/news/stock-market-news/how-much-does-a-gw-of-data-center-capacity-actually-cost-4314046 https://www.investing.com/news/stock-market-news/how-much-do...
- kenjackson 11mo agoThanks. I should've read this before my last reply.
- georgeecollins 11mo agoFirst, I think it's $80b per 100 GW datacenter. The way you figure that out is a GPU costs $x and consumes y power. The $x is pretty well known, for example an H100 costs $25-30k and uses 350-700 watts (that's from Gemini and I didn't check my work). You add an infrastructure (i) cost to the GPU cost, but that should be pretty small, like 10% or less. So a 1 gigawatt data center uses n chips, where yn = 1 GW. It costs = xi*n. I am not an expert so correct me please!
- zozbot234 11mo ago1 GW is not enough, you need at least 1.21 GW before the system begins to learn at a geometric rate and reaches AGI.
- kenjackson 11mo agoThe article says, "Kirshna said that it takes about $80 billion to fill up a one-gigawatt data center." But thanks for you insight -- I used your basic idea to estimate and for 1GW it comes to about $30b just for enough GPU power to pull 1GW. And of course that doesn't take into account any other costs. So $80b for a GW datacenter seems high, but it's within a small constant factor. That said, power seems like a weird metric to use. Although I don't know what sort of metric makes sense for AI (e.g., a flops counterpart for AI workloads). I'd expect efficiency to get better and GPU cost to go down over time (???). UPDATE: Below someone posted an article breaking down the costs. In that article they note that GPUs are about 39% of the cost. Using what I independently computed to be $30b -- at 39% of total costs, my estimate is $77b per GW -- remarkably close to the CEO of IBM. I guess he may know what he's talking about. :-)
- wmf 11mo ago$8T may be too big of an estimate. Sure you can take OpenAI's $1.4T and multiply it by N but the other labs do not spend as much as OpenAI.
- bluGill 11mo agoThis is likely correct overall, but it can still pay off in specific cases. However those are not blind investments they are targeted with a planned business model
- bluGill 11mo agoI question depreciation. those gpu's will be obsolete in 5 years, but will the newer be enough better as to be worth replacing them is an open question. cpu's stopped getting exponetially faster 20 years ago, (they are faster but not the jumps the 1990s got)
- rlpb 11mo ago> those gpu's will be obsolete in 5 years, but will the newer be enough better as to be worth replacing them is an open question Doesn't one follow from the other? If newer GPUs aren't worth an upgrade, then surely the old ones aren't obsolete by definition.
- carlCarlCarlCar 11mo agoMTBF for data center hardware is short; DCs breeze through GPUs compared to even the hardest of hardcore gamers. And there is the whole FOMO effect to business purchases; decision makers will worry their models won't be as fast. Obsolete doesn't mean the reductive notion you have in mind, where theoretically it can still push pixels. Physics will burn them up, and "line go up" will drive demand to replace them.
- zozbot234 11mo agoSource? Anecdotally, GPUs sourced from cryptomining were absolutely fine MTBF-wise. Zero apparent issues of wear-and-tear or any shortened lifecycle.
- dghlsakjg 11mo agoMy bellybutton fluff, uninformed opinion is that heat cycling and effective cooling are probably a much more limiting factor. If you are running a gpu at 60C for months at a time, but never idling it (crypto use case), I would actually hazard a guess that it is better than cycling it with intermittent workloads due to thermal expansion. That of course presupposes effective, consistent cooling.
- 10mo ago
- qwertyuiop_ 11mo agoThe question no one seems to be answering is what would be the EOL for these newer GPUs that are being churned out of NVDIA ? What % annual capital expenditures is refresh of GPUs. Will they be perpetually replaced as NVIDIA comes up with newer architectures and the AI companies chase the proverbial lure ?
- scotty79 11mo agoI think the key to replacing is power efficiency. If Nvidia is not able to make GPUs that are cheaper to run than previous generation theres no point for replacing previous generation. Time doesn't matter.
- parapatelsukh 11mo agoThe spending will be more than paid off since the taxpayer is the lender of last resort There's too many funny names in the investors / creditors a lot of mountains in germany and similar ya know
- myaccountonhn 11mo ago> In an October letter to the White House's Office of Science and Technology Policy, OpenAI CEO Sam Altman recommended that the US add 100 gigawatts in energy capacity every year. > Krishna also referenced the depreciation of the AI chips inside data centers as another factor: "You've got to use it all in five years because at that point, you've got to throw it away and refill it," he said. And people think the climate concerns of AI are overblown. Currently US has ~1300 GW of energy capacity. That's a huge increase each year.
- coliveira 11mo agoScam Altman wants the US to build a lot of energy plants so that the country will pay the costs and OpenAI will have the profits of using this cheap energy.
- jamesbelchamber 11mo agoIf we moron our way to large-scale nuclear and renewable energy rollout however..
- mywittyname 11mo agoI highly doubt this will happen. It will be natural gas all the way, maybe some coal as energy prices will finally make it profitable again.
- emodendroket 11mo agoIf for no other reason than they're actively attacking renewable capacity even amid surging demand
- mrguyorama 11mo agoThis admin has already killed as much solar and wind and battery as it can. The only large scale rollout will be payment platforms that will allow you to split your energy costs into "Five easy payments"
- tehjoker 11mo ago
- Octoth0rpe 11mo ago> Krishna also referenced the depreciation of the AI chips inside data centers as another factor: "You've got to use it all in five years because at that point, you've got to throw it away and refill it," he said This doesn't seem correct to me, or at least is built on several shaky assumptions. One would have to 'refill' your hardware if: - AI accelerator cards all start dying around the 5 year mark, which is possible given the heat density/cooling needs, but doesn't seem all that likely. - Technology advances such that only the absolute newest cards can be used to run _any_ model profitably, which only seems likely if we see some pretty radical advances in efficiency. Otherwise, it seems like assuming your hardware is stable after 5 years of burn in, you could continue to run older models on that hardware at only the cost of the floorspace/power. Maybe you need new cards for new models for some reason (maybe a new fp format that only new cards support? some magic amount of ram? etc), but it seems like there may be room for revenue via older/less capable models at a discounted rate.
- mcculley 11mo agoBut if your competitor is running newer chips that consume less power per operation, aren't you forced to upgrade as well and dispose of the old hardware?
- Octoth0rpe 11mo agoSure, assuming the power cost reduction or capability increase justifies the expenditure. It's not clear that that will be the case. That's one of the shaky assumptions I'm referring to. It may be that the 2030 nvidia accelerators will save you $2000 in electricity per month per rack, and you can upgrade the whole rack for the low, low price of $800,000! That may not be worth it at all. If it saves you $200k/per rack or unlocks some additional capability that a 2025 accelerator is incapable of and customers are willing to pay for, then that's a different story. There are a ton of assumptions in these scenarios, and his logic doesn't seem to justify the confidence level.
- trollbridge 11mo agoA typical data centre is $2,500 per year per kW load (including overhead, hvac and so on). If it costs $800,000 to replace the whole rack, then that would pay off in a year if it reduces 320 kW of consumption. Back when we ran servers, we wouldn't assume 100% utilisation but AI workloads do do that; normal server loads would be 10kW per rack and AI is closer to 100. So yeah, it's not hard to imagine power savings of 3.2 racks being worth it.
- maxglute 11mo agoHow long can ai gpus stretch? Optmistic 10 years and we're still looking at 400b+ profit to cover interests. The factor in silicon is closer to tulips than rail or fiber in terms of depreciated assets.
- criddell 11mo ago> But AGI will require "more technologies than the current LLM path," Krisha said. He proposed fusing hard knowledge with LLMs as a possible future path. And then what? These always read a little like the underpants gnomes business model (1. Collect underpants, 2. ???, 3. Profit). It seems to me that the AGI business models require one company has exclusive access to an AGI model. The reality is that it will likely spread rapidly and broadly. If AGI is everywhere, what's step 2? It seems like everything AGI generated will have a value of near zero.
- irilesscent 11mo agoAGI has value in automation and optimisation which increase profit margins.When AGI is everywhere, then the game is who has the smartest agi, who can offer it cheapest, who can specialise it for my niche etc. Also in this context agi need to run somewhere and IBM stands to benefit from running other peoples models.
- maplethorpe 11mo ago> then the game is who has the smartest agi, who can offer it cheapest, who can specialise it for my niche etc. I always thought the use case for developing AGI was "if it wants to help us, it will invent solutions to all of our problems". But it sounds like you're imagining a future in which companies like Google and OpenAI each have their own AGI, which they somehow enslave and offer to us as a subscription? Or has the definition of AGI shifted?
- marcosdumay 11mo agoAGI is something that can do the kind of tasks people can do, not necessarily "solve all of our problems". "Recursively improving intelligence" is the stuff that will solve everything humans can't even understand and may kill everybody or keep us as pets. (And, of course, it qualifies as AGI too.) A lot of people say that if we teach an AGI how to build an AGI, recursive improvement comes automatically, but in reality nobody even knows if intelligence even can be improved beyond recognition, or if one can get there by "small steps" evolution. Either way, "enslaving" applies to beings that have egos and selfish goals. None of those are a given for any kind of AI.
- scroot 11mo agoAs an elder millennial, I just don't know what to say. That a once in a generation allocation of capital should go towards...whatever this all will be, is certainly tragic given current state of the world and its problems. Can't help but see it as the latest in a lifelong series of baffling high stakes decisions of dubious social benefit that have necessarily global consequences.
- PrairieFire 11mo agoagree the capital could be put to better use, however I believe the alternative is this capital wouldn't have otherwise been put to work in ways that allow it to leak to the populace at large. for some of the big investors in AI infrastructure, this is cash that was previously and likely would have otherwise been put toward stock buybacks. for many of the big investors pumping cash in, these are funds deploying the wealth of the mega rich, that again, otherwise would have been deployed in other ways that wouldn't leach down to the many that are yielding it via this AI infrastructure boom (datacenter materials, land acquisition, energy infrastructure, building trades, etc, etc)
- amanaplanacanal 11mo agoIt could have, though. Higher taxes on the rich, spend it on social programs.
- ayaros 11mo agoWhy is this so horrible. Put more resources in the hands of the average person. They will get pumped right back into the economy. If people have money to spend, they can buy more things, including goods and services from gigantic tax-dodging mega-corporations. Gigantic mega-corporations do enjoy increased growth and higher sales, don't they? Or am I mistaken?
- thmsths 11mo agoBecause the entire western culture has shifted to instant gratification. Yes, what you suggest would most likely lead to increased business eventually. But they want better number this quarter, so they resort to the cheap tricks like financial engineering/layoffs to get an immediate boost.
- ic_fly2 11mo agoIBM might not have a data strategy or AI plan but he isn’t wrong on the inability to generate a profit. A bit of napkin math: NVIDIA claims 0.4J per token for their latest generation 1GW plant with 80% utilisation can therefore produce 6.29 10^16 tokens a year. There are ~10^14 tokens on the internet. ~10^19 tokens have been spoken by humans… so far.
- lostmsu 11mo ago> ~10^14 tokens on the internet Does that include image tokens? My bet is with image tokens you are off by at least 5 orders of magnitude for both.
- scotty79 11mo agoImages are not that big. Each text token is a multidimensional vector. There were recent observations that rendering the text as an image and ingesting the image might actually be more efficient than using text embedding.
- senordevnyc 11mo agoI must be dense, why does this imply AI can't be profitable?
- mywittyname 11mo agoTokens are, roughly speaking, how you pay for AI. So you can approximate revenue by multiplying tokens per year by the revenue for a token. (6.29 10^16 tokens a year) * ($10 per 10^6 tokens) = $6.29 10^11 = $629,000,000,000 per year in revenue Per the article > "It's my view that there's no way you're going to get a return on that, because $8 trillion of capex means you need roughly $800 billion of profit just to pay for the interest," he said. $629 billion is less than $800 billion. And we are talking raw revenue (not profit). So we are already in the red. But it gets worse, that $10 per million tokens costs is for GPT-5.1, which is one of the most expensive models. And the costs don't account for input tokens, which are usually a tenth of the costs of output tokens. And using bulk API instead of the regular one halves costs again. Realistic revenue projections for a data center are closer to sub $1 per million tokens, $70-150 billion per year. And this is revenue only. To make profits at current prices, the chips need to increase in performance by some factor, and power costs need to fall by another factor. The combination of these factors need to be, at minimum, like 5x, but realistically need to be 50x.
- skeeter2020 11mo agoThe interesting macro view on what's happening is to compare a mature data center operation (specifically a commoditized one) with the utility business. The margins here, and in similar industries with big infra build-out costs (ex: rail) are quite small. Historically the businesses have not done well; I can't really imagine what happens when tech companies who've only ever known huge, juicy margins experience low single digit returns on billions of investment.
- milesvp 11mo agoWorse, is that a lot of these people are acting like Moore's law isn't still in effect. People conflate clock speeds on beefy hardware with moore's law, and act like it's dead, when transistor density rises, and cost per transistor continue to fall at rates similar to what they always have. That means the people racing to build out infrastructure today might just be better off parking that money in a low interest account, and waiting 6 months. That was a valid strategy for animation studios in the late 90s (it was not only cheaper to wait, but also the finished renders happened sooner), and I'd be surprised if it's not a valid strategy today for LLMs. The amount of silicon that is going to be produced that is specialized for this type of processing is going to be mind boggling.
- throwaway31131 11mo agoCost per transistor is increasing. or flat, if you stay on a legacy node. They pretty much squeezed all the cost out of 28nm that can be had, and it’s the cheapest per transistor. “based on the graph presented by Milind Shah from Google at the industry tradeshow IEDM, the cost of 100 million transistors normalized to 28nm is actually flat or even increasing.” https://www.tomshardware.com/tech-industry/manufacturing/chips-arent-getting-cheaper-the-cost-per-transistor-stopped-dropping-a-decade-ago-at-28nm https://www.tomshardware.com/tech-industry/manufacturing/chi...
- marcosdumay 11mo agoYep. Moore's law ended at or shortly before the 28nm era. That's the main reason people stopped upgrading their PCs. And it's probably one of the main reasons everybody is hyped about Risc-V and the pi 2040. If Moore's law was still in effect, none of that would be happening. That may also be a large cause of the failure of Intel.
- eitally 11mo agoAt some point, I wonder if any of the big guys have considered becoming grid operators. The vision Google had for community fiber (Google Fiber, which mostly fizzled out due to regulatory hurdles) could be somewhat paralleled with the idea of operating a regional electrical grid.
- devmor 11mo agoI suppose it depends on your definition of "pay off". It will pay off for the people investing in it, when the US government inevitably bails them out. There is a reason Zuckerberg, Huang, etc are so keen on attending White House dinners. It certainly wont pay off for the American public.
- jmclnx 11mo agoI guess he is looking directly at IBM's cash cow, the mainframe business. But, I think he is correct, we will see. I still believe AI will not give the CEOs what they really want, no or very cheap labor.
- badmonster 11mo ago[flagged]
- ambicapter 11mo agoFiber seems way easier to get long-term value out of then GPUs, though. How many workloads today other than AI justify massive GPU deployments?
- AlexandrB 10mo agoWould be funny if all the stagnant GPUs finally brought game streaming to the mainstream.
- martinald 11mo agoI disagree on that and covered a lot of it in this blog (sorry for the plug!) https://martinalderson.com/posts/are-we-really-repeating-the-telecoms-crash-with-ai-datacenters/ https://martinalderson.com/posts/are-we-really-repeating-the...
- htk 11mo agoGreat article, thank you for writing and sharing it!
- skippyboxedhero 11mo ago100% of technical innovations have had the same pattern. The same thing happens every time because this is the only way the system can work: excess is required because there is some uncertainty, lots of companies are designing strategies to fill this gap, and if this gap didn't exist then there would be no investment (as happens in Europe). Also, demand wasn't over-estimated in the 2000s. This is all ex-post reasoning you use data from 2002 to say...well, this ended up being wrong. Companies were perfectly aware that no-one was using this stuff...do you think that telecoms companies in all these countries just had no idea who was using their products? This is the kind of thing you see journalists write after the event to attribute some kind of rationality and meaning, it isn't that complicated. There was uncertainty about how things would shake out, if companies ended up not participating then CEOs would lose their job and someone else would do it. Telecoms companies who missed out on the boom bought shares in other telecom's companies because there was no other way to stay ahead of the news and announce that they were doing things. This financial cycle also worked in reverse twenty years later too: in some countries, telecoms companies were so scarred that they refused to participate in building out fibre networks so lost share and then ended up doing more irrational things. Again, there was uncertainty here: incumbents couldn't raise from shareholders who they bankrupted in fiber 15 years ago, they were 100% aware that demand was outstripping supply, and this created opportunities for competitors. Rationality and logic run up against the hard constraints of needing to maintain a dividend yield and the exec's share options packages. Humans do not change, markets do not change, it is the same every time. What people are really interested in is the timing but no-one knows that either (again, that is why the massive cycle of irrationality happens)...but that won't change the outcome. There is no calculation you can make to know more, particularly as in the short-term companies are able to control their financial results. It will end the same way it ended every time before, who knows when but it always ends the same way...humans are still human.
- Animats 11mo agoHow much has actually been spent on AI data centers vs. amounts committed or talked about? That is, if construction slows down sharply, what's total spend?
- mbreese 11mo agoI would add an addendum to this -- there is no way the announced spending on AI data centers will all come to fruition. I have no doubt that there will be a massive build-out of infrastructure, but it can't reach the levels that have been announced. The power requirements alone will stop that from happening.
- arisAlexis 11mo ago[flagged]
- beeflet 10mo agome very smart. me go college get fancy paper. me move money out of ai stocks. flat rocks not think so well, use too much fire. me trade for shiny yellow rock instead.
- mbreese 11mo agoI believe there is a difference between what people say publicly and what they are actually committed to doing on the ground. When all is said and done, I'll be more interested to know what was actually spent. For example, XYZ AI company may say they are going to spend $1T for AI data centers over the next 5 years. In actuality, I suspect it is likely that they have committed to something like $5-10B in shovel-ready projects with stretch goals for the rest. And the remaining spend would be heavily conditioned -- is power available? are chips available? is the public support present? financing? etc... Not to mention, it's a much bigger moat if you can claim you're going to spend $1T. Who else will want to compete with you when you're spending $1T. After the dust has settled and you've managed to be one of the 2-3 dominant AI players, who is going to care that you "only" spent $100B instead of $1T. Look -- you were very capital efficient! So, do I see it as possible that XYZ AI company could spend $1T, sure. Is it likely? No.
- asadotzler 11mo agoWhat qualifies you to question this?
- skywhopper 11mo ago
- oxqbldpxo 11mo agoFB playbook. Act (spend) then say sorry.
- nashashmi 11mo agoDon’t worry. The same servers will be used for other computing purposes. And maybe that will be profitable. Maybe it will be beneficial to others. But This cycle of investment and loss is a version of distribution of wealth. Some benefit. The banks and loaners always benefit.
- coliveira 11mo agoThat would be true for general purpose servers. But what they want is lots of special purpose AI chips. While is still possible to use that for something else, it's very different from having a generic server farm.
- danans 11mo agoLAN party at the end of the universe?
- scotty79 11mo agoI can't imagine everybody suddenly leaving AI like a broken toy and taking all special purpose AI chips offline. AI serves millions of people every day. It's here to stay even if it doesn't get any better than it is it already brings immense value to the users. It will keep being worth something.
- coliveira 10mo agoYes, it will be worth something. But when the value is less than its cost, you have a loss - and nobody runs a service at a loss.
- Ekaros 11mo agoHow much of Nvidias price is based on 5 year replacement cycle? If that stops or slows with new demand could it also affect things? Not that 5 years does not seem very long horizon now.
- pjdesno 11mo ago> $8 trillion of CapEx means you need roughly $800 billion of profit just to pay for the interest That assumes you can just sit back and gather those returns indefinitely. But half of that capital expenditure will be spent on equipment that depreciates in 5 years, so you're jumping on a treadmill that sucks up $800M/yr before you pay a dime of interest.
- mattbrewsbytes 11mo agoThere is something to be said about what the ROI is for normal (i.e. non AI/tech) companies using AI. AI can help automate things, robots have been replacing manufacturing jobs for decades but there is an ROI on that which I think is easier to see and count, less humans in the factory, etc. There seems to be a lot of exaggerated things being said these days with AI and the AI companies have only begun to raise rates, they won't go down. The AI bubble will burst when normal companies start to not realize their revenue/profit goals and have to answer investor relations calls about that.
- ninjaa 11mo agoWhat does Jim Cramer have to say?
- 1vuio0pswjnm7 11mo agoOne thing we saw with the dot-com bust is how certain individuals were able to cash in on the failures, e.g., low cost hardware, domain names, etc. (NB. prices may exceed $2) Perhaps people are already thinking about they can cash in on the floor space and HVAC systems that will be left in the wake of failed "AI" hype
- blibble 11mo agoI'm looking forward to buying my own slightly used 5 million square ft data centre in Texas for $1
- WhyOhWhyQ 11mo agoYou're out of luck because I am willing to pay at least $2.
- blibble 11mo agothey'll be plenty for everyone!
- jsheard 11mo agoTired: homelabbers bringing decommissioned datacenter gear home. Wired: homelabbers moving into decommissioned datacenters.
- reverius42 11mo agoMore of a labhome than a homelab at that point.
- spacecadet 11mo agoColo!
- phantasmish 11mo agoYOLO Co-Lo Casa House
- sombragris 11mo ago"yeah, there's no way spending in those data centers will pay off. However, let me show you this little trinket which runs z/OS and which is exactly what you need for these kinds of workloads. You can subscribe to it for the low introductory price of..."
- pharos92 11mo agoI find it disturbing how long people wait to accept basic truths, as if they need permission to think or believe a particular outcome will occur. It was quite obvious that AI was hype from the get-go. An expensive solution looking for a problem. The cost of hardware. The impact on hardware and supply chains. The impact to electricity prices and the need to scale up grid and generation capacity. The overall cost to society and impact on the economy. And that's without considering the basic philosophical questions "what is cognition?" and "do we understand the preconditions for it?" All I know is that the consumer and general voting population loose no matter the outcome. The oligarchs, banking, government and tech-lords will be protected. We will pay the price whether it succeeds or fails. My personal experience of AI has been poor. Hallucinations, huge inconsistencies in results. If your day job exists within an arbitrary non-productive linguistic domain, great tool. Image and video generation? Meh. Statistical and data-set analysis. Average.
- wordpad 11mo agoJust like .com bust from companies going online, there is hype, but there is also real value. Even slow non-tech legacy industry companies are deploying chatbots across every department - HR, operations, IT, customer support. All leadership are already planning to cut 50 - 90% of staff from most departments over next decade. It matters, because these initiatives are receiving internal funding which will precipitate out to AI companies to deploy this tech and to scale it.
- SchemaLoad 11mo agoThe "legacy" industry companies are not immune from hype. Some of those AI initiatives will provide some value, but most of them seem like complete flops. Trying to deploy a solution without an idea of what the problem or product is yet.
- wordpad 10mo agoRight, but this is consumer side hype. Even if AI is vaporware is mostly hype and little value, it will take a while to hype to fizzle out and by then AI might start deliver on its promise. They got a long runway.
- bmadduma 11mo agoNo wonder why he is saying that, they lost AI game, no top researcher wants to work for IBM. Spent years developing Watson, it is dead. I believe this is a company that should not be existed.
- BearOso 11mo agoMaybe it's the opposite. IBM spent years on the technology. Watson used neural networks, just not nearly as large. Perhaps they foresaw that it wouldn't scale or that it would plateau.
- stevenjgarner 11mo ago"It is 1958. IBM passes up the chance to buy a young, fledgling company that has invented a new technology called xerography. Two years later, Xerox is born, and IBM has been kicking themselves ever since. It is ten years later, the late '60s. Digital Equipment DEC and others invent the minicomputer. IBM dismisses the minicomputer as too small to do serious computing and, therefore, unimportant to their business. DEC grows to become a multi-hundred-million dollar corporation before IBM finally enters the minicomputer market. It is now ten years later, the late '70s. In 1977, Apple, a young fledgling company on the West Coast, invents the Apple II, the first personal computer as we know it today. IBM dismisses the personal computer as too small to do serious computing and unimportant to their business." - Steve Jobs [1][2][3] Now, "IBM CEO says there is 'no way' spending on AI data centers will pay off". IBM has not exactly had a stellar record at identifying the future. [1] https://speakola.com/ideas/steve-jobs-1984-ad-launch-1983 https://speakola.com/ideas/steve-jobs-1984-ad-launch-1983 [2] https://archive.org/details/1983-10-22-steve-jobs-keynote https://archive.org/details/1983-10-22-steve-jobs-keynote [3] https://theinventors.org/library/inventors/blxerox.htm https://theinventors.org/library/inventors/blxerox.htm
- rchaud 11mo agoGot anything vis-a-vis the message as opposed to the messenger? I'm not sure these examples are even the gotchas you're positing them as. Xerox is a dinosaur that was last relevant at the turn of the century, and IBM is a $300bn company. And if it wasn't obvious, the Apple II never made a dent in the corporate market, while IBM and later Windows PCs did. In any case, these examples are almost half a century old and don't relate to capex ROI, which was the topic of dicussion.
- stevenjgarner 11mo agoIf it's not obvious, Steve's quote is ENTIRELY about capex ROI, and I feel his quote is more relevant to what is happening today than anything Arvind Krishna is imagining. The quote is posted in my comment not to grandstand Apple in any sense, but to grandstand just how consistently wrong IBM has been about so many opportunities that they have failed to read correctly - reprography, mini computers and microcomputers being just three. Yes it is about ROI: "IBM enters the personal computer market in November ’81 with the IBM PC. 1983 Apple and IBM emerged as the industry’s strongest competitors each selling approximately one billion dollars worth of personal computers in 1983, each will invest greater than fifty million dollars for R&D and another fifty million dollars for television advertising in 1984 totaling almost one quarter of a billion dollars combined, the shakeout is in full swing. The first major firm goes bankrupt with others teetering on the brink, total industry losses for 83 out shadow even the combined profits of Apple and IBM for personal computers."
- zeckalpha 11mo agoReminds me of all the dark fiber laid in the 1990s before DWDM made much of the laid fiber redundant. If there is an AI bust, we will have a glut of surplus hardware.
- dangus 11mo agoThe problem is that the laid fiber can be useful for years while data center hardware degrades and becomes obsolete fast. It could be a massive e-waste crisis.
- SchemaLoad 11mo agoThose GPUs don't just die after 2 years though, they will keep getting used since it's very likely their electricity costs will be low enough to still make it worth it. What's very dubious is if their value after 2/3 years will be enough to pay back the initial cost to buy them. So it's more a crisis of investors wasting their money rather than ewaste.
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- oofbey 11mo agoFor the analogy to fiber & DWDM to hold, we'd need some algorithmic breakthrough that makes current GPUs much faster / more efficient at running AI models. Something that makes the existing investment in hardware unneeded, even though the projected demand is real and continues to grow. IMNSHO that's not going to happen here. The foreseeable efficiency innovations are generally around reduced precision, which almost always require newer hardware to take advantage of. Impossible to rule out brilliant innovation, but I doubt it will happen like that. And of course we might see an economic bubble burst for other reasons. That's possible again even if the demand continues to go up.
- zeckalpha 10mo agoI think there are still innovations at that layer like the Addition is All You Need paper.
- mathattack 11mo agoInteresting to hear this from IBM, especially after years of shilling Watson and moving from being a growth business to the technology audit and share buyback model.
- prodigycorp 11mo agoalso because the market (correctly) rewards ibm for nothing, so if they’re going to sit around twiddling their fingers, they may as well do it in a capex-lite way.
- roncesvalles 10mo agoI'm still flumoxed by how IBM stock went from ~$130 to $300 in the last few years for essentially no change in their fundamentals (in fact, a decline). IBM's stock price to me is the single most alarming sign of either extreme shadow inflation, or an equities bubble. Why do you say the market correctly prices it this way?
- itake 11mo agoimho, IBM's quant computing says they are still hungry for growth. Apple and google still do share buy backs and dividends, despite launching new businesses https://www.ibm.com/roadmaps/ https://www.ibm.com/roadmaps/
- mathattack 10mo ago
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- 1970-01-01 11mo agoThere's really 3 fears going on: 1. The devil you know (bubble) 2. The devil you don't (AI global revolution) 3. Fear of missing out on devil #2 I don't think IBM knows anything special. It's just more noise about fear1 & fear3.
- getnormality 11mo agoA decade ago, IBM was spending enormous amounts of money to tell me stuff like "cognitive finance is here" in big screen-hogging ads on nytimes.com. They were advertising Watson, vaporware which no one talks about today. Are they bitter that someone else has actually made the AI hype take off?
- ghaff 11mo agoInitial Watson was sort of a mess. But a lot of the Watson-related tech is integrated into a lot of products these days.
- mikalauskas 11mo agoWhat related tech and what products, interesting to read about them
- ghaff 11mo agoBaked into a lot a Red Hat products including Ansible and RHEL. Not that directly involved any longer. Probably read up on watsonx.ai.
- hn_throwaway_99 11mo agoSuch as? I'm curious because I know a bunch of people who did a lot of Watson-related work and it was all a dead end, but that was 2020-ish timeframe.
- ghaff 11mo agoIBM did a lot of pretty fragmented and often PR-adjacent work. And getting into some industry-specific (e.g. healthcare) things that didn't really work out. But my understanding is that it's better standardized and embedded in products these days.
- hn_throwaway_99 10mo ago
- matt-p 11mo agoUnless we get AGI.
- BoorishBears 11mo agoConsumer will eat it all. AI is very good at engaging content, and getting better by the day: it won't be the AGI we wanted, but maybe the AGI we've earned
- rmoriz 11mo agoThe second buyer will make truckloads of money, remember the data center and fiber network liquidation of 2001+ - smart investors collected the overcapacity and after a couple of years the money printer worked. This time it will be the same, only the single purpose hardware (LLM specific GPUs) will probably end on a landfill.
- singpolyma3 11mo agoAre they LLM specific?
- rmoriz 10mo agoDeep down technically probably not, but they are optimized for this workload and business model. I doubt that once the AI bubble busts, another business model is viable. While datacenters can be downsized or partially shut down until demand picks up again, high end hardware is just losing money by the second.
- nialse 11mo agoThe game is getting OpenAI to owe you as much money as you can. When they fail to pay back, you own OpenAI.
- rmoriz 10mo agoYou are talking about the circular investments in the segment? Yes, but assume NVIDIA can get cheap access to IP and products of failing AI unicorns through contracts, this does not mean the LLM business can be operated profitably by them. Models are like fresh food, they start to rot by the training cut off date and lose value. The process of re-training a model will always be very expensive.
- djdjsjejb 11mo agothats like boeing telling us we shouldnt build rockets
- bytesandbits 11mo agoMind you IBM makes +7B from keeping old school enterprise hooked up on 30 plus year old tech like z/OS and Cobol and their own super outdated stack. their AI division is frankly embarrassing. of course they would say that. IBM is one of the most conservative, anti-progress leaches in the entire tech industry. I am glad they are missing out big time on the AI gold rush. to me if anything this is a green signal.
- zobzu 11mo agoAlso IBM: we are fully out of the AI race, btw. Also IBM: we're just an offshoring company now anyway. So yeah.
- SamDc73 11mo agoComing from the company that missed on consumer hardware, operating systems, and cloud. He might be right but IBM isn't where I’d look for guidance on what will pay off.
- m3kw9 11mo agoSays the guy missing out on it
- boxedemp 10mo agoNobody really knows the future. What were originally consumer graphics expansion cards turned out useful in delivering more compute than traditional CPUs. Now that compute is being used for transformers and machine learning, but we really don't know what it'll be used for in 10 years. It might all be for naught, or maybe transformers will become more useful, or maybe something else. 'no way' is very absolute. Unlikely, perhaps.
- cheema33 10mo ago> What were originally consumer graphics expansion cards turned out useful in delivering more compute than traditional CPUs. Graphics cards were relatively inexpensive. When one got old, you tossed it out and move on to the new hotness. Here when you have spent $1 trillion on AI graphics cards and a new hotness comes around that renders your current hardware obsolete, what do you do? Either people are failing to do simple math here or are expecting, nay hoping, that trillions of $$$ in value can be extracted out of the current hardware, before the new hotness comes along. This would be a bad bet even if the likes of OpenAI were actually making money today. It is an exceptionally bad bet when they are losing money on everything they sell, by a lot. And the state of competition is such that they cannot raise prices. Nobody has a real moat. AI has become a commodity. And competition is only getting stronger with each passing day.
- randomNumber7 10mo agoYou can likely still play the hottest games with the best graphics on an H200 in 5 years.
- cmrdporcupine 10mo agoThe investors in these companies and all this infrastructure are not so much concerned with whether any specific companies pays off with profits, necessarily. They are gambling instead that these investments pay out it in a different way: by shattering high labour costs for intellectual labour and de-skilling our profession (and others like it) -- "proletarianising" in the 19th century sense. Thereby increasing profits across the whole sector and breaking the bargaining power (and outsized political power, as well) of upper middle class technology workers. Put another way this is an economy wide investment in a manner similar to early 20th century mass factory industrialization. It's not expected that today's big investments are tomorrow's winners, but nobody wants to be left behind in the transformation, and lots of political and economic power is highly interested in the idea of automating away the remnants of the Alvin Toffler "Information Economy" fantasy.
- RobRivera 10mo agoWhat kind of reporte does the CEO of IBM expect the general technology workforce to hold for them?
- winddude 10mo ago8T is the high-end of the McKinsey estimate that is 4-8T, by 20230. That includes non-AI data-centre IT, AI data-centre, and power infrastructure build out, also including real estate for data centres. Not all of it would be debt. Google, Meta, Microsoft and AWS have massive profit to fund their build outs. Power infrastructure will be funded by govts and tax dollars.
- oblio 10mo agoThere is mounting evidence that even places like Meta are increasing their leverage (debt load) to fund this scale out. They're also starting to do accounting tricks like longer depreciation for assets which degrade quickly, such as GPUs (all the big clouds increasing their hardware depreciation from 2-3-4 years to 6), which makes their financial numbers look better but might not mean that all that hardware is still usable at production levels 6 years from now. They're all starting to strain under all this AI pressure, even with their mega profits.
- winddude 10mo agoI've read / hear the cloud providers like AWS started extending amortization periods in 2020ish
- BenFranklin100 10mo agoA lot of you guys in the AI industry are going to lose your jobs. LLM and prompt ‘engineering’ experts won’t be able to score an AI job paying as well as a barista.
- westurner 10mo agoCtrl-F this thread for terms like: cost, margin Is transistor density cost still the limit? Cost model, Pricing model What about more recyclable chips made out of carbon? What else would solve for e.g. energy efficiency, thermal inefficiency, depreciation, and ewaste costs?
- Archelaos 10mo agoGartner estimates that worldwide AI spending will total 1.5 Trillion US$ in 2025.[1] As of 2024, global GDP per year is 111.25 Trillion US$.[2] The question is how much this can be increased by AI. This describes the market volumn for AI. Todays investments have a certain lifespan, until they become obsolet. For custom software I would estiamte that it is 6-8 years. AI investments should be somewhere in this range. Taking all this into consideration, the investment volumn does not look oversized to me -- unless one is quite pessimistic about the impact of AI on global GDP. [1] https://www.gartner.com/en/newsroom/press-releases/2025-09-17-gartner-says-worldwide-ai-spending-will-total-1-point-5-trillion-in-2025 https://www.gartner.com/en/newsroom/press-releases/2025-09-1... [2] https://data.worldbank.org/indicator/NY.GDP.MKTP.CD https://data.worldbank.org/indicator/NY.GDP.MKTP.CD
- i000 10mo agoWhat makes you think that this 'surplus' GDP will be captured by those who do the investments?
- mh8h 10mo agoexcept that a big chunk of the AI investments is going into buying GPUs that go obsolete much earlier than the 6-8 year time frame.
- andruby 10mo agoTo increase the GDP you also need people to spend money. With the general population earning relatively less, I'm not sure the GDP increase will be that substantial. It's all going to cause more inflation and associated reduction in purchasing power due to stale wages.
- ojr 10mo agoAs long as the dollar remains the reserve currency of the world and US retains its hegemony, a lot of the finances will work itself out, the only threat to the US empire crumbling is by losing a major war or extreme civil unrest and that threat is astronomically low. The US is orders of magnitude stronger than the Roman Empire, I don't think people realize the scale or control.
- rootnod3 10mo agoFamous last words of empires. I doubt that if current situations continue that the US will in any sense be still thought of as the reserve currency.
- deleted 10mo ago[deleted]
- 7222aafdcf68cfe 10mo agoGradually, then suddenly. Best not to underestimate the extent to which the USA has lost trust in the rest of the world, and how actively people and organisations are working to derisk by disengaging. Of course that will neither be easy nor particularly fast, but I'm not certain it can be stopped at this point.
- LunaSea 10mo agoYou should look at the depreciation of the value of the dollar this year.
- randomNumber7 10mo agoPride comes before a fall.
- dragonwriter 10mo ago> The US is orders of magnitude stronger than the Roman Empire This would be trivially true even if the US was currently in its death throes (which there is plenty of evidence that the US-as-empire might be, even if the US-as-polity is not), as the Roman Empire fell quite a while ago.
- nnurmanov 10mo agoI agree. Here is my thinking. What if LLM providers will make short answers the default (for example, up to 200 tokens, unless the user explicitly enables “verbose mode”). Add prompt caching and route simple queries to smaller models. Result: a 70%+ reduction in energy consumption without loss of quality. Current cost: 3–5 Wh per request. At ChatGPT scale, this is $50–100 million per year in electricity (at U.S. rates). In short mode: 0.3–0.5 Wh per request. That is $5–10 million per year — savings of up to 90%, or 10–15 TWh globally with mass adoption. This is equivalent to the power supply of an entire country — without the risk of blackouts. This is not rocket science — just a toggle in the interface and I believe, minor changes in the system prompt. It increases margins, reduces emissions, and frees up network resources for real innovation. And what if EU/California enforces such mode? This will greatly impact DC economy.
- cryptophreak 10mo agoCan you explain why a low-hanging optimization that would reduce costs by 90% without reducing perceived value hasn't been implemented?
- lmm 10mo ago> Can you explain why a low-hanging optimization that would reduce costs by 90% without reducing perceived value hasn't been implemented? Because the industry is running on VC funny-money where there is nothing to be gained by reducing costs. (A similar feature was included in GPT-5 a couple of weeks ago actually, which probably says something about where we are in the cycle)
- balder1991 10mo agoNot sure that’s even possible with ChatGPT embedding your chat history in the prompts to try to give more personal answers.
- randomNumber7 10mo agoDunning Krueger
- nrhrjrjrjtntbt 10mo ago
- m00dy 10mo agoHe will get assasinated or fired.
- wtcactus 10mo agoThe same IBM that lost all races in the last 40 years? That IBM?
- simianwords 10mo agoIf it is so obvious that it won’t pay off, why is every company investing in it? What alpha do you have that they don’t?
- jacquesm 10mo agoThat's a good question. During the .com boom everybody was investing in 'the internet' or at least in 'the web'. And lots of those companies went bust, quite a few spectacularly so. Since then everything that was promised and a lot more has been realized. Even so, a lot of those initial schemes were harebrained at best at the time and there is a fair chance that we will look in a similar way at the current AI offerings in 30 years time. Short term is always disappointing, long term usually overperforms. Think back to the first person making a working transistor and what came of that.
- simianwords 10mo agoI still don’t get it. What at a personal level is making Sam Altman make a suboptimal choice for himself if it is so obvious it won’t work out for him?
- jacquesm 10mo agoOn a personal level it will work out for him just fine. All he has to do is siphon off a fraction of that money to himself and/or an entity that he controls. He's like Elon Musk in that respect: always doubling the bet on the next round, it is a real life Martingale these guys are playing with society on the hook for the downside. https://en.wikipedia.org/wiki/Martingale_(betting_system) https://en.wikipedia.org/wiki/Martingale_(betting_system)
- simianwords 10mo agoHow would he siphon off? He has no stake in OpenAI. And any other stake must be public. Or are you suggesting something more shady? Elon is the complete opposite of martingale. He has helped produce value beyond just bets. Spacex, Tesla and so on.
- PeterStuer 10mo agoIf AI is a highlander market, then the survivor will be able to eventually aquire all those assets on the cheap from the failing competitors that flush their debt in bankruptcy. Meanwhile, highlander hopefuls are spending other peoples money to compete. Some of them with dreams of not just building a tech empire, but to truly own the machine that will rule the world in every aspect. Investors are keen on backing the winner. They just do not know yet who it will be.
- SirHumphrey 10mo agoUntil China sees it valuable to fund open weights SOTA-ish models, even the winner might struggle. There is very little capture - protocols are mostly standard so models are mostly interchangeable and if you are trying to raise prices enough to break even on the whole operation, somebody else can probably profitably run inference cheaper.
- PeterStuer 10mo agoYou could always try to corner the hardware market so even though those open models exist, running them might get extremely costly ;)
- glaslong 10mo ago"commoditize your complements" and all that. "oh look, with open weights now everyone can run this quadrillion param 'superintelligent' model. but what's that? only we have the power capacity and cheap $/W to actually serve it? funny thing...!"
- dghf 10mo agoWhat's a highlander market, or a highlander hopeful? Google wasn't helpful.
- kowbell 10mo agoI interpreted it as "there can only be one" which I believe is a quote from the Highlander movie; it's a "winner takes all" and that winner gets the title of "highlander." In this situation then everyone who _isn't_ the winner will go broke -> sell off all their stuff on the cheap because they're desperate -> the winner gets all their hardware for a great deal and becomes even more powerful.
- Aperocky 10mo agoLLMs at current utility do not justify this spending, but the offside chance that someone will hit AGI is likely worth the expectation.
- ta9000 10mo ago“It doesn’t even have a keyboard!” energy.
- blablabla123 10mo agoDespite the flashy title that's the first "sober" analysis from a CEO I read about the technology. While not even really news, it's also worth mentioning that the energy requirements are impossible to fulfill Also now using ChatGPT intensely since months for all kinds of tasks and having tried Claude etc. None of this is on par with a human. The code snippets are straight out of Stackoverflow...
- delaminator 10mo agoYour assessment of Claude simply isn’t true. Or Stackoverflow is really good. I’m producing multiple projects per week that are weeks of work each.
- written-beyond 10mo agoI'm just as much of an avid llm code generator fan as you may be but I do wonder about the practicality of spending time making projects anymore. Why build them if other can just generate them too, where is the value of making so many projects? If the value is in who can sell it the best to people who can't generate it, isn't it just a matter of time before someone else will generate one and they may become better than you at selling it?
- jstummbillig 10mo agoThe value is that we need a lot more software and now, because building software has gotten so much less time consuming, you can sell software to people that could/would not have paid for it previously at a different price point.
- eschaton 10mo agoWe don’t need more software, we need the right software implemented better. That’s not something LLMs can possibly give us because they’re fucking pachinko machines. Here’s a hint: Nobody should ever write a CRUD app, because nobody should ever have to write a CRUD app; that’s something that can be generated fully and deterministically (i.e. by a set of locally-executable heuristics, not a goddamn ocean-boiling LLM) from a sufficiently detailed model of the data involved. In the 1970s you could wire up an OS-level forms library to your database schema and then serve literally thousands of users from a system less powerful than the CPU in modern peripheral or storage controller. And in less RAM too. People need to take a look at what was done before in order to truly have a proper degree of shame about how things are being done now.
- jstummbillig 10mo agoWell, at least it tells us something about the sentiment on hn that a lame insight around self admitted "napkin math" and obvious conflict of interest garners 400 points.
- koliber 10mo agoNOTE: People pointed out that it's $800 billion to cover interest, not $8 billion, as I wrote below. My mistake. That adds 2 more zeroes to all figures, which makes it a lot more crazy. Original comment below... $8 billion / US adult adult population of of 270 million comes out to about $3000 per adult per year. That's only to cover cost of interest, let alone other costs and profits. That sounds crazy, but let's think about it... - How much does an average American spend on a car and car-related expenses? If AI becomes as big as "cars", then this number is not as nuts. - These firms will target the global market, not US only, so number of adults is 20x, and the average required spend per adult per year becomes $150. - Let's say only about 1/3 of the world's adult population is poised to take advantage of paid tools enabled by AI. The total spend per targetable adult per year becomes closer to $500. - The $8 billion in interest is on the total investment by all AI firms. All companies will not succeed. Let's say that the one that will succeed will spend 1/4 of that. So that's $2 billion dollar per year, and roughly $125 per adult per year. - Triple that number to factor in other costs and profits and that company needs to get $500 in sales per targetable adult per year. People spend more than that on each of these: smoking, booze, cars, TV. If AI can penetrate as deep as the above things did, it's not as crazy of an investment as it looks. It's one hell of a bet though.
- writebetterc 10mo agoYou're saying $8 billion to cover interest, another commenter said 80, but the actual article says ""$8 trillion of CapEx means you need roughly $800 billion of profit just to pay for the interest". Eight HUNDRED billion. Where does the eight come from, from 90% of these companies failing to make a return? If a few AI companies survive and thrive (which tbh, sure, why not?) then we're still gonna fall face down into concrete.
- koliber 10mo agoright. My goof. That adds two more zeroes across all the math. More crazy, but I think in the realm of "maybe, if we squint hard."
- 10mo ago
- littlecranky67 10mo agoThere are so many CEOs, tech experts, financial analysts and famous investors who say we are in an AI bubble - even AI-invested companies say that about themselves. My latest favorite "We are in an AI bubble" comment comes from Linus Torvalds himself in the video with Linus from Linus Tech Tipps [0] [0]: https://www.youtube.com/watch?v=mfv0V1SxbNA&t=2063s https://www.youtube.com/watch?v=mfv0V1SxbNA&t=2063s
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- turtleyacht 10mo agoData centers house hardware, and it's a land grab for compute. What actually runs post-AI depends on its owners. A glut of processing might be spent reverse-engineering efficient heuristics versus the "magic box." A bitter summer.
- liampulles 10mo agoHypothetically speaking, if the AI hype bubble pops (or just returns to normalcy), would it be profitable to retarget the compute towards some kind of crypto mining? If so, could we expect the cryptocurrency supply to soar and the price to tank in short succession?
- kopirgan 10mo agoIts also strange that while solar systems built wait years for grid capacity, this much extra energy is being planned..
- kopirgan 10mo agoWhat's the legal status of all this AI code?! Will it be likely that someone whose code was lifted as part of "learning" can sue?!
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- weerfeegleem 10mo agoOne more data center and we will reach AGI, we promise, just give us more money.
- 6thbit 10mo ago“I think there is a world market for maybe five computers.” Let’s hope IBM keeps their streak of bad predictions.
- Kon5ole 10mo agoI think this old quote can come around to being accurate in a way, if you consider that from the user's perspective every cloud service is like one system. Aws, Azure, Google cloud...how many will there be when the dust settles? ;-)
- m101 10mo agoTo all those people that think IBM don't know anything. Calculate this number: # companies 100+ years old / # companies ever existed in 100+ years Then you will see why IBM is pretty special and probably knows what they are doing.
- mattlondon 10mo agoPretty special? They were making guns and selling computation tools to the Nazis for a bunch of those years. I think they trade now mostly on legacy maintenance contracts (e.g. for mainframes) for e.g. banks who are terrified of rocking their technology-stack-boat, and selling off-shore consultants (which is at SIGNIFICANT risk of disruption - why would you pay IBM squillions to do some contract IT work, when we have AI code agents? Probably why the CEO is out doing interviews saying you cant trust AI to be around forever) I have not really seen anything from IBM that signals they are anything other than just milking their legacy - what have they done that is new or innovative in the past say 10 or 20 years? I was a former IBMer 15 odd years ago and it was obvious then that it was a total dinosaur on a downward spiral, and a place where innovation happened somewhere else.
- LtWorf 10mo agoI don't think selling things to nazis was worse than selling things to israel today.
- mattlondon 10mo agoYep, both equally as bad and morally repugnant.
- michaelbuckbee 10mo agoIt's not going to pay off for everybody, this is a land grab for who will control this sort of central aspect of AI inference.
- fnord77 10mo ago> this is a land grab is it though? Unlike fiber, current GPUs will be obsolete in 5-10 years.
- vcryan 10mo agoOkay, that is what IBM has to say. Are there any credible opinions we should know about?
- spogbiper 10mo ago[flagged]
- filoeleven 10mo agoPlease don't pollute the comments with noise. This adds nothing to the conversation.
- tomhow 10mo agoWe detached this comment from https://news.ycombinator.com/item?id=46135548 https://news.ycombinator.com/item?id=46135548 and marked it off topic.
- mistercheph 10mo agoPlease, can we get more analysis from the geniuses at International Business Machines in 2025?
- stevetron 10mo agoFrom the company that said the world market size for computers was about 50. And the company that gave us OS2.
- AlexandrB 10mo agoI see a lot of people attacking the messenger but very few addressing the basic logic that you need 800B+ in profit just to pay the interest on some of these investments. Pointing out IBM's mixed history would be valid if they were making some complex, intricate, hard to verify case for why AI won't be profitable. But the case being made seems like really simple math. A lot of the counterarguments to these economic problems have the form "this time it's different" - something you hear every bubble from .com to 2008.
- jonfw 10mo ago"Company that has been left in the dust claims it was a good business decision"
- atleastoptimal 10mo ago>IBM CEO might as well ask a magic 8 ball for more prescient tech takes
- IAmBroom 10mo agoIt honestly reminds me of the opinion pieces put out by encyclopedia companies about the many ways Wikipedia was inferior. I read an article that pretended to objectively compare them. It noted that Wikipedia (at that time) had more articles, but not way more... A brief "sampling test" suggested EB was marginally more accurate than Wikipedia - marginally! The article concluded that EB was superior. Which is what the author was paid to conclude, obviously. "This free tool is marginally better in some ways, and slightly worse in others, than this expensive tool - so fork over your cash!"
- accra4rx 10mo agoI mean why not , they have to put something down to make their quantum show as better ROIs
- Jimmc414 10mo ago"It is difficult to get a man to understand something when his salary depends on his not understanding it." - Upton Sinclair
- rldjbpin 10mo agothe calculation, while simple, does make rational sense if all things remain equal. regardless, given their past business decisions, this statement can be true for them without thinking about the bottom line. the entire premise is enterprise compute amped to the max. the sheer expensive nature of the hardware and intensive resource requirements truly challenges what modern data centers can do today.