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"JPMorgan calculated last fall that the tech industry must collect an extra $650 billion in revenue every year — three times the annual revenue of AI chip giant

• robotnikman 8mo ago
  The future is not looking bright at all.... I only have a meme to describe what we are facing https://imgur.com/a/xYbhzTj https://imgur.com/a/xYbhzTj
  • weavie 8mo ago
    As someone in the UK for whom that link is blocked, I wonder if that meme is doubly apt.
    • cedws 8mo ago
      Children successfully protected. Nevermind the child groomers on Roblox.
  • butterlettuce 8mo ago
    I was expecting to see Mark Baum on the phone saying "hey, we're in a bubble".
  • the-wouter 8mo ago
    [dead]
  • dmix 8mo ago
    > The future is not looking bright at all.... The tech industry going through a boom and settling back down at a higher place than before isn't the end of the world. They all start merging together soon.
    • dijit 8mo ago
      There has never been an industry that does that consistently (that wasn't government subsidised at least). We got lucky with the dotcom bubble. There's no guarantee of anything, and it's totally possible for the industry to collapse and stay that way.
      • cootsnuck 8mo ago
        They got the current administration to ban state level regulation for them. Not to mention various defense contracts. They are government subsidized.
    • marcyb5st 8mo ago
      I am more afraid if AI will actually deliver what CEOs are touting. People that are now working will be unemployable and will have to pivot to something else, overcrowding these other sectors and driving wages down. If that comes to pass you will work the same or more for less money than now. Basically jump back to a true plutocracy since only a few people will syphon the wealth generated by AI and that wealth will give them substantial temporal power.
      • monkaiju 8mo ago
        I mean, I just dont see any evidence of that happening. TBF I'm a SWE so I can only speak to that segment, but its literally worse than useless for working with anything software related thats non-trivial...
        • anonzzzies 8mo ago
          I see that sentiment here all the time and I don't understand what you must be doing; our projects are far from non trivial and we get a lot of benefit from it in the SWE teams. Our software infra was alway (almost 30 years) made to work well with outsourcing teams, so maybe that is it, but I cannot understand how you can have quite that bad results.
  • palmotea 8mo ago
    > I only have a meme to describe what we are facing https://imgur.com/a/xYbhzTj https://imgur.com/a/xYbhzTj I don't recognize that cartoon and there's no audio. I'm going to need help with that one.
    • falloutx 8mo ago
      Smiling Friends
    • robotnikman 8mo ago
      Make sure you click the unmute button, imgur mutes by default it seems.
• kryogen1c 8mo ago
  The question is not "is it a bubble". Bubbles are a desirable feature of the American experiment. The question is "will this bubble lay the foundation for growth and destroy some value when it pops, or will it only destroy value" https://www.oaktreecapital.com/insights/memo/is-it-a-bubble https://www.oaktreecapital.com/insights/memo/is-it-a-bubble
  • toomuchtodo 8mo ago
    What can we use fields of GPUs for next?
    • greenchair 8mo ago
      cloud gaming?
    • dragontamer 8mo ago
      We can use the GPUs for research (64-bit scientific compute), 3d graphics, a few other things. We programmers will reconfigure them to something useful. At least, the GPUs that are currently plugged in. A lot of this bullshit bubble crap is because most of those GPUs (and RAM) is sitting unplugged in a warehouse, because we don't even have enough power to turn all of them on. So if your question is how to use a GPU... I got plenty of useful non-AI related ideas. But only if we can plug them in. I wouldn't be surprised if many of those GPUs are just e-waste, never to turn on due to lack of power.
      • cogman10 8mo ago
        > I wouldn't be surprised if many of those GPUs are just e-waste, never to turn on due to lack of power. That's my fear. The problem is these GPUs are specifically made for datacenters, So it's not like your average consumer is going to grab one to put into their gaming PCs. I also worry about what the pop ends up doing to consumer electronics. We'll have a bunch of manufacturers that have a bunch of capacity that they can no longer use to create products which people want to buy and a huge backstop of second hand goods that these liquidated AI companies will want to unload. That will put chip manufactures in a place where they'll need to get their money primarily from consumers if they want to stay in business. That's not the business model that they've operated on up until this point. We are looking at a situation where we have a bunch of oil derricks ready to pump, but shut off because it's too expensive to run the equipment making it not worth the energy.
• zeroonetwothree 8mo ago
  Total US GDP is ~31 trillion, so that's only like 5%. I think it's conceivable that AI could result in ~5% of GDP in additional revenue. Not saying it's guaranteed, but it's hardly an implausible figure. And of course it's even less considering global GDP.
  • mykowebhn 8mo ago
    Have you ever seen US GDP go up 5% yearly for several years?
    • matthewaveryusa 8mo ago
      That’s the bet! last time we had that growth was for a few years during the dotcom, followed by a lost decade of growth in tech stocks
    • dkasper 8mo ago
      China did it. It’s not inconceivable.
      • eatsyourtacos 8mo ago
        Yeah but China actively works in the best interest of their entire population.
        • brutalc 8mo ago
          Huh? No they don’t.
          • direwolf20 8mo ago
            In what way? Bring some substance instead of a vague rebuttal
            • b00ty4breakfast 8mo ago
• onion2k 8mo ago
  Nvidia invests $100bn in OpenAI, who buy $100bn of Nvidia chips, who invest the $100bn revenue in OpenAI, who buy $100bn in Nvidia chips, and round it goes. That's an easy $600bn increase in tech industry revenue right there.
  • dickersnoodle 8mo ago
    Someone in management read and misunderstood "The Velocity of Money" (https://en.wikipedia.org/wiki/Velocity_of_money https://en.wikipedia.org/wiki/Velocity_of_money)?
    • collingreen 8mo ago
      Or understood way too well. I promise it isn't Altman that will be left destroyed or jobless if this crashes.
      • andrewmcwatters 8mo ago
        You're absolutely joking if you don't think when this goes to crap Microsoft won't hoover up more share of OpenAI. I wouldn't be surprised if they're banking long-term on its failure and got in early so they had equity preference.
  • wiseowise 8mo ago
    https://news.ycombinator.com/item?id=37395566 https://news.ycombinator.com/item?id=37395566
    • sssilver 8mo ago
      An important thing that this joke misses is that both economists now also owe federal income tax and social security tax.
      • TedDoesntTalk 8mo ago
        Were the payments considered income?
• mullingitover 8mo ago
  I read "Devil Take the Hindmost: A History of Financial Speculation" last year, and the current AI bubble is like getting a front row seat to the next edition being written. The really stupid bubbles end up getting themselves metastasized into the public retirement system, I'm just waiting for that to start any day now.
  • chasd00 8mo ago
    > The really stupid bubbles end up getting themselves metastasized into the public retirement system, I'm just waiting for that to start any day now. Not sure what you mean exactly but every single 401k is tied into this.
• rishabhaiover 8mo ago
  > "must collect an extra $650 billion in revenue every year" paired with the idea that automating knowledge work can cause a short-term disruption in the economy doesn't seem logical to me. I find it funny that Microsoft is scaling compute like crazy and their own products like Copilot are being dwarfed by the very models they wish to serve on that compute.
• belter 8mo ago
  I run the numbers on hyperscaler AI capex and the math is not going to work out. With these assumptions: – Big 4 keep spending at current pace for 3 more years – Returns only start showing after aprox 2 years – Heavy competition with around 20% operating margin on AI and Cloud – Use of 9% cost of capital This is the current reality: AWS aprox $142B/yr Azure aprox $132B/yr Google Cloud around $71B/yr Combined its about $330B to $340B annual cloud revenue today And lets says Global public cloud market of $700B total today. To justify the current capex trajectory under those assumptions, by year 3 the big hyperscalers would need roughly $800B to $900B in new annual revenue just to earn a normal return on the capital being deployed. That implies combined hyperscaler cloud and AI revenue going from: $330B today to $1.2T within 3 years :-)) In other words...Cloud would need to roughly do 4× in a very short window, and the incremental revenue alone would exceed the entire current global cloud market. So for the investment wave to make financial sense, at least one of these must be true: 1 Cloud/AI spending globally explodes far beyond all prior forecasts 2 AI massively increases revenue/profit in ads, software, commerce and not just cloud 3 A winner takes all outcome where only 1 or 2 players earn real returns 4 Or a large share of this capex never earns an economic return and is defensive People keep modeling this like normal cloud growth. But what we have is insanity
  • johnvanommen 8mo ago
    > That implies combined hyperscaler cloud and AI revenue going from: $330B today to $1.2T within 3 years :-)) You’re ignoring the fact that gaming is going to the cloud. That industry is bigger than Hollywood. Desktop computers will invariably follow. The RAM shortage will drive the transition. For instance, my wife uses her personal laptop about four days a year. People like that won’t be buying personal desktops or laptops, five years from now. The RAM shortage will drive a transition into thin clients. I already see it with our kids. They use an iPhone, unless they need to type. Then they use an iPad with a BT keyboard.
    • kg 8mo ago
      Even if gaming goes to the cloud, how are they going to run the massive existing library of video games on the dedicated AI inference hardware that everyone is buying right now? Seems like that pivot would require even more spending.
• kristianp 8mo ago
  If 1 or 2 of the 5 big spenders starts having big losses, things will be interesting. Their market caps will be a fraction of the current overinflated values. Meanwhile Apple is only spending 1 billion a year to use Google's models.
• mahirsaid 8mo ago
  It's crazy to me how many flags are being thrown in this investment spree. Repeating the same mistakes as before (2000). Big companies will be hit hard when they can't show for what they spent shareholders money on. The run will be large and impactful.
  • mahirsaid 8mo ago
    If you analyze what's happening right now in the tech industry, you can't help but to think of something deeper than what's being talked about in plain sight. There is a clear panic amongst the large tech firms. the root cause of the panic is still unclear, simply saying these companies want to be the first in this new revolution isn't enough to draw conclusion. Amongst the top tech firms there still sits the original founders whom as we all know changed the way we live life today. Saying they are misunderstanding what's happening right now and they're are foolish, is to simple of an understatement. They of all people in the world would know it's a bad idea to go all in, in this manner. The underlying competing nature of this whether it has to do with China or other competing markets are not being talked about, and not just that " what exactly is the strategy here?"
    • devmor 8mo ago
      > They of all people in the world would know it's a bad idea to go all in, in this manner. Or this kind of financial crash is exactly what they want. If they can drive the markets to failure, only the largest companies can hold on - and acquire more of the failing companies in the process.
      • mahirsaid 8mo ago
        Day-by-day it seeming this way. They seem to want to flush out the remaining competitors. dedicators are old news, umbrella corporation(tm) is the new form of totalitarian/authoritarianism.
  • antonvs 8mo ago
    > Repeating the same mistakes as before (2000). The issue is that every company in a position to do so is trying to stake a claim in a new market. Not every company will win. No-one has a surefire way of identifying "mistakes" ahead of time. What alternative do you think would work better, short of central planning?
• WarmWash 8mo ago
  It tells you that 500 million people will be paying $60-$80/mo for AI. Something they find as indispensable as a cell phone or internet bill. The numbers actually work really well, (un)fortunately.
  • anonymous908213 8mo ago
    I don't know how you can write down those numbers and come to the conclusion they sound reasonable at all. Corporations literally can't give this trash away for free without consumers being unhappy about it (eg. the Copilot malware infesting every aspect of Windows). ChatGPT had 800m MAU at one report, but that's a chat interface and free. Do you really believe over half of those users are going to convert from "free" to paying $60/mo for access to the chat interface, when all potential applications for actually improving their lives are failing badly? I think you are out of touch with the finances of non-tech-indsutry workers if you think they will.
    • jgalt212 8mo ago
      > ChatGPT had 800m MAU at one report, but that's a chat interface and free. Do you really believe over half of those users are going to convert from "free" to paying $60/mo for access to the chat Even if these things worked great for everyone, the percent of free uses who convert to paid users is low single digits per cent. For OpenAI to have any chance of breaking even in the consumer space, they need to develop an ad biz that makes around 20-25% of G does. That's a tall order in that G doesn't make good dough from search anymore as SERP page clicks are down 80% with AI summaries being good enough for most.
      • lopis 8mo ago
        And let's not forget that for the bubble to sustain itself, people would currently use different LLMs would need to create a separate account in each one. There's absolutely no way most people will be paying more than one LLM unless they have a lot of disposable income.
    • WarmWash 8mo ago
• raincole 8mo ago
  It sounds about right. Coffee's global revenue is $500b/yr. I can totally imagine AI brings twice or more than that.
  • mrweasel 8mo ago
    That's not unreasonable, but if you can't do it without losing money then there's going be a problem. The problem isn't that AI/LLMs can't be useful or generate revenue, the problem is still the cost. We're no where near production ready AI, it can sort of do coding and some medical stuff, but we're not at a level of technology where the potential is fully realized. How much are investors willing to pour into more research? We looking at OpenAI contemplating ads and erotic chatbots. That's not a successful business who have those ideas for profit generation. Revenue is pointless without eventual profit.
• throw_llm 8mo ago
  On the other hand many who work on AI refer to it as 'building God' so all things taken together, it's all reasonable.
  • glouwbug 8mo ago
    God was a dream of good government
• echelon 8mo ago
  > JPMorgan calculated last fall that the tech industry must collect an extra $650 billion in revenue every year If you take half the software engineers in the US and replace them with AI, you're halfway there. And why stop with software? There's a reason for the fervor and excitement of these companies. The positive outlook is that you don't fire folks - they have even more work to do. But we'll see how it pans out in practice.
  • sensanaty 8mo ago
    But who's going to be buying any of these products if everyone is out of a job? Other rich people? Sure I assume there's a good market there, luxury yachts exist after all, but what is a company like Netflix going to do when people are too poor to even afford the streaming services that cost 10 bucks a month? Not to get conspiratorial, but the only logical thing for me here is that They want as many of the plebs dead as possible so that the remainder of us are beholden to them and their money, once they own all the AI factories.
• tempodox 8mo ago
  > That pretty much tells you how this will end, right there. It seems so blatantly obvious, yet nobody wants to listen, and practically everyone knows better. We live in interesting times.
• tototrains 8mo ago
  The question is, how much are they willing to pay for the kind of surveillance and control that they hope this data processing will get them? The economics are not all in profit.