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There's clearly easy/irrational money distorting the markets here. No, I think it is real demand. AI will cause shortages in everything from GPUs to CPUs, RAM

There's clearly easy/irrational money distorting the markets here. No, I think it is real demand. AI will cause shortages in everything from GPUs to CPUs, RAM, storage, networking, fiber, etc because of real demand. The physical world can't keep up with AI progress. Hence, shortages. AI simply increases computer use by magnitudes. Now you can suddenly use Seedance 2.0 to make CGI that would have cost tens of millions 5 years ago for $5.[0] Everyone is going to need more disk space to store all those video files. Someone in their basement can make a full length movie limited only by imagination. The output quality keeps getting better quicker. AI agents also drastically increase storage demands. Imagine financial companies using AI agents to search, scrape, organize data on stocks that they wouldn't have been able to do prior. Suddenly, disk storage and CPUs are in high demand for tasks like these. I think the demand for computer hardware and networking gear is real and is only the beginning. As someone who is into AI, hardware, and investing, I've been investing in physical businesses based on the above hypothesis. The only durable moats will be compute, energy, and data. [0]https://seed.bytedance.com/en/seedance2_0 https://seed.bytedance.com/en/seedance2_0

azan_ 9mo ago
I wonder if I'm alone in being optimistic about this. I believe that the gigantic inflow of money into hardware will lead to large increase in production capabilities, accelerated progress and perhaps even new, better architectures.
- zozbot234 9mo ago
  I actually agree: a spike in prices due to bumping against capacity limits is way better than a downturn in the market. But this is only really true if AI hyperscalers are incented to space out their big buildouts over time (while raising their prices enough to ration current demand) so that suppliers can have some guarantee that their expanded capacity will be used.
anthk 9mo ago
AI's output is not reproducible. It's a disaster.
- thephyber 9mo ago
  This is wrong for all LLMs which have a temperature setting. And even if there were guaranteed to be non-deterministic, there is still lots of value in many aspects of content generation.
- pixl97 9mo ago
  If we want reproducible output we already have conventional software. Stop using a hammer on screws.
  - anthk 9mo ago
    Good luck in a near future. Science be damned modulo the users of reproducible software and distros.
  - bigstrat2003 9mo ago
    We do in fact want reproducible output. Which means LLMs are not fit for actual work.
    - CamperBob2 8mo ago
      No, you want verifiable output. That is not the same thing.
- 0-_-0 9mo ago
  So it's like humans then
pjc50 9mo ago
> The only durable moats will be compute, energy, and data "Compute" is capital investment; normal and comprehensible, but on a huge scale. "Data" is .. stolen? That feels like a problem which has been dodged but will not remain solved forever, as everyone goes shields-up against the scrapers. "Energy" was a serious global problem before AI. All economic growth is traded off against future global temperature increases to some extent, but this is even more acute in this electricity-intensive industry. How many degrees of temperature increase is worth one .. whatever the unit of AI gain-of-function is?
- capitol_ 9mo ago
  one.. fully autonomous, self improving, replicating, general intelligence.
- misnome 9mo ago
  > How many degrees of temperature increase is worth one .. whatever the unit of AI gain-of-function is? Billionaire. And they are definitely willing to make the trade.
- AnthonyMouse 9mo ago
  > All economic growth is traded off against future global temperature increases to some extent, but this is even more acute in this electricity-intensive industry. How many degrees of temperature increase is worth one .. whatever the unit of AI gain-of-function is? The premise here is that if we use more electricity then we burn more carbon. And the media hates AI, so if anybody restarts any coal-fired power plant to run a data center anywhere, that's the story. But then there's this: https://electrek.co/2026/01/28/eia-99-of-new-us-capacity-in-2026-will-be-solar-wind-storage/ https://electrek.co/2026/01/28/eia-99-of-new-us-capacity-in-... Nobody actually wants coal because solar is cheaper. And data centers are a pretty good combination for this because the biggest problem with solar and wind is what to do during multi-day periods of low generation, but data centers have backup generators and would be willing to turn them on whenever the cost of grid power is higher than the cost of operating them. Running some gas turbines for a week every two years in exchange for stabilizing the grid and being able to run on renewable power for the other 103 weeks is a pretty good outcome for everybody, not least because that amount of grid stabilization would exceed their consumption, i.e. allow more renewables to be added to the grid than they're using. If they can shed 1GW of load when a 2GW (long-term average) solar farm is generating at 50% of typical capacity for a week, you can add that 2GW of solar to the grid and remove 1GW of fossil fuels even while the data center is increasing consumption by 1GW.
mbreese 9mo ago
The question isn’t if the demand is real or not (supplies are low, so demand must exist). The question is if the demand curve has permanently shifted, or is this a short-term issue. No one builds new capacity in response to short term changes, because you’ll have difficulty recouping the capital expense. If AI will permanently cause an increase in hard drives over the current growth curve, then WD, et al will build new capacity, increasing supply (and reducing costs). But this really isn’t something that is known at this point.
- aurareturn 9mo ago
  My post argues that the demand has permanently shifted. By the way, plenty of people on HN and Reddit ask if the demand is real or not. They all think there's some collusion to keep the AI bubble going by all the companies. They don't believe AI is that useful today.
  - geerlingguy 9mo ago
    AI can be useful today, while also being insanely overvalued, and a bubble.
    - aurareturn 9mo ago
      There will be a bubble. It's inevitable. The most important question is are we in 1994 or 2000 of the bubble for investors and suppliers like Samsung, WD, SK Hynix, TSMC. What about 10 years from now? 15 years? Will AI provide more value in 2040 than in 2026? The internet ultimately provided far more value than even peak dotcom bubble thought.
      - lelanthran 9mo ago
        > The internet ultimately provided far more value than even peak dotcom bubble thought. Yeah, but not to the early investors. The early investors lost their shirts. The internet provided a lot of value after the bubble popped and everyone lost money.
  - 9mo ago
xtracto 9mo ago
This fact never ceases to amaze me. It's so cool how relentlessly AI is pushing the horizons of our current hardware! Maybe now we will start to see the "optical" CPUs start to be a thing. Or the 3D disk storage,;or other ground breaking technology.
- zozbot234 9mo ago
  Optical interconnect in the rack is a thing already. It's just a matter of time until it moves to single-PCB scale. And most persistent memories (competing with DDR memory for speed, and with far lower wearout than NAND) are of the "3D storage" type.
lelanthran 9mo ago
> AI will cause shortages in everything from GPUs to CPUs, RAM, storage, networking, fiber, etc because of real demand. Real demand, sure, I agree, but maybe not retail or business demand; at the moment the "demand" is entirely VC demand. It's a really distorted market which is to be expected in any bubble/hype phase. The current retail/business demand doesn't appear to exist at the price point these investments require - even at the low low cost of "free, gratis and for nothing", not enough consumers and businesses are signing up. The ones really going all-in on AI are the slop-producers. I dunno if slop is enough to pay back the investment into AI - I mean, even the slop producers are going to realise that paying $200/m to produce something in 1/10th of the time is a race to the bottom because someone else on the same plan is going to do the same, but cheaper. > The physical world can't keep up with AI progress. Hence, shortages. I think the word "progress" is inaccurate there - the physical world supply product at the demand maintained by VC's money. It's not "cannot keep up with progress", it's "cannot keep up with demand from VCs". > The only durable moats will be compute, energy, and data. That'll be a first :-) Physical commodities have never been moats on their own before.

azan_ 9mo ago

I wonder if I'm alone in being optimistic about this. I believe that the gigantic inflow of money into hardware will lead to large increase in production capabilities, accelerated progress and perhaps even new, better architectures.

zozbot234 9mo ago
I actually agree: a spike in prices due to bumping against capacity limits is way better than a downturn in the market. But this is only really true if AI hyperscalers are incented to space out their big buildouts over time (while raising their prices enough to ration current demand) so that suppliers can have some guarantee that their expanded capacity will be used.

anthk 9mo ago

AI's output is not reproducible. It's a disaster.

thephyber 9mo ago
This is wrong for all LLMs which have a temperature setting. And even if there were guaranteed to be non-deterministic, there is still lots of value in many aspects of content generation.
pixl97 9mo ago
If we want reproducible output we already have conventional software. Stop using a hammer on screws.
- anthk 9mo ago
  Good luck in a near future. Science be damned modulo the users of reproducible software and distros.
- bigstrat2003 9mo ago
  We do in fact want reproducible output. Which means LLMs are not fit for actual work.
  - CamperBob2 8mo ago
    No, you want verifiable output. That is not the same thing.
0-_-0 9mo ago
So it's like humans then

pjc50 9mo ago

> The only durable moats will be compute, energy, and data "Compute" is capital investment; normal and comprehensible, but on a huge scale. "Data" is .. stolen? That feels like a problem which has been dodged but will not remain solved forever, as everyone goes shields-up against the scrapers. "Energy" was a serious global problem before AI. All economic growth is traded off against future global temperature increases to some extent, but this is even more acute in this electricity-intensive industry. How many degrees of temperature increase is worth one .. whatever the unit of AI gain-of-function is?

capitol_ 9mo ago
one.. fully autonomous, self improving, replicating, general intelligence.
misnome 9mo ago
> How many degrees of temperature increase is worth one .. whatever the unit of AI gain-of-function is? Billionaire. And they are definitely willing to make the trade.
AnthonyMouse 9mo ago
> All economic growth is traded off against future global temperature increases to some extent, but this is even more acute in this electricity-intensive industry. How many degrees of temperature increase is worth one .. whatever the unit of AI gain-of-function is? The premise here is that if we use more electricity then we burn more carbon. And the media hates AI, so if anybody restarts any coal-fired power plant to run a data center anywhere, that's the story. But then there's this: https://electrek.co/2026/01/28/eia-99-of-new-us-capacity-in-2026-will-be-solar-wind-storage/ https://electrek.co/2026/01/28/eia-99-of-new-us-capacity-in-... Nobody actually wants coal because solar is cheaper. And data centers are a pretty good combination for this because the biggest problem with solar and wind is what to do during multi-day periods of low generation, but data centers have backup generators and would be willing to turn them on whenever the cost of grid power is higher than the cost of operating them. Running some gas turbines for a week every two years in exchange for stabilizing the grid and being able to run on renewable power for the other 103 weeks is a pretty good outcome for everybody, not least because that amount of grid stabilization would exceed their consumption, i.e. allow more renewables to be added to the grid than they're using. If they can shed 1GW of load when a 2GW (long-term average) solar farm is generating at 50% of typical capacity for a week, you can add that 2GW of solar to the grid and remove 1GW of fossil fuels even while the data center is increasing consumption by 1GW.

mbreese 9mo ago

The question isn’t if the demand is real or not (supplies are low, so demand must exist). The question is if the demand curve has permanently shifted, or is this a short-term issue. No one builds new capacity in response to short term changes, because you’ll have difficulty recouping the capital expense. If AI will permanently cause an increase in hard drives over the current growth curve, then WD, et al will build new capacity, increasing supply (and reducing costs). But this really isn’t something that is known at this point.

aurareturn 9mo ago
My post argues that the demand has permanently shifted. By the way, plenty of people on HN and Reddit ask if the demand is real or not. They all think there's some collusion to keep the AI bubble going by all the companies. They don't believe AI is that useful today.
- geerlingguy 9mo ago
  AI can be useful today, while also being insanely overvalued, and a bubble.
  - aurareturn 9mo ago
    There will be a bubble. It's inevitable. The most important question is are we in 1994 or 2000 of the bubble for investors and suppliers like Samsung, WD, SK Hynix, TSMC. What about 10 years from now? 15 years? Will AI provide more value in 2040 than in 2026? The internet ultimately provided far more value than even peak dotcom bubble thought.
    - lelanthran 9mo ago
      > The internet ultimately provided far more value than even peak dotcom bubble thought. Yeah, but not to the early investors. The early investors lost their shirts. The internet provided a lot of value after the bubble popped and everyone lost money.
- 9mo ago

xtracto 9mo ago

This fact never ceases to amaze me. It's so cool how relentlessly AI is pushing the horizons of our current hardware! Maybe now we will start to see the "optical" CPUs start to be a thing. Or the 3D disk storage,;or other ground breaking technology.

zozbot234 9mo ago
Optical interconnect in the rack is a thing already. It's just a matter of time until it moves to single-PCB scale. And most persistent memories (competing with DDR memory for speed, and with far lower wearout than NAND) are of the "3D storage" type.

lelanthran 9mo ago

> AI will cause shortages in everything from GPUs to CPUs, RAM, storage, networking, fiber, etc because of real demand. Real demand, sure, I agree, but maybe not retail or business demand; at the moment the "demand" is entirely VC demand. It's a really distorted market which is to be expected in any bubble/hype phase. The current retail/business demand doesn't appear to exist at the price point these investments require - even at the low low cost of "free, gratis and for nothing", not enough consumers and businesses are signing up. The ones really going all-in on AI are the slop-producers. I dunno if slop is enough to pay back the investment into AI - I mean, even the slop producers are going to realise that paying $200/m to produce something in 1/10th of the time is a race to the bottom because someone else on the same plan is going to do the same, but cheaper. > The physical world can't keep up with AI progress. Hence, shortages. I think the word "progress" is inaccurate there - the physical world supply product at the demand maintained by VC's money. It's not "cannot keep up with progress", it's "cannot keep up with demand from VCs". > The only durable moats will be compute, energy, and data. That'll be a first :-) Physical commodities have never been moats on their own before.