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Why is xAI giving up their advantage? Is this a signal that their frontier model improvements are plateauing and decided there is no value in hoarding all their

Why is xAI giving up their advantage? Is this a signal that their frontier model improvements are plateauing and decided there is no value in hoarding all their compute?

tw04 4mo ago
What advantage? Has there ever been any indication they’re leading in any segment? Sure Elon has thrown a bunch of money at hardware, but to what end? And frankly as bad as Altman is from a: if AI is really going to disrupt humanity do I want this guy in charge? Elon is 10x worse. So why would the best and the brightest ever work for him?
- eightysixfour 4mo ago
  In a compute starved world, big ass data centers are an advantage.
  - loktarogar 4mo ago
    yes, but it's only advantage if one is compute-strained and the other isn't. if they both have lots then there's no advantage. if one doesn't fully utilise their compute then it's not an advantage either
    - eightysixfour 4mo ago
      Well, it appears all their competitors are compute starved so…
      - loktarogar 4mo ago
        I mean. they're selling it to a competitor so it's not really an advantage
  - 8note 4mo ago
    can you elucidate what that advantage is, that isnt renting it out for the highest price to somebody that really needs it?
    - eightysixfour 4mo ago
      Well, other than your ability to turn that into cash by renting it out for the highest price to someone who needs it, you can promise prospective employees that are supposed to use that infra to train models that they won’t be compute starved. You can kick off more model training runs and experiments than your competitors. You can kick off a $1-2t IPO claiming you are going to capture a large portion of the largest TAM the world has ever seen.
      - sumeno 4mo ago
        They have neither the most resources nor the best models. They are mediocre at everything except the CSAM generation market, they've got that one cornered
      - HarHarVeryFunny 4mo ago
        Could have (past tense). They now have rented the capacity out, presumably with a multi-year contract. A rental deal, even at a premium price, actually makes great sense for Anthropic. Rather than building themselves, they are de-risked by renting instead, and they don't own the depreciating asset. They've also compute-starved X.ai as a potential competitor as a marginal added bonus.
    - root_axis 4mo ago
      Training a model that is larger than your competitor's.
- abraxas 4mo ago
  No other LLM has made as much child porn as grok so there is that...
- Rover222 4mo ago
  The datacenter advantage, obviously
SoKamil 4mo ago
As weird as it seems I think this is Musk’s best shot at winning over Altman. He has personal vendetta.
dktp 4mo ago
I would guess it's purely because Grok isn't nearly in-demand enough to produce meaningful revenue. And they want to juice the numbers for IPO And I'm sure it's a bonus point for Musk that it goes to OpenAI's most relevant competitor
Computer0 4mo ago
When did xAI have an advantage?
- aurareturn 4mo ago
  Advantage in training compute.
guluarte 4mo ago
I think they overestimated the demand for Grok, which is mostly useless, and now they have too much compute on hand.
- bwfan123 4mo ago
  I see this as a huge warning sign. If a frontier ai lab is in this position of renting their own capacity, imagine how much overcapacity there is in the system. Outside of VC money, and circular financing, the only external money coming into ai are into open-ai, and anthropic via their subscriptions and APIs.
  - runako 4mo ago
    > a frontier ai lab Wait, do people consider xAI a frontier AI lab?
    - londons_explore 4mo ago
      They were briefly SOTA on some benchmarks, although there were suggestions there might have been some massaging of the results since real world usage showed lackluster performance compared to the benchmarks.
  - vessenes 4mo ago
    To the contrary - there’s so much demand that Dario needs Elon’s compute and is willing to pay premium month to month pricing for it.
    - HarHarVeryFunny 4mo ago
      I think any warning this provides is more about the ability to forecast demand. Obviously it was a giant leap of faith, that didn't pan out, for Must to build these data centers without having a product with a growth trajectory to more rationally justify it. OpenAI and Anthropic (and their investors!) are obviously also out on a limb here, both with deals in place to 10x their available compute (roughly 1GW -> 10GW) over next few years. Maybe these growth estimates are a bit more grounded, but they have all sorts of assumptions baked in. I still would not be surprised to see OpenAI self-implode, and to see Google and Microsoft as the eventual winners here.
SilverElfin 4mo ago
Elon got rid of most of the core xAI researchers recently. It looked like firings and he said something like Grok needs to be rewritten because it was fundamentally built in a bad way. My guess - Grok was not one of the top two models and had no traction beyond users on Twitter - so investing in it did not make sense. Or maybe he needs time to build a new team and rebuild Grok, and while he’s doing that, he needs revenue to make up for all the GPUs they bought. Either way, I doubt he has any ‘real’ advantage in this game. It’s OpenAI and Anthropic, and then everyone else including the open weight models.
- vessenes 4mo ago
  Boy I’d love to have the sort of ‘no real advantage’ that got me $1.9bn in revenue per month from Anthropic. Make no mistake - Elon’s charging premium pricing because he has something Anthropic realllly needs. In exchange, he will get significant revenues added to the balance sheet along with the cursor team right around IPO. It’s very good business for Elon and SpaceX.
ifwinterco 4mo ago
xAI have (with some questionable ethics) managed to actually build a data centre, so they have a ton of compute but not much inference demand for their model which is second-tier. Everyone else trying to build data centres is really struggling (turns out building physical things is not as easy as writing code, who knew). So Anthropic have the model but they're compute starved because everyone else they've signed agreements with still mostly have piles of dirt and the GPUs are still in Nvidia's warehouse somewhere. It's a bit of a win-win: xAI's financial numbers will be massively improved by the revenue using otherwise useless data centre capacity, Anthropic get the compute they desperately need albeit probably paying through the nose for it
viking123 4mo ago
xAI advantage is that it's not censored, that's why people use Grok
HarHarVeryFunny 4mo ago
Musk's goal with X.ai from the start seems to have been primarily to compete with OpenAI, and given that Grok itself isn't doing that (not even mentioned in competitive benchmark tables), and his data centers are therefore mostly sitting idle, this deal with Anthropic helps him achieve that goal by helping OpenAI's #1 competitor. Note how the initial deal was only for the older Colossus #1 data center, and now after losing his lawsuit against OpenAI the Anthropic deal has been expanded to Colossus #2 also. Coincidence?

Why is xAI giving up their advantage? Is this a signal that their frontier model improvements are plateauing and decided there is no value in hoarding all their compute?

tw04 4mo ago

What advantage? Has there ever been any indication they’re leading in any segment? Sure Elon has thrown a bunch of money at hardware, but to what end? And frankly as bad as Altman is from a: if AI is really going to disrupt humanity do I want this guy in charge? Elon is 10x worse. So why would the best and the brightest ever work for him?

eightysixfour 4mo ago
In a compute starved world, big ass data centers are an advantage.
- loktarogar 4mo ago
  yes, but it's only advantage if one is compute-strained and the other isn't. if they both have lots then there's no advantage. if one doesn't fully utilise their compute then it's not an advantage either
  - eightysixfour 4mo ago
    Well, it appears all their competitors are compute starved so…
    - loktarogar 4mo ago
      I mean. they're selling it to a competitor so it's not really an advantage
- 8note 4mo ago
  can you elucidate what that advantage is, that isnt renting it out for the highest price to somebody that really needs it?
  - eightysixfour 4mo ago
    Well, other than your ability to turn that into cash by renting it out for the highest price to someone who needs it, you can promise prospective employees that are supposed to use that infra to train models that they won’t be compute starved. You can kick off more model training runs and experiments than your competitors. You can kick off a $1-2t IPO claiming you are going to capture a large portion of the largest TAM the world has ever seen.
    - sumeno 4mo ago
      They have neither the most resources nor the best models. They are mediocre at everything except the CSAM generation market, they've got that one cornered
    - HarHarVeryFunny 4mo ago
      Could have (past tense). They now have rented the capacity out, presumably with a multi-year contract. A rental deal, even at a premium price, actually makes great sense for Anthropic. Rather than building themselves, they are de-risked by renting instead, and they don't own the depreciating asset. They've also compute-starved X.ai as a potential competitor as a marginal added bonus.
  - root_axis 4mo ago
    Training a model that is larger than your competitor's.
abraxas 4mo ago
No other LLM has made as much child porn as grok so there is that...
Rover222 4mo ago
The datacenter advantage, obviously

SoKamil 4mo ago

As weird as it seems I think this is Musk’s best shot at winning over Altman. He has personal vendetta.

dktp 4mo ago

I would guess it's purely because Grok isn't nearly in-demand enough to produce meaningful revenue. And they want to juice the numbers for IPO And I'm sure it's a bonus point for Musk that it goes to OpenAI's most relevant competitor

Computer0 4mo ago

When did xAI have an advantage?

aurareturn 4mo ago
Advantage in training compute.

guluarte 4mo ago

I think they overestimated the demand for Grok, which is mostly useless, and now they have too much compute on hand.

bwfan123 4mo ago
I see this as a huge warning sign. If a frontier ai lab is in this position of renting their own capacity, imagine how much overcapacity there is in the system. Outside of VC money, and circular financing, the only external money coming into ai are into open-ai, and anthropic via their subscriptions and APIs.
- runako 4mo ago
  > a frontier ai lab Wait, do people consider xAI a frontier AI lab?
  - londons_explore 4mo ago
    They were briefly SOTA on some benchmarks, although there were suggestions there might have been some massaging of the results since real world usage showed lackluster performance compared to the benchmarks.
- vessenes 4mo ago
  To the contrary - there’s so much demand that Dario needs Elon’s compute and is willing to pay premium month to month pricing for it.
  - HarHarVeryFunny 4mo ago
    I think any warning this provides is more about the ability to forecast demand. Obviously it was a giant leap of faith, that didn't pan out, for Must to build these data centers without having a product with a growth trajectory to more rationally justify it. OpenAI and Anthropic (and their investors!) are obviously also out on a limb here, both with deals in place to 10x their available compute (roughly 1GW -> 10GW) over next few years. Maybe these growth estimates are a bit more grounded, but they have all sorts of assumptions baked in. I still would not be surprised to see OpenAI self-implode, and to see Google and Microsoft as the eventual winners here.

SilverElfin 4mo ago

Elon got rid of most of the core xAI researchers recently. It looked like firings and he said something like Grok needs to be rewritten because it was fundamentally built in a bad way. My guess - Grok was not one of the top two models and had no traction beyond users on Twitter - so investing in it did not make sense. Or maybe he needs time to build a new team and rebuild Grok, and while he’s doing that, he needs revenue to make up for all the GPUs they bought. Either way, I doubt he has any ‘real’ advantage in this game. It’s OpenAI and Anthropic, and then everyone else including the open weight models.

vessenes 4mo ago
Boy I’d love to have the sort of ‘no real advantage’ that got me $1.9bn in revenue per month from Anthropic. Make no mistake - Elon’s charging premium pricing because he has something Anthropic realllly needs. In exchange, he will get significant revenues added to the balance sheet along with the cursor team right around IPO. It’s very good business for Elon and SpaceX.

ifwinterco 4mo ago

xAI have (with some questionable ethics) managed to actually build a data centre, so they have a ton of compute but not much inference demand for their model which is second-tier. Everyone else trying to build data centres is really struggling (turns out building physical things is not as easy as writing code, who knew). So Anthropic have the model but they're compute starved because everyone else they've signed agreements with still mostly have piles of dirt and the GPUs are still in Nvidia's warehouse somewhere. It's a bit of a win-win: xAI's financial numbers will be massively improved by the revenue using otherwise useless data centre capacity, Anthropic get the compute they desperately need albeit probably paying through the nose for it

viking123 4mo ago

xAI advantage is that it's not censored, that's why people use Grok

HarHarVeryFunny 4mo ago

Musk's goal with X.ai from the start seems to have been primarily to compete with OpenAI, and given that Grok itself isn't doing that (not even mentioned in competitive benchmark tables), and his data centers are therefore mostly sitting idle, this deal with Anthropic helps him achieve that goal by helping OpenAI's #1 competitor. Note how the initial deal was only for the older Colossus #1 data center, and now after losing his lawsuit against OpenAI the Anthropic deal has been expanded to Colossus #2 also. Coincidence?