6 ms·

Or, hear me out, maybe there's a compute shortage and xAI has compute and manages that well. There are no dark GPUs. Compute translates directly to money for t

• jklinger410 4mo ago
  > I think everyone is reading way too much into this. Sure there is some circular transactions that are sus, but this ain't it. Let us pin this comment and see how it ages
  • fragmede 4mo ago
    Let's say it does all collapse. How would we know it's the 5-6% stake (which in my mind doesn't make them a "major shareholder") that was a circular deal that was the fall of the house of cards vs some other segment?
    • bastawhiz 4mo ago
      It doesn't even have to be circular. One company is juicing another company's valuation to make their stake worth more. Down the road they'll sell their stake, end the deal, and leave everyone else holding the bag. Nothing about this deal is about better technology or talent. It's about an opportunity that's too juicy for Google to pass up on.
    • senordevnyc 4mo ago
      When has that kind of nuance ever stopped an angry mob with an axe to grind?
• oblio 4mo ago
  > I think everyone is reading way too much into this. Sure there is some circular transactions that are sus, but this ain't it. Alphabet/Google profits: Q1 2025: $34.54 billion Q2 2025: $28.20 billion Q3 2025: $34.98 billion Q4 2025: $34.46 billion <<Q1 2026: $62.58 billion>> Amazon profits: Q1 2025: $17.1 billion Q2 2025: $18.16 billion Q3 2025: $21.2 billion Q4 2025: $21.19 billion <<Q1 2026: $30.3 billion>> Both Alphabet/Google and Amazon have invested recently into Anthropic and are doing all sorts of financial chicanery. https://www.youtube.com/watch?v=-bjNrGFiAI4 https://www.youtube.com/watch?v=-bjNrGFiAI4 Nah, man, it's all fine, they're just going to take down the entire global financial system doing this crap, and by global, I mean <<everyone's>> pensions are going to take a hit, even "fully funded" pension systems.
  • JumpCrisscross 4mo ago
    > Both Alphabet/Google and Amazon have invested recently into Anthropic and are doing all sorts of financial chicanery bko didn’t say there isn’t circular financing going on. They’re just saying this isn’t an example of it. They’re right. It’s a potential conflict of interest. And if the agreement is fake—if Google cancels without paying the cash—it could be market manipulation. But the influencer space likes to latch onto jargon, and the one it’s overapplying right now is circular financing.
    • oblio 4mo ago
      Did I say it was circular financing? I said "financial chicanery". I even included a link to a video explaining said financial chicanery. What are you even going on about?
      • JumpCrisscross 4mo ago
        The comment you’re responding to and the comment above it are about circular financing. It’s reasonably to assume that’s the same chicanery you’re talking about; expecting everyone to watch a random video to understand your comment is unreasonable.
        • oblio 4mo ago
          I listed a bunch of data points that make no sense (profits spiking 50% in a non-Christmas quarter for companies) and weren't directly tied[1] to the circular financing. [1] They're indirectly tied to it.
          • JumpCrisscross 4mo ago
            > that make no sense (profits spiking 50% They were unrealized gains on non-marketable equities. It’s clearly disclosed and done according to GAAP. It’s put under other income precisely so analysts can strip it out when modelling long-term trends. Like, yes, if SpaceX goes to zero Google would have to realize losses and probably lose a quarter or two of GAAP profits. (But not cash flows. Cash-flow wise, it may wind up being positive due to tax effects.) It’s a risk factor, of course, but far from making no sense. None of which is particularly relevant to the deal at hand other than in raising a potential conflict of interest among related parties.
• tootie 4mo ago
  Compute is presently in shortage but generally it's a commodity. It also depreciates.
  • JumpCrisscross 4mo ago
    > generally it's a commodity The NVIDIA GPUs, HBM, land-use permits and power-supply agreements xAI nailed down are absolutely not commodities. I think xAI is a mess. But let’s call a spade a spade, they speculated on AI compute and they are currently right.
    • fc417fc802 4mo ago
      > and power-supply agreements Don't you mean gas turbine purchases and questionably legal operation? But yeah I feel exactly the same way. The AI part of xAI looks like a mess but it seems that they still managed to score a massive win.
      • JumpCrisscross 4mo ago
        > Don't you mean gas turbine purchases and questionably legal operation? The point is it’s running. They built fast before the backlash got organized. Now everyone has to deal with delays and thoughtful permitting processes.
        • XorNot 4mo ago
          The point is they're in a business no one would claim is particularly profitable but claiming a valuation like they're in a totally different business - one where they're not even top 3. Its not that there isn't value in that business, but it's not the AI business either. Its the one where Oracle is laying off staff to try and avoid a revenue crash on future commitments. Both Google and Anthropic would be trying to can this sort of rental arrangement as fast as possible since it's a mind bogglingly expensive way to get something you already do in house.
          • 4mo ago
• b112 4mo ago
  Indeed, that hardware was bought on old RAM, SSD, etc pricing. These are now 5x the price. To reap massive profits before depreciation is just plain smart. LLM space, model generation is just plain crowded now too. And everyone thinks a crash is coming. They could also build out their own end-user infra, but letting someone else which already sells direct to the public do so, is sensible. I know of the desire to show profit for the IPO, but my point is, this is a good move on its own.
• jhallenworld 4mo ago
  >There are no dark GPUs This might not be true. Someone was comparing Nvidia's production rate with known data center capacity, and they do not match. Their conclusion was that people (possibly even Nvidia) were hoarding GPUs- in the very short term this might be a good strategy, but GPUs go EOL fast. There are other stories about paused datacenter builds that match with this. TSMC is definitely fully allocated, based on current 40 wk lead times for FPGAs..
  • Dig1t 4mo ago
    All that means is that there's a bottleneck at the data center layer. When he says "dark GPUs" he's saying that there are no dark DEPLOYED GPUs. This is a reference to the 1990's dot com bubble where internet infrastructure companies overbuilt network capacity, leading to the term "dark fiber". That was an indicator of a bubble because it showed that capacity was larger than demand. OP is saying that this is specifically NOT happening in the case of GPUs yet, indicating that demand still outstrips supply of compute. >GPUs go EOL fast We are seeing the opposite of what was expected, GPUs are actually getting more valuable because demand is so great, something that basically never happens. Even older chips have become more valuable. >paused datacenter builds It doesn't seem that datacenters have been paused because of lack of demand for AI, it seems mostly that there is a lot of pushback by cities to build these things and also there is a shortage of power to run them. IMO none of these things point to a AI being a bubble (over-hyped, demand does not match the stated value). It mostly points to the opposite, there is massive demand for AI and every layer of the supply chain is struggling to keep up with that demand.
    • hadlock 4mo ago
      Adding to this, a lot of fiber installed in the 1990s is still dark. Multi-wavelength XYZ and other improvements mean the same fiber from 35 years ago can carry 100 or 1000x what it was originally designed for. Also, like Solar, all the cost is in labor. When they designed the Seattle/King County fiber network, they knew they would never have access/permits to go back and add more, so instead of running a single 12 fiber bundle the size of your pinkie, they ran 3 x 1024 bundles the size of your arm through the hollow bridges that span I-5 freeway and snakes through Seattle underground. Almost all of that sits dark today despite being in a very busy area, simply because fiber technology keeps getting better.
• adjejmxbdjdn 4mo ago
  Compute is also a rapidly depreciating asset. I want to make a comparison with a car rental business and say that it would be like valuing Hertz entirely on the basis of the number of cars they own, as opposed to how many they rent out, but cars have a much longer depreciation period, if there are no customers they’re not costing you more money, unlike your computer which you are using for training and sucking up massive amounts of energy, and those cars do maintain decent value even after they’re of little use to the car rental company, unlike the compute here.
  • BoorishBears 4mo ago
    Compute is about to come an appreciating asset in the near-term, and it some ways it already is. The frontier labs are shifting from pricing grounded in the price of compute, to pricing grounded in the intelligence provided, or more specifically the economic value of that intelligence downstream. The margins on that allow them to pay a hefty premium on compute and still come out ahead. As they buy more compute at high prices, they're also pricing out competition from cheaper models. It's already become materially more difficult to get compute to run open weight models at competitive prices as a result of frontier labs in the last year.
    • enos_feedler 4mo ago
      There is zero evidence of this shift in pricing occurring. It’s still a dream which seems unlikely
      • dylan604 4mo ago
        It feels like this is the line people are using to justify the expense of compute capex
        • otterley 4mo ago
          The fact that you can sell or lease out something for more than you bought it for is justification in and of itself.
• Spooky23 4mo ago
  xAI lets companies like Google move fast and hurt people at arms length. Google itself has a good reputation as a facilities operator. SpaceXAI is operating gas turbines emitting exhaust at ground level.
  • seltzered_ 4mo ago
    Google has also tried to hide things like water consumption data, see: - https://cloud.sustainability.watch/explore-issues/example-googles-water-disclosure-battle/ https://cloud.sustainability.watch/explore-issues/example-go... - https://www.sfgate.com/national-parks/article/mount-hood-water-google-21307223.php https://www.sfgate.com/national-parks/article/mount-hood-wat... They also seemingly dropped their net-zero climate goal: https://www.tomshardware.com/tech-industry/google-quietly-removes-net-zero-carbon-goal-from-website-amid-rapid-power-hungry-ai-data-center-buildout-industry-first-sustainability-pledge-moved-to-background-amidst-ai-energy-crisis https://www.tomshardware.com/tech-industry/google-quietly-re...
• AtlasBarfed 4mo ago
  There is a compute shortage. In fact, for all these companies to do what they're going to do, they need a massive, massive massive amount of data centers, a highly improbable number of data centers that need to be built in an highly improbably short amount of time. And the capitals about to dry off in about a year. So it's a race between these improbable timelines on data center construction, with capital evaporating.
  • podocarp 4mo ago
    Source for capital drying up in one year? Not trying to be snarky but that's super big if true.
    • AtlasBarfed 4mo ago
      - iran destabilization will shift middle east capital to military spending and infrastructure repair - Ukraine war similarly is triggering an EU buildup and reduction in us dependency - all the IPOs indicate the companies themselves know the private investment is coming to an end so they need the retail investors to keep the boondoggle moving
• chronci3740 4mo ago
  [dead]
• epsteingpt 4mo ago
  correct but it's really bad news for the industry capacity if your best option is unproven space datacenters.
• baq 4mo ago
  > There are no dark GPUs. There are actually lots of GPUs in storage somewhere waiting for data center megawatts to put them in.
• 0xbadcafebee 4mo ago
  The compute is useless if nobody is left to pay for the compute, once all the AI companies die, from all that debt getting called in, once everyone realizes it's a scam. (AI isn't a scam, but the financial deals and promises of unrealistic recoupment are)
  • ViscountPenguin 4mo ago
    The thing I've never understood about the ai investment model is the upside. What's the point of valuations that only make sense if you've built a digital god, when at that point you've literally got a digital god. I can't imagine the tangible value of money being high in that scenario
    • 0xbadcafebee 4mo ago
      Money is imaginary, it's just a placeholder, doesn't need to be tangible. In the case of AI it's the promise that you can replace humans with cheap fast robots, to do more things and cheaper. That's valuable. But the wealthy aren't considering that our economy depends on people (replacing all the people too fast would tank the economy from unemployment, and cause a revolt). So you might wonder, why don't they just move at a slower, sustainable pace? The answer is greed. Make as much as you can, as fast as you can, before the next guy does. All this investment is completely driven by the companies leading the pack. OpenAI and Anthropic have been telling everyone they need to spend hundreds of billions in a few years. Of course they don't, they could do this over 10-15 years and still be profitable. But they're terrified they won't be able to dominate the market. So to dominate the market, they've estimated they need this growth to beat China (and each other). And the US technically has the capital to make this happen, but there's only so much money available to spend. By growing too fast, they spend money faster than they can make it, and the bills are so big that the investors go bankrupt. That's what happened in the panic of 1873 (railroads instead of AI). That's what's going to happen here in the next 2-4 years.
• danielmarkbruce 4mo ago
  But this doesn't sound exciting to folks who like a good conspiracy theory. The google/xai deal is the least interesting thing at spacex. "you have compute, i need compute, i'll pay you for some compute.".
• killerstorm 4mo ago
  Presumably from internal all-hands presentation in Google: “Now we must double every 6 months… the next 1000x in 4–5 years.” reported by CNBC in November 2025, attributed to Amin Vahdat, Google Cloud VP / AI infrastructure lead. Sundar Pichai at Q4 2025 earnings call: “We’ve been supply-constrained". Satya Nadella, 2026: Microsoft would increase total AI capacity by over 80% in the year and roughly double total datacenter footprint over two years. Microsoft CFO, 2026 earnings call: “We’ve been short now for many quarters. I thought we were going to catch up. We are not. Demand is increasing.” So yeah, either top management of hyperscalers are doing a 'bit' for the last few years, or Aschenbrenner 'Situational Awareness' is going roughly as predicted and hyperscalers are desperate to acquire compute even at higher cost.