5 ms·

Meta building cloud business to sell excess AI capacity

30 points by mgh2 3mo ago

_heimdall 3mo ago
For one thing, I still don't understand Meta as a business. It seems like Zuck refused to accept owning a boring ad business and keeps trying to act like a tech business. For another, this seems like a move that happens when the bubble pops. The dotcom bubble went from having tons of business raising fortunes on the promise of business models the internet unlocks to having few internet businesses left at that scale and a bunch of unused fiber. Now we're starting to see all the companies claiming AI products will make fortunes to them trying to sell unused hardware capacity.
- spacington 3mo ago
  He just has that much money and his 'whatever ecosystem this is' continues to work, it has to be a kind a playground for him. He could invest in paying back society but he cares more about continuing his ignorance. Just imagine how his ego got stroked when he was agreeing with trump like a bootlicker but still sitting at a table at the Whitehouse. Even with this clown this has to count for something in his books.
- rwmj 3mo ago
  The difference is the hardware will become obsolete in a few years, unlike the dark fibre (really, rights of way) that provided cheap connectivity for years after the crash.
  - cyanydeez 3mo ago
    not if they completely crash manufacturing with their push for fascism; be more optimistic!
  - johndhi 3mo ago
    It's obsolete for training but is it obsolete for inference?
    - disgruntledphd2 3mo ago
      The factories won't be obsolete, even if the chips are.
      - rwmj 3mo ago
        The fabs for current nodes will be obsoleted by newer nodes.
  - bwb 3mo ago
    Do we have any good data on how many of the GPU burn out given hard usage? Are we talkinga bout loosing 50% of the hardware as it fails? Or far less?
    - digdugdirk 3mo ago
      It's an inherently different thing. Fibre is infrastructure. It'll still function decades later. GPUs at this scale are consumables. I've heard 3-5 years lifespan before they fail out. This might be a low estimate, but even if you double it - they're 50% of the cost of datacenters. We're flushing entire countries worth of economic value down an Nvidia shaped toilet.
      - bwb 3mo ago
        Anyone got any good testing data? Surely someone knows rough failure rate from constant usage?
        rwmj 3mo ago
        It's not that they fail (which they also do), it's that they become obsolete. They consume more energy to do fewer operations relative to newer nodes. This is the basis behind Moore's law.
        bwb 3mo ago
        Ah gotcha, ya that will be interesting to see, but does seem like a more likely life of 7 to 10 years is possible. I am curious on actual hardware failure rates due to heat etc.
    - rightbyte 3mo ago
      I tried to do a calculation. https://news.ycombinator.com/item?id=48762428 https://news.ycombinator.com/item?id=48762428 So 10% failure rate per gpu year. Some might be repairable and there might be a failure rate acceleration as time passes etc. So very approximate numbers.
  - Traster 3mo ago
    The hardware will become obsolete but we may end up with an oversupply of cheap power - overbuild on things like Nuclear and solar. That would be nice.
- tacker2000 3mo ago
  Unfortunately he has too much cash since he owns some of the largest social networks and thus receives insane amounts of ad spend… this will not end soon
  - jordanb 3mo ago
    And he can't be fired by shareholders.
- gloryjulio 3mo ago
  > For one thing, I still don't understand Meta as a business Zuck got spooked by apple ads change a few years ago, which crashed the meta's stock to double digit. So Zuck is trying to own a platform. They want to be a version of openai selling ads
  - johndhi 3mo ago
    Good take! I buy it.
  - eiejee 3mo ago
    Actually his basket case investments with VR is what led to a loss of investor trust
    - gloryjulio 3mo ago
      That's true. But trying out a new sector is one thing, even apple build their own vr. Zuck took so long to cut loss on vr platform because he wants to have this platform to be solely under his control
  - zaphirplane 3mo ago
    How is that different from Facebook
  - kombookcha 3mo ago
    This is an interesting angle. I had not considered how fundamentally exposed Meta is, should Apple and Google decide to break omerta.
    - gloryjulio 3mo ago
      Btw I am just quoting someone else. It's in the news in for a long time. Besides ads monetization, Zuck's moves in recent years are mostly about creating their own platform so the Apple incident never happen again
      - 3mo ago
- re-thc 3mo ago
  > It seems like Zuck refused to accept owning a boring ad business Zuck sees a real problem: not owning the platform. Hence the VR and other attempts. He sees what he has today as a dead end. The fear grips him. In theory Google and Apple could ban Meta’s apps and it would be game over.
  - eiejee 3mo ago
    lol that’s charitable The real problem for Zuck is he thinks he’s some grand master who can play 5-d chess, except he can’t
- cmiles8 3mo ago
  It’s a pretty consistent story in tech. Meta built a successful ads platform. That success went to their head and the company starts acting like it’s just great at tech and innovation and tried to do a bunch of other stuff. Turns out it’s pretty crap at most other things and can’t figure out how to make money from anything other than selling ads. Company is very headstrong and refuses to admit it’s just not good at other stuff. It has enough cash from ads to not go bankrupt and so just carries on with this nonsense on cycle after cycle of crazy side projects that go nowhere.
- mrweasel 3mo ago
  He might be scared that his ad business won't be as profitable in a few years. He'll still be rich, but perhaps that's not enough for him. He has all the correct number and knows exactly how many of their users are bots and how much of the ad revenue comes from scams. Maybe he sees a potential risk that we can't. Could also be a self-image thing. Facebook isn't exactly young and fashionable anymore, it's more akin to a weird mid-90s idea of a close walled Internet in some sense. Instagram users I'd guess is mostly younger women. None of these really align with Zuckerbergs macho persona.
emsign 3mo ago
Excess AI capacity? Huh? Wait a minute does that mean they've built more data centers than there's demand for? Oh! How did that happen? Well, I'm a complete idiot, a layman, not even a developer, what do I know about economics and technology...
- ianm218 3mo ago
  It’s a hard thing to measure right? Google under bet on demand for their AI infra and left lots of money on the table with Anthropic/ has to buy computer from SpaceX for awhile, Meta over built.
  - jgalt212 3mo ago
    > Meta over built. In retrospect, this seems pretty easy for Meta to have done as heretofore they were a single captive customer AI shop.
    - ianm218 3mo ago
      Even then though at their scale - billions of DAU with pretty elite consumer distribution in terms of InstaGram and WhatsApp the future is hard to predict. Like they have much lower cost of capital than OpenAI or Anthropic for example and far more direct to consumer muscle, if they could've gotten their models into a better position it's very possible they could've beaten out OpenAI on consumer AI. Probably a smaller prize to win than B2B AI but still huge. And then if the case where AI is panning out but they are failing to execute (where we appear to be now) they have the option of becoming a SpaceX style NeoCloud that is pretty solid, even though most of their moves were pretty bad along the way.
fghorow 3mo ago
"Bubble? What Bubble? I don't see no steenkin' Bubble."
Sol- 3mo ago
xAI has shown this to be quite lucrative. And it seems to even make some sense - if the contract can be ended on relatively short notice, you basically have the capacity on stand-by if you ever need it yourself (accumulating GPUs is not trivial), but can monetize it if you don't need it. Though it's probably a bad sign generally that you can't capitalize on all the GPUs you've acquired.
- re-thc 3mo ago
  > xAI has shown this to be quite lucrative Come back when you have actual numbers on dollars spent, interest rates and the time spent.
  - disgruntledphd2 3mo ago
    To be fair to meta, they've been running data centers for almost two decades now, so they'd be in a different position to XAI.
- khurs 3mo ago
  >xAI has shown this to be quite lucrative. The demand is likely short term till the renter can ramp up their own centres/find better deals.
- InsideOutSanta 3mo ago
  > xAI has shown this to be quite lucrative How do you know this? Have they released any numbers?
  - Sol- 3mo ago
    I think the SpaceX IPO showed them to rent the clusters for billions a month
    - InsideOutSanta 3mo ago
      That doesn't mean they're lucrative, though. They cost tens of billions to build and huge sums to run. Even if I believe that they are now running profitably, that doesn't mean they're "quite lucrative" overall. SpaceX's numbers show xAI increasing its losses over time. In 2025, xAI lost $6.4 billion on $3.2 billion. In 2026, xAI posted a $2.47 billion operating loss in the first quarter alone.
SilverSlash 3mo ago
So have they just given up on llama then? What happened to the 25 year old Zuck paid $250M for?
- raverbashing 3mo ago
  Probably got laid off already
- khurs 3mo ago
  25 year old has been doing the rounds giving podcast and other interviews so you can listen to him.
- pavlov 3mo ago
  If you mean Alexandr Wang, the number is off by an order of magnitude. Forbes estimates he made over $3 billion from selling his startup to Meta and getting hired as chief AI officer.
  - SilverSlash 3mo ago
    Nah, it's a guy named Matt Deitke and he was 24 at the time.
- wmf 3mo ago
  Muse Spark.
cmiles8 3mo ago
So like likes of AWS are spending crazy sums building capacity citing amazing demand they can’t meet. Meanwhile those with capacity are saying hey maybe we don’t need so much and are building cloud businesses to compete with AWS and flood the market with excess capacity. Oh yeah, this is gonna end well.
- johndhi 3mo ago
  I don't really think this necessarily means demand is limited. It just means demand is consolidating to winners. There's no denying openai and anthropic and maybe Google have a ton of demand. The fact that xai and meta do not does not mean no demand exists.
  - cmiles8 3mo ago
    Everyone slamming the brakes on tokenmaxing and companies putting strict AI budgets in place is surely having at least some impact on demand. And the point is not that “no” demand exists but the likes of AWS are building to the moon citing massive future need but that simply doesn’t jive with all this unused capacity from others coming to the market. And building out massive capacity to sell a product that’s likely to trend to a low margin market commodity isn’t a great business.
    - eiejee 3mo ago
      Yeah today’s demand at existing and higher prices won’t persist. Firms are currently experimenting and figuring out the correct way to use these tools in the production function.
- Jordanpomeroy 3mo ago
  Most of the demand for data center GPUs comes from the big tech companies themselves, to develop products/services. Facebook and Twitter are both now signaling that the resources they funded with vast amounts of capital would be worth more to shareholders if they were leased to the highest bidder. This is either a realization that their internally developed product/service roadmap is not panning out, or that the lease demand is so high that they’d be fools not to take advantage.
khurs 3mo ago
Good news. The more providers, the more competition and lower prices. Meta are laying their own sub-sea cables globally at present: https://www.bbc.co.uk/news/articles/ckgrgz8271go https://www.bbc.co.uk/news/articles/ckgrgz8271go
- XorNot 3mo ago
  In the grim darkness of the AI boom everyone is watching high profitability industries move into areas characterized by having few providers due to incredibly poor margins and high expenses and declare it business genius.
  - khurs 3mo ago
    AWS have 35% profit margins. Google Cloud recently told Meta they couldn't supply all the ai compute they want so Meta has no choice but to secure their supply? https://memeburn.com/google-limits-metas-gemini-ai-access-as-compute-crunch-bites/ https://memeburn.com/google-limits-metas-gemini-ai-access-as...
    - cmiles8 3mo ago
      Yes… and AWS is critical to the cash flow and valuation of its parent Amazon. The market looking like it’s trending towards oversupply does not paint a good picture in that context. AWS has to operate at these margins as most of the rest of Amazon is a very low margin business. Google, Microsoft and others have separate cash cows. For Amazon, AWS is the cash cow. They can’t afford a blip here.
  - iamacyborg 3mo ago
    And much like the 41st millenium, there are no good guys, just the eternal laughter of hungry shareholders.
  - TYPE_FASTER 3mo ago
    Are we watching the next sacrificial infra build-out happen (Global Crossing/Iridium), where eventually a bankruptcy will lead to affordability? Is this an artificial semiconductor demand peak with rapid expansion due to business FOMO? Will semi manufacturing ramp up to meet this peak, leading to a glut? Will this be like the pandemic supply chain whiplash impact on outdoor gear (Kona Bicycles at one point was offering a BOGO deal)?
dachworker 3mo ago
I'm excited for the opportunities that an abundance of compute brings, even in the absense of AI applications. Big compute is the right direction, if we can afford it. There are always things to simulate or discover or automate in some way shape or form.
- newsclues 3mo ago
  Big computer isn't the right direction if we have to sacrifice LOCAL COMPUTE for the big cloud future.
Traster 3mo ago
I think we're going to look back on this as one of the things that really exacerbates this bubble. It's one thing for these companies to have high expectations of their future compute needs and therefore overbuild. But what the SpaceX/Anthropic deal showed was even if you fall short, you can profit by selling off your overcapacity. This means there is essentially no incentive to limit how much capacity you're building, anything you don't use you'll still profit from. The problem is that only works if aggregate demand is higher than supply. At some point, all these new data centres are going to come on line, and the frothy "throw AI at everything with no regard to costs" is going to drawn down across the industry. And this supply will be much larger - because everyone thought the down side was limited. At that point you're going to have all of these companies trying to dump their excess capacity on the market and it suddenly won't be true that you can just sell capacity to your competitors. Obviously this won't bankrupt Meta - it'll just eat into their profits from their ads business. But it likely will drive a bunch of neo-clouds out of business very quickly, and the technology providers like Nvidia etc will suddenly come back to reasonable P/Es.
- dotcoma 3mo ago
  > But what the SpaceX/Anthropic deal showed was even if you fall short, you can profit by selling off your overcapacity. Do you have proof that the deal is profitable (and for how long?) for SpaceX ?
dotcoma 3mo ago
Meta is just another company that, like xAI/Grok, is at last starting to face reality: there are going to be two or three winners in this space, and they are not one of them.
ChrisArchitect 3mo ago
[dupe] Earlier on source: https://news.ycombinator.com/item?id=48745966 https://news.ycombinator.com/item?id=48745966

30 points by mgh2 3mo ago

For one thing, I still don't understand Meta as a business. It seems like Zuck refused to accept owning a boring ad business and keeps trying to act like a tech business. For another, this seems like a move that happens when the bubble pops. The dotcom bubble went from having tons of business raising fortunes on the promise of business models the internet unlocks to having few internet businesses left at that scale and a bunch of unused fiber. Now we're starting to see all the companies claiming AI products will make fortunes to them trying to sell unused hardware capacity.

spacington 3mo ago
He just has that much money and his 'whatever ecosystem this is' continues to work, it has to be a kind a playground for him. He could invest in paying back society but he cares more about continuing his ignorance. Just imagine how his ego got stroked when he was agreeing with trump like a bootlicker but still sitting at a table at the Whitehouse. Even with this clown this has to count for something in his books.
rwmj 3mo ago
The difference is the hardware will become obsolete in a few years, unlike the dark fibre (really, rights of way) that provided cheap connectivity for years after the crash.
- cyanydeez 3mo ago
  not if they completely crash manufacturing with their push for fascism; be more optimistic!
- johndhi 3mo ago
  It's obsolete for training but is it obsolete for inference?
  - disgruntledphd2 3mo ago
    The factories won't be obsolete, even if the chips are.
    - rwmj 3mo ago
      The fabs for current nodes will be obsoleted by newer nodes.
- bwb 3mo ago
  Do we have any good data on how many of the GPU burn out given hard usage? Are we talkinga bout loosing 50% of the hardware as it fails? Or far less?
  - digdugdirk 3mo ago
    It's an inherently different thing. Fibre is infrastructure. It'll still function decades later. GPUs at this scale are consumables. I've heard 3-5 years lifespan before they fail out. This might be a low estimate, but even if you double it - they're 50% of the cost of datacenters. We're flushing entire countries worth of economic value down an Nvidia shaped toilet.
    - bwb 3mo ago
      Anyone got any good testing data? Surely someone knows rough failure rate from constant usage?
      - rwmj 3mo ago
        It's not that they fail (which they also do), it's that they become obsolete. They consume more energy to do fewer operations relative to newer nodes. This is the basis behind Moore's law.
        bwb 3mo ago
        Ah gotcha, ya that will be interesting to see, but does seem like a more likely life of 7 to 10 years is possible. I am curious on actual hardware failure rates due to heat etc.
  - rightbyte 3mo ago
    I tried to do a calculation. https://news.ycombinator.com/item?id=48762428 https://news.ycombinator.com/item?id=48762428 So 10% failure rate per gpu year. Some might be repairable and there might be a failure rate acceleration as time passes etc. So very approximate numbers.
- Traster 3mo ago
  The hardware will become obsolete but we may end up with an oversupply of cheap power - overbuild on things like Nuclear and solar. That would be nice.
tacker2000 3mo ago
Unfortunately he has too much cash since he owns some of the largest social networks and thus receives insane amounts of ad spend… this will not end soon
- jordanb 3mo ago
  And he can't be fired by shareholders.
gloryjulio 3mo ago
> For one thing, I still don't understand Meta as a business Zuck got spooked by apple ads change a few years ago, which crashed the meta's stock to double digit. So Zuck is trying to own a platform. They want to be a version of openai selling ads
- johndhi 3mo ago
  Good take! I buy it.
- eiejee 3mo ago
  Actually his basket case investments with VR is what led to a loss of investor trust
  - gloryjulio 3mo ago
    That's true. But trying out a new sector is one thing, even apple build their own vr. Zuck took so long to cut loss on vr platform because he wants to have this platform to be solely under his control
- zaphirplane 3mo ago
  How is that different from Facebook
- kombookcha 3mo ago
  This is an interesting angle. I had not considered how fundamentally exposed Meta is, should Apple and Google decide to break omerta.
  - gloryjulio 3mo ago
    Btw I am just quoting someone else. It's in the news in for a long time. Besides ads monetization, Zuck's moves in recent years are mostly about creating their own platform so the Apple incident never happen again
    - 3mo ago
re-thc 3mo ago
> It seems like Zuck refused to accept owning a boring ad business Zuck sees a real problem: not owning the platform. Hence the VR and other attempts. He sees what he has today as a dead end. The fear grips him. In theory Google and Apple could ban Meta’s apps and it would be game over.
- eiejee 3mo ago
  lol that’s charitable The real problem for Zuck is he thinks he’s some grand master who can play 5-d chess, except he can’t
cmiles8 3mo ago
It’s a pretty consistent story in tech. Meta built a successful ads platform. That success went to their head and the company starts acting like it’s just great at tech and innovation and tried to do a bunch of other stuff. Turns out it’s pretty crap at most other things and can’t figure out how to make money from anything other than selling ads. Company is very headstrong and refuses to admit it’s just not good at other stuff. It has enough cash from ads to not go bankrupt and so just carries on with this nonsense on cycle after cycle of crazy side projects that go nowhere.
mrweasel 3mo ago
He might be scared that his ad business won't be as profitable in a few years. He'll still be rich, but perhaps that's not enough for him. He has all the correct number and knows exactly how many of their users are bots and how much of the ad revenue comes from scams. Maybe he sees a potential risk that we can't. Could also be a self-image thing. Facebook isn't exactly young and fashionable anymore, it's more akin to a weird mid-90s idea of a close walled Internet in some sense. Instagram users I'd guess is mostly younger women. None of these really align with Zuckerbergs macho persona.

emsign 3mo ago

Excess AI capacity? Huh? Wait a minute does that mean they've built more data centers than there's demand for? Oh! How did that happen? Well, I'm a complete idiot, a layman, not even a developer, what do I know about economics and technology...

ianm218 3mo ago
It’s a hard thing to measure right? Google under bet on demand for their AI infra and left lots of money on the table with Anthropic/ has to buy computer from SpaceX for awhile, Meta over built.
- jgalt212 3mo ago
  > Meta over built. In retrospect, this seems pretty easy for Meta to have done as heretofore they were a single captive customer AI shop.
  - ianm218 3mo ago
    Even then though at their scale - billions of DAU with pretty elite consumer distribution in terms of InstaGram and WhatsApp the future is hard to predict. Like they have much lower cost of capital than OpenAI or Anthropic for example and far more direct to consumer muscle, if they could've gotten their models into a better position it's very possible they could've beaten out OpenAI on consumer AI. Probably a smaller prize to win than B2B AI but still huge. And then if the case where AI is panning out but they are failing to execute (where we appear to be now) they have the option of becoming a SpaceX style NeoCloud that is pretty solid, even though most of their moves were pretty bad along the way.

fghorow 3mo ago

"Bubble? What Bubble? I don't see no steenkin' Bubble."

Sol- 3mo ago

xAI has shown this to be quite lucrative. And it seems to even make some sense - if the contract can be ended on relatively short notice, you basically have the capacity on stand-by if you ever need it yourself (accumulating GPUs is not trivial), but can monetize it if you don't need it. Though it's probably a bad sign generally that you can't capitalize on all the GPUs you've acquired.

re-thc 3mo ago
> xAI has shown this to be quite lucrative Come back when you have actual numbers on dollars spent, interest rates and the time spent.
- disgruntledphd2 3mo ago
  To be fair to meta, they've been running data centers for almost two decades now, so they'd be in a different position to XAI.
khurs 3mo ago
>xAI has shown this to be quite lucrative. The demand is likely short term till the renter can ramp up their own centres/find better deals.
InsideOutSanta 3mo ago
> xAI has shown this to be quite lucrative How do you know this? Have they released any numbers?
- Sol- 3mo ago
  I think the SpaceX IPO showed them to rent the clusters for billions a month
  - InsideOutSanta 3mo ago
    That doesn't mean they're lucrative, though. They cost tens of billions to build and huge sums to run. Even if I believe that they are now running profitably, that doesn't mean they're "quite lucrative" overall. SpaceX's numbers show xAI increasing its losses over time. In 2025, xAI lost $6.4 billion on $3.2 billion. In 2026, xAI posted a $2.47 billion operating loss in the first quarter alone.

SilverSlash 3mo ago

So have they just given up on llama then? What happened to the 25 year old Zuck paid $250M for?

raverbashing 3mo ago
Probably got laid off already
khurs 3mo ago
25 year old has been doing the rounds giving podcast and other interviews so you can listen to him.
pavlov 3mo ago
If you mean Alexandr Wang, the number is off by an order of magnitude. Forbes estimates he made over $3 billion from selling his startup to Meta and getting hired as chief AI officer.
- SilverSlash 3mo ago
  Nah, it's a guy named Matt Deitke and he was 24 at the time.
wmf 3mo ago
Muse Spark.

cmiles8 3mo ago

So like likes of AWS are spending crazy sums building capacity citing amazing demand they can’t meet. Meanwhile those with capacity are saying hey maybe we don’t need so much and are building cloud businesses to compete with AWS and flood the market with excess capacity. Oh yeah, this is gonna end well.

johndhi 3mo ago
I don't really think this necessarily means demand is limited. It just means demand is consolidating to winners. There's no denying openai and anthropic and maybe Google have a ton of demand. The fact that xai and meta do not does not mean no demand exists.
- cmiles8 3mo ago
  Everyone slamming the brakes on tokenmaxing and companies putting strict AI budgets in place is surely having at least some impact on demand. And the point is not that “no” demand exists but the likes of AWS are building to the moon citing massive future need but that simply doesn’t jive with all this unused capacity from others coming to the market. And building out massive capacity to sell a product that’s likely to trend to a low margin market commodity isn’t a great business.
  - eiejee 3mo ago
    Yeah today’s demand at existing and higher prices won’t persist. Firms are currently experimenting and figuring out the correct way to use these tools in the production function.
Jordanpomeroy 3mo ago
Most of the demand for data center GPUs comes from the big tech companies themselves, to develop products/services. Facebook and Twitter are both now signaling that the resources they funded with vast amounts of capital would be worth more to shareholders if they were leased to the highest bidder. This is either a realization that their internally developed product/service roadmap is not panning out, or that the lease demand is so high that they’d be fools not to take advantage.

khurs 3mo ago

Good news. The more providers, the more competition and lower prices. Meta are laying their own sub-sea cables globally at present: https://www.bbc.co.uk/news/articles/ckgrgz8271go https://www.bbc.co.uk/news/articles/ckgrgz8271go

XorNot 3mo ago
In the grim darkness of the AI boom everyone is watching high profitability industries move into areas characterized by having few providers due to incredibly poor margins and high expenses and declare it business genius.
- khurs 3mo ago
  AWS have 35% profit margins. Google Cloud recently told Meta they couldn't supply all the ai compute they want so Meta has no choice but to secure their supply? https://memeburn.com/google-limits-metas-gemini-ai-access-as-compute-crunch-bites/ https://memeburn.com/google-limits-metas-gemini-ai-access-as...
  - cmiles8 3mo ago
    Yes… and AWS is critical to the cash flow and valuation of its parent Amazon. The market looking like it’s trending towards oversupply does not paint a good picture in that context. AWS has to operate at these margins as most of the rest of Amazon is a very low margin business. Google, Microsoft and others have separate cash cows. For Amazon, AWS is the cash cow. They can’t afford a blip here.
- iamacyborg 3mo ago
  And much like the 41st millenium, there are no good guys, just the eternal laughter of hungry shareholders.
- TYPE_FASTER 3mo ago
  Are we watching the next sacrificial infra build-out happen (Global Crossing/Iridium), where eventually a bankruptcy will lead to affordability? Is this an artificial semiconductor demand peak with rapid expansion due to business FOMO? Will semi manufacturing ramp up to meet this peak, leading to a glut? Will this be like the pandemic supply chain whiplash impact on outdoor gear (Kona Bicycles at one point was offering a BOGO deal)?

dachworker 3mo ago

I'm excited for the opportunities that an abundance of compute brings, even in the absense of AI applications. Big compute is the right direction, if we can afford it. There are always things to simulate or discover or automate in some way shape or form.

newsclues 3mo ago
Big computer isn't the right direction if we have to sacrifice LOCAL COMPUTE for the big cloud future.

Traster 3mo ago

I think we're going to look back on this as one of the things that really exacerbates this bubble. It's one thing for these companies to have high expectations of their future compute needs and therefore overbuild. But what the SpaceX/Anthropic deal showed was even if you fall short, you can profit by selling off your overcapacity. This means there is essentially no incentive to limit how much capacity you're building, anything you don't use you'll still profit from. The problem is that only works if aggregate demand is higher than supply. At some point, all these new data centres are going to come on line, and the frothy "throw AI at everything with no regard to costs" is going to drawn down across the industry. And this supply will be much larger - because everyone thought the down side was limited. At that point you're going to have all of these companies trying to dump their excess capacity on the market and it suddenly won't be true that you can just sell capacity to your competitors. Obviously this won't bankrupt Meta - it'll just eat into their profits from their ads business. But it likely will drive a bunch of neo-clouds out of business very quickly, and the technology providers like Nvidia etc will suddenly come back to reasonable P/Es.

dotcoma 3mo ago
> But what the SpaceX/Anthropic deal showed was even if you fall short, you can profit by selling off your overcapacity. Do you have proof that the deal is profitable (and for how long?) for SpaceX ?

dotcoma 3mo ago

Meta is just another company that, like xAI/Grok, is at last starting to face reality: there are going to be two or three winners in this space, and they are not one of them.

ChrisArchitect 3mo ago

[dupe] Earlier on source: https://news.ycombinator.com/item?id=48745966 https://news.ycombinator.com/item?id=48745966