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Even banks and hyperscalers are now sounding the alarm about the AI bubble

35 points by andsoitis 4mo ago

joe_the_user 4mo ago
Even AI companies talk about the situation as a bubble. But the idea is this is akin to the railroad bubble or the Internet bubble. Basically, you the "frothy" development of a new technology in which you will certainly many losers but also a few massive winners. Moreover, "how do you monetize it" is not as much of a question as in dot com era. Not that things are guaranteed. But the argument that a smart speculative investor should be in AI somewhere seems convincing. It's certainly "overheated" the economy but a correction based on overheating doesn't discredit things, it just shakes thing up allows the highest quality plays to double down however many months later.
favflam 4mo ago
China is laughing because US pensioners will have paid trillions to train all these AI models whose weights can be distilled and open sourced trivially. Giving Silicon Valley political power is going to cost the United States enormously, starting with the pensions who will be left holding the bag after the AI bubble bursts.
- dcrazy 4mo ago
  Pensions? You’re not from the U.S., are you?
  - IOT_Apprentice 4mo ago
    I am from the USA and 401k + IRAs are the terms here and yes they are going to be used. Your point?
    - dcrazy 4mo ago
      There’s a relevant structural difference between 401(k)s/IRAs and pensions. You get to choose how to invest your personal retirement accounts, while pensions are institutional investors with active managers. An individual retiree can adjust their retirement account’s risk profile over time, but a pension fund needs to be generating sufficient revenue to cover any upcoming disbursements. There are also often other constraints on the pension fund, such as being substantially invested in the sponsoring company or only investing in investment-grade securities. If a single significant investment blows up, this can threaten the solvency of the fund for all beneficiaries. There have been pension funds that have zeroed out their unvested beneficiaries due to insolvency. My point in bringing this up is that the fact that most American retirements are self-directed rather than fixed-benefit means that the catastrophic scenario implied by the OP is less likely.
  - gipp 4mo ago
    https://fred.stlouisfed.org/series/BOGZ1FL594090005Q https://fred.stlouisfed.org/series/BOGZ1FL594090005Q Pension funds hold $30 trillion, my guy. Even restricting to only defined -benefit funds it's 7T.
- frrgg 4mo ago
  Indeed - it’ll essentially be like toilet paper when all is said and done. I know many here are really, really upset about that prospect - suck it up!!
- andsoitis 4mo ago
  > US pensioners will have paid trillions to train all these AI models What do you mean? Can you explain the flow of money from pensioners to the AI labs?
jocelyner 4mo ago
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35 points by andsoitis 4mo ago

Even AI companies talk about the situation as a bubble. But the idea is this is akin to the railroad bubble or the Internet bubble. Basically, you the "frothy" development of a new technology in which you will certainly many losers but also a few massive winners. Moreover, "how do you monetize it" is not as much of a question as in dot com era. Not that things are guaranteed. But the argument that a smart speculative investor should be in AI somewhere seems convincing. It's certainly "overheated" the economy but a correction based on overheating doesn't discredit things, it just shakes thing up allows the highest quality plays to double down however many months later.

favflam 4mo ago

China is laughing because US pensioners will have paid trillions to train all these AI models whose weights can be distilled and open sourced trivially. Giving Silicon Valley political power is going to cost the United States enormously, starting with the pensions who will be left holding the bag after the AI bubble bursts.

dcrazy 4mo ago
Pensions? You’re not from the U.S., are you?
- IOT_Apprentice 4mo ago
  I am from the USA and 401k + IRAs are the terms here and yes they are going to be used. Your point?
  - dcrazy 4mo ago
    There’s a relevant structural difference between 401(k)s/IRAs and pensions. You get to choose how to invest your personal retirement accounts, while pensions are institutional investors with active managers. An individual retiree can adjust their retirement account’s risk profile over time, but a pension fund needs to be generating sufficient revenue to cover any upcoming disbursements. There are also often other constraints on the pension fund, such as being substantially invested in the sponsoring company or only investing in investment-grade securities. If a single significant investment blows up, this can threaten the solvency of the fund for all beneficiaries. There have been pension funds that have zeroed out their unvested beneficiaries due to insolvency. My point in bringing this up is that the fact that most American retirements are self-directed rather than fixed-benefit means that the catastrophic scenario implied by the OP is less likely.
- gipp 4mo ago
  https://fred.stlouisfed.org/series/BOGZ1FL594090005Q https://fred.stlouisfed.org/series/BOGZ1FL594090005Q Pension funds hold $30 trillion, my guy. Even restricting to only defined -benefit funds it's 7T.
frrgg 4mo ago
Indeed - it’ll essentially be like toilet paper when all is said and done. I know many here are really, really upset about that prospect - suck it up!!
andsoitis 4mo ago
> US pensioners will have paid trillions to train all these AI models What do you mean? Can you explain the flow of money from pensioners to the AI labs?

jocelyner 4mo ago

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