25 ms·

The AI bubble is popping; we just don't know it yet

85 points by Bender 2mo ago

simianwords 2mo ago
> I caution anyone looking at API prices: they dropped the price, but is it actually less expensive? > Yeah, they dropped the price, but count the number of tokens you're tossing into it and see if it's actually cheaper. It's good for marketing, but the rub is how much you're actually using. The level of discourse is so horrible now, I don't have words. Are these the ones making predictions on AI bubble?
- empath75 2mo ago
  Of course, the price of tokens going down makes it cheaper. You can now afford to throw millions of tokens at solving a problem that would have been impossible for AI to solve at all a year ago for any price. People completely lack imagination about this stuff. The main problem right now with AI isn't even AI successfully producing code at a reasonable cost, it's human coordination and review that is the bottleneck.
  - HarHarVeryFunny 2mo ago
    I think it's both. It's easy to run up a massive bill with AI without much to show for it, which is why token-maxxing has now been replaced by cost-awareness and AI budgeting such as Uber's "max 10% of salary per employee". Cost isn't just token price though - it's (number-of-tokens-used x price-per-token), and there are large differences in token efficiency between different models and harnesses. Increasingly we're seeing benchmark sites focusing on "cost per completed task" as a cost metric, and it's not always the cheapest tokens that win. I agree that ultimately AI/coding cost is just part of the picture - at the end of the day it's about software development cost, which for time being involves humans.
- InsideOutSanta 2mo ago
  This is poorly stated in the podcast, but the underlying point is correct: while cost-per-token is going down, overall token use is way up. This is causing the cost of using LLMs in corporations to skyrocket.
  - simianwords 2mo ago
    Do you first agree that not only is the cost-per-token going down, cost per task is going down which obviously encourages people to use it more? If a car company releases a new car with higher mileage, would you suggest that cars are getting costlier?
    - InsideOutSanta 2mo ago
      No, cost per task is probably not going down on average. The underlying issue is that LLMs are still bad at most tasks they could be used for, so as their contexts get larger and they're able to run longer without becoming incoherent, more tokens are spent on tasks to improve the quality of output. So cost per task is probably going up on average, but so is the quality of the output.
      - simianwords 2mo ago
        I obviously mean cost per fixed task. Do you agree that if you fix a task, the cost is going down? Meaning you get more work done from the same cost over the years.
        InsideOutSanta 2mo ago
        Yes, obviously. The same task at the same quality and the same speed got cheaper. That's not what anyone is disputing. The problem is that overall expenses are going up.
        simianwords 2mo ago
        If a fruit company developed fruit that was cheaper but people ended up buying more fruits, would you then call fruits more expensive or more cheap? I assume cheap. Then why would you call AI more expensive?
- ac-ciano 2mo ago
  [flagged]
feverzsj 2mo ago
It's obvious. Most people were expecting this.
- abirch 2mo ago
  "The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivities ¾ that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future ¾ will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands." Warren Buffett 2000 https://www.berkshirehathaway.com/2000ar/2000letter.html https://www.berkshirehathaway.com/2000ar/2000letter.html
sysguest 2mo ago
well if bubble pops, everyone will die EXCEPT google UNLESS openAI/etc actually succeeds in making AGI that never hallucinates and goes over the current LLM limitations as for google... well they own the web (+google has plenty of other revenue sources, so it can just pay out its AI survival) if you're a website owner, would you welcome chatgpt/etc's data-collection bots? but... as for google's bots... you need your website to be on the Google search results...
- bzzzt 2mo ago
  > well if bubble pops, everyone will die EXCEPT google Also, possible Apple since they haven't gone into deep debt to finance 'AI buildout'.
  - gizajob 2mo ago
    They’re also primed to capture the on-device AI market in 3-5 years time when a “good enough” model can run locally.
  - brazzy 2mo ago
    Do they even have any direct exposure to the whole AI bubble? If not, I'd say they don't even count in the "everyone"-
    - bzzzt 2mo ago
      Their exposure could be net positive. If other companies fail they will still be around to pick up their customers.
  - delfinom 2mo ago
    Apple is also just partnering with Google. https://blog.google/company-news/inside-google/company-announcements/joint-statement-google-apple/ https://blog.google/company-news/inside-google/company-annou...
- tremon 2mo ago
  I expect Nvidia to survive the crash on its own, and everyone else except Softbank to be bailed out with US taxpayer money.
techpression 2mo ago
> The same thing happened with their massive investment in Anthropic. They accounted for $53.4 billion due to deals with Anthropic last quarter. He said if you follow one Anthropic dollar through the earnings release, it's counted in AI business revenue, chips business, and AWS segment revenue. That is insane if that is true, is that even legal?
- cmiles8 2mo ago
  It is. However remember that when the bubble pops it all works in the reverse direction too. Suddenly you have to mark down investment losses, missed revenue, and written off commitments. Companies can go from looking really good to a complete financial mess almost overnight when all that leverage and self-reinforcing stuff unwinds. See last weeks headlines for one such scenario.
- keeda 2mo ago
  There's a bit of Chinese whispers happening here. If you read the original piece they're talking about -- https://www.theregister.com/paas-and-iaas/2026/07/31/amazon-q2-earnings-strong-results-much-baloney-in-press-release-corey-quinn/5281486 https://www.theregister.com/paas-and-iaas/2026/07/31/amazon-... (definitely worth a read, it's hilarious) -- you'll realize it means that that Anthropic dollar is "counted" multiple times in the marketing of three different Amazon businesses. As far as accounting of revenue is concerned, it would have been counted as appropriate. Else, like you, I would guess it's not very legal.
AussieWog93 2mo ago
The title's clickbait (from The Register, of all people - colour me shocked!). There's nothing really groundbreaking at all in there, just "chips are expensive, and open weights models hosted locally in enterprise could displace Claude/GPT"
deleted 2mo ago
[deleted]
cmiles8 2mo ago
Outside a relatively small world of circular investment and FOMO feeding FOMO the general consensus seems to be “let it burn.” It appears very unlikely we will ever see an IPO of OpenAI. Anthropic appears less doomed, but still iffy at best. Tons of other large, but little discussed, AI startups are just dead-companies-walking at this point. The likes of AWS are showing good headline numbers but are taking out massive debt to build infrastructure that looks increasingly unneeded. Those with capacity are looking to offload it, quickly. Yes AWS has “committed contracts” for this capacity but if those commitments are with shaky AI startups then it’s mostly just fluff PR and these hyperscalers will get left holding the bag on all this debt.
- inigyou 2mo ago
  It's holding up the entire US stock market and therefore the entire US economy and the dollar value. You probably don't want this particular Atlas to shrug.
  - delfinom 2mo ago
    It's inevitable though. The funny-money has outpaced actual money by lightyears at this point. On the plus side, our interest rates aren't 0% right now, so there's some room there. On the down side, our national debt generation now exceeds 125% of GDP and bond rates are shooting up because nobody wants to buy our debt.
    - LogicFailsMe 2mo ago
      This guy makes a decent argument that the funny money party doesn't really get started until Q3 2027. To which I would respond probably, but also probably not if another coding agent sized market opens up between now and then. But predicting the future is hard and all that. https://overweightskepticism.substack.com/p/ais-cash-cushion-runs-out-around https://overweightskepticism.substack.com/p/ais-cash-cushion...
  - theideaofcoffee 2mo ago
    I do. The faster it happens, the faster a recovery begins and we can devote resources back to doing more practical things. Get it over with as soon as possible, rip the bandaid off, insert your idiom of choice.
lluisantoni 2mo ago
There is something I have been pondering recently. If we compare the cost of AI subscriptions (let's say Claude's 100/month) to a median developer salary (let's say 100k/year to 200k/year), the difference is orders of magnitude. This fills like a gap that needs to close. I suspect llms are too cheap right now but will raise their prices to a point where only big companies will be able to afford subscriptions to use them. I think soon we will see models that are only sold at very high prices.
- terabytest 2mo ago
  LLMs are not as cheap on enterprise plans.
- lluisantoni 2mo ago
  Also, something else to add. At first I thought no one wants to build data centers in hotter areas in the middle of deserts (many places in the American continent). So nobody would spend money building a data center in the Chihuahuan Desert for instance. However, a game of latencies will either require cover llm access from these areas, or make people move closer to the other data centers. In the former, llm prices will go up; in the latter, there will be a migration towards data centers that increase the price of the areas around.
  - KeplerBoy 2mo ago
    Who cares about a few ms more latency on an LLM API? Maybe for voice, but most other use-cases are quite latency insensitive.
    - goalieca 2mo ago
      Yeah, the customer support use case is already grinding me even worse than offshoring to India.
  - mythrwy 2mo ago
    They are building data centers in the Chihuahuan Desert right now. Meta has a huge one planned right outside El Paso.
digitcatphd 2mo ago
I would argue we still have not even really gotten started. What do we have in the decade ahead? Robotics in every household, models 10x+ faster and more intelligent than today. Really no significant impact in life sciences, R&D, and 'offline' world / robotics today as of yet, which is where most of the value will live.
- Waterluvian 2mo ago
  The absolutely massive scale and influence of the Web happened after the dot com burst.
- Cthulhu_ 2mo ago
  Robotics in the household has been the realm of science fiction for decades and it still hasn't happened. We get dedicated, compact machines like dishwashers and washing machine/dryers, that's it. Most recent innovation has been the automatic vacuum. If you want someone else to do household chores, hire someone. You can pay someone to do your house chores for years for the cost that these things will have initially.
  - ghaff 2mo ago
    >Most recent innovation has been the automatic vacuum Which are pretty useless for a lot of home layouts and degree of putting cords etc. away. I took a look a few years back and got a stick vac instead. (And have a monthly housekeeper who does a lot more than a robo-vac would.)
  - novia 2mo ago
    What it we would prefer that there were not other people in our homes for interpersonal reasons?
    - kibwen 2mo ago
      All robotic home appliances will feature cameras with which people will be watching you and microphones with which people will be listening to you, all the time, forever.
Aldipower 2mo ago
The bubble in the US pops maybe. China is only limited by chips, not costs.
- delfinom 2mo ago
  It's entirely possible China has a little bit of a bubble too when it comes to development investment vs demand. But obviously the bubble in the US is basically a whale compared to whatever small fish China is.
effnorwood 2mo ago
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ozgung 2mo ago
Note that the “AI Bubble” term used here is only defined in the context of market speculation. If you are not an investor of AI companies then there is nothing to worry about for you. If you are an investor, then you should know that people can’t really predict when bubbles burst. Every prediction in the markets is a speculation and some investors can simply bets against the popular expectations to make good money. Movements of AI stocks shouldn’t be confused with “AI as a technology” and “AI as a business”. Market valuation is a different game.
- rickydroll 2mo ago
  I'm not an intentional investor in AI companies. I have index funds, which still expose me to the risk of AI froth. Although yes, AI as a technology is still in its early stages, and I believe it's a sound technology for us to work with. I also think we're solving the wrong problem (removing office work) versus solving problems in the sciences, like running and monitoring biotech labs.
Hoasi 2mo ago
Of course we know it. It’s been obvious since at least 2023. Everyone in AI oversells, except a few companies that built an actual business with revenue, like Midjourney. There is no AGI coming anytime soon no matter how much hype is being thrown around. We are not in the singularity. However, peak bullshit is NEAR.
- CuriouslyC 2mo ago
  The trick the frontier labs have done is define AGI as "better than humans at the vast majority of valuable knowledge work" which is definitely not what most people think it means.
  - exographicskip 2mo ago
    > define AGI as "better than humans at the vast majority of valuable knowledge work" Isn't that superintelligence?
northernsausage 2mo ago
I mean we are due our 6-8 year financial crash that we won't learn from. Once again it'll be coming from the USA's feral financial investments all to be bailed out by the tax player whilst the rest of the world picks up the pieces. Maybe its time we moved away from the petro-dollar if the USA can't be trusted to keep its finances in order.
- ozlikethewizard 2mo ago
  Financial markets are already diversifying away from dollar as the sole reserve currency. Think swiss francs are doing pretty good.
jillesvangurp 2mo ago
There's a bubble around data centers, mainly. That's fueled by projected demand of AI and assumptions companies make about how the pie for that revenue is going to be divided up. What's very real is the rapidly growing amount of revenue for both OpenAI and Anthropic. That's already tens of billions per year and growing quite rapidly. Investments against that kind of revenue aren't completely horrible. To a point. But at the multi trillion dollar valuation level, of course there are going to be issues with living up to those expectations. In my view some of the base assumptions are looking not so solid currently. It's not a given that OpenAI and Anthropic will end up with most of the revenue. The Chinese trust Silicon Valley just about as much as vice versa. Which is why they are doing their own models, chips, and data centers. This is driving a rapid commoditization for things like frontier models, open model weights, and chips. This in turn gives countries outside the US a lot of options to stay independent. Which burst the bubble that all that global revenue was going to flow towards Silicon Valley. Some of that still might. But that will have to happen based on cost and merit. There are also geopolitical circumstances that cause most data center plans to be bottle necked on permitting, chip shortages, grid connectivity, availability of gas turbines, gas, solar panels, inverters, batteries, water, and other resources. As it turns out, you can't just willy nilly plan for hundreds of GW of data centers and expect those to pop into existence overnight along with all the needed infrastructure. Most of the announced/planned capacity for this will likely not be realized. Certainly not this decade. 5-10% by 2035 would be a lot given all the constraints and scarcity. No amount of reality distortion can change the physical constraints on this topic. The good news is that most of the money needed for this hasn't been spent yet. And what has been spent won't be going to waste. Up and running data centers are a hot commodity right now. They won't be running idle if a bubble bursts. But probably investors dreaming of multi trillion dollar IPOs might be a bit more cautious now that SpaceX stock is trading well below its IPO value.
antibarbarus 2mo ago
Just before coming to read this article and thread, I read how Hyatt got rid of something like 30% of their call centre staff, and how the industry is gearing for replacing human work with AI. There is sadly ample fiscal headroom in mundane drone-like work that was being outsourced (still cheaply, I might add) that AI can replace and even do a marginally better job of. I suspect AI prices can even increase and it will still be profitable for enterprises. Companies like this will certainly keep expanding their AI use, and once they commit to that, there's little stopping them from moving to open models or local inference if need be. My concern is less over the bubble and more over the social cost of AI. Call centres and the like provide a tremendous number of jobs. As AI moves into enterprises more and more, where are all these people supposed to work? Become baristas? They certainly won't be "learning to code"... What sorts of social and other unrests will this cause? These forces I think will muddy the waters and make predictions difficult. Say what you want about the AI bubble, but if it pops, it will be different than previous ones. The bubble doesn't even need to burst because of the insane economic model, if enough people are economically devastated by it, it will cause ripple effects of its own.
- DiBop 2mo ago
  The thing is that companies that are investing in AI crap to replace mundane drone-like workers is that the AI will get better but more importantly we will get more used to the way behaves towards us. Right now we some janky-as-fuck implementations but we're currently being trained on how to react to AI just as much it is trained on us responding to it.
pu_pe 2mo ago
> And the fundamentals here are OpenAI and Anthropic, which are massively valued companies. They have humongous commitments and are generating real revenue on the order of twenty billion a year. I think the size of their commitments is predicated on demand. Anthropic's annualized revenue run rate is now close to $50 billion, a fivefold increase from a year before [1]. They are making big investments, like $200 billion on Google's TPUs over the next five years [2], but those numbers seem justified by their expected revenue this year alone. If Anthropic cannot capture that revenue, someone else will. Stock market valuations are a different beast, I personally think we have been due for a correction for ages now. But criticism of AI investment and particularly betting that it will all come crashing soon appears misguided to me. I can see a future where AI expenditures shifts around, not a future where everyone simply stops spending in AI all of a sudden. [1] https://www.marketscale.com/industries/software-and-technology/anthropics-47b-run-rate-googles-alphaevolve-ga-and-netflixs-genpage-signal-enterprise-ai-is-entering-a-new-operational-phase https://www.marketscale.com/industries/software-and-technolo... [2] https://www.resultsense.com/news/2026-05-06-anthropic-200bn-google-cloud-tpu/ https://www.resultsense.com/news/2026-05-06-anthropic-200bn-...
welwala 2mo ago
Wow I hope this is true. This can only be good for the world. I'm sure AI will still come but it is too disruptive now. It needs a slowdown. As usual all the greedy investors are to blame.
lousken 2mo ago
The sooner it pops, the better. Later on it will be even worse.
keeda 2mo ago
> If you look at most big tech earnings this quarter, with the exception of Amazon, almost all others lost significant value after reporting. Microsoft, Alphabet, Meta, and Apple did. Microsoft spiked on earnings, and is now actually about ~24% above it's pre-earning level. Alphabet did lose about 7% the day of the earnings, but it recovered and now, after MSFT earnings, is actually 9% above the pre-earnings level. Meta dropped 10% on earnings but is now back to its pre-earnings level. Apple dropped ~10% and has not recovered (yet) but it's also famously "sitting out the AI bubble", so not sure why it's included here other than a "tech stock that went down." Oracle has been dropping forever but after Microsoft's earnings it's climbing again. If you zoom out, the stories change, and as you keep zooming out, they keep changing all over again. My point is, 1) reading stocks in isolation is like reading tea leaves, and 2) if you want to point to any stocks, you should make sure they support your narrative.
eboy 2mo ago
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zombot 2mo ago
I'm looking forward to prices for RAM and SSDs returning to sane levels.

85 points by Bender 2mo ago

> I caution anyone looking at API prices: they dropped the price, but is it actually less expensive? > Yeah, they dropped the price, but count the number of tokens you're tossing into it and see if it's actually cheaper. It's good for marketing, but the rub is how much you're actually using. The level of discourse is so horrible now, I don't have words. Are these the ones making predictions on AI bubble?

empath75 2mo ago
Of course, the price of tokens going down makes it cheaper. You can now afford to throw millions of tokens at solving a problem that would have been impossible for AI to solve at all a year ago for any price. People completely lack imagination about this stuff. The main problem right now with AI isn't even AI successfully producing code at a reasonable cost, it's human coordination and review that is the bottleneck.
- HarHarVeryFunny 2mo ago
  I think it's both. It's easy to run up a massive bill with AI without much to show for it, which is why token-maxxing has now been replaced by cost-awareness and AI budgeting such as Uber's "max 10% of salary per employee". Cost isn't just token price though - it's (number-of-tokens-used x price-per-token), and there are large differences in token efficiency between different models and harnesses. Increasingly we're seeing benchmark sites focusing on "cost per completed task" as a cost metric, and it's not always the cheapest tokens that win. I agree that ultimately AI/coding cost is just part of the picture - at the end of the day it's about software development cost, which for time being involves humans.
InsideOutSanta 2mo ago
This is poorly stated in the podcast, but the underlying point is correct: while cost-per-token is going down, overall token use is way up. This is causing the cost of using LLMs in corporations to skyrocket.
- simianwords 2mo ago
  Do you first agree that not only is the cost-per-token going down, cost per task is going down which obviously encourages people to use it more? If a car company releases a new car with higher mileage, would you suggest that cars are getting costlier?
  - InsideOutSanta 2mo ago
    No, cost per task is probably not going down on average. The underlying issue is that LLMs are still bad at most tasks they could be used for, so as their contexts get larger and they're able to run longer without becoming incoherent, more tokens are spent on tasks to improve the quality of output. So cost per task is probably going up on average, but so is the quality of the output.
    - simianwords 2mo ago
      I obviously mean cost per fixed task. Do you agree that if you fix a task, the cost is going down? Meaning you get more work done from the same cost over the years.
      - InsideOutSanta 2mo ago
        Yes, obviously. The same task at the same quality and the same speed got cheaper. That's not what anyone is disputing. The problem is that overall expenses are going up.
        simianwords 2mo ago
        If a fruit company developed fruit that was cheaper but people ended up buying more fruits, would you then call fruits more expensive or more cheap? I assume cheap. Then why would you call AI more expensive?
ac-ciano 2mo ago
[flagged]

feverzsj 2mo ago

It's obvious. Most people were expecting this.

abirch 2mo ago
"The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivities ¾ that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future ¾ will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands." Warren Buffett 2000 https://www.berkshirehathaway.com/2000ar/2000letter.html https://www.berkshirehathaway.com/2000ar/2000letter.html

sysguest 2mo ago

well if bubble pops, everyone will die EXCEPT google UNLESS openAI/etc actually succeeds in making AGI that never hallucinates and goes over the current LLM limitations as for google... well they own the web (+google has plenty of other revenue sources, so it can just pay out its AI survival) if you're a website owner, would you welcome chatgpt/etc's data-collection bots? but... as for google's bots... you need your website to be on the Google search results...

bzzzt 2mo ago
> well if bubble pops, everyone will die EXCEPT google Also, possible Apple since they haven't gone into deep debt to finance 'AI buildout'.
- gizajob 2mo ago
  They’re also primed to capture the on-device AI market in 3-5 years time when a “good enough” model can run locally.
- brazzy 2mo ago
  Do they even have any direct exposure to the whole AI bubble? If not, I'd say they don't even count in the "everyone"-
  - bzzzt 2mo ago
    Their exposure could be net positive. If other companies fail they will still be around to pick up their customers.
- delfinom 2mo ago
  Apple is also just partnering with Google. https://blog.google/company-news/inside-google/company-announcements/joint-statement-google-apple/ https://blog.google/company-news/inside-google/company-annou...
tremon 2mo ago
I expect Nvidia to survive the crash on its own, and everyone else except Softbank to be bailed out with US taxpayer money.

techpression 2mo ago

> The same thing happened with their massive investment in Anthropic. They accounted for $53.4 billion due to deals with Anthropic last quarter. He said if you follow one Anthropic dollar through the earnings release, it's counted in AI business revenue, chips business, and AWS segment revenue. That is insane if that is true, is that even legal?

cmiles8 2mo ago
It is. However remember that when the bubble pops it all works in the reverse direction too. Suddenly you have to mark down investment losses, missed revenue, and written off commitments. Companies can go from looking really good to a complete financial mess almost overnight when all that leverage and self-reinforcing stuff unwinds. See last weeks headlines for one such scenario.
keeda 2mo ago
There's a bit of Chinese whispers happening here. If you read the original piece they're talking about -- https://www.theregister.com/paas-and-iaas/2026/07/31/amazon-q2-earnings-strong-results-much-baloney-in-press-release-corey-quinn/5281486 https://www.theregister.com/paas-and-iaas/2026/07/31/amazon-... (definitely worth a read, it's hilarious) -- you'll realize it means that that Anthropic dollar is "counted" multiple times in the marketing of three different Amazon businesses. As far as accounting of revenue is concerned, it would have been counted as appropriate. Else, like you, I would guess it's not very legal.

AussieWog93 2mo ago

The title's clickbait (from The Register, of all people - colour me shocked!). There's nothing really groundbreaking at all in there, just "chips are expensive, and open weights models hosted locally in enterprise could displace Claude/GPT"

deleted 2mo ago

[deleted]

cmiles8 2mo ago

Outside a relatively small world of circular investment and FOMO feeding FOMO the general consensus seems to be “let it burn.” It appears very unlikely we will ever see an IPO of OpenAI. Anthropic appears less doomed, but still iffy at best. Tons of other large, but little discussed, AI startups are just dead-companies-walking at this point. The likes of AWS are showing good headline numbers but are taking out massive debt to build infrastructure that looks increasingly unneeded. Those with capacity are looking to offload it, quickly. Yes AWS has “committed contracts” for this capacity but if those commitments are with shaky AI startups then it’s mostly just fluff PR and these hyperscalers will get left holding the bag on all this debt.

inigyou 2mo ago
It's holding up the entire US stock market and therefore the entire US economy and the dollar value. You probably don't want this particular Atlas to shrug.
- delfinom 2mo ago
  It's inevitable though. The funny-money has outpaced actual money by lightyears at this point. On the plus side, our interest rates aren't 0% right now, so there's some room there. On the down side, our national debt generation now exceeds 125% of GDP and bond rates are shooting up because nobody wants to buy our debt.
  - LogicFailsMe 2mo ago
    This guy makes a decent argument that the funny money party doesn't really get started until Q3 2027. To which I would respond probably, but also probably not if another coding agent sized market opens up between now and then. But predicting the future is hard and all that. https://overweightskepticism.substack.com/p/ais-cash-cushion-runs-out-around https://overweightskepticism.substack.com/p/ais-cash-cushion...
- theideaofcoffee 2mo ago
  I do. The faster it happens, the faster a recovery begins and we can devote resources back to doing more practical things. Get it over with as soon as possible, rip the bandaid off, insert your idiom of choice.

lluisantoni 2mo ago

There is something I have been pondering recently. If we compare the cost of AI subscriptions (let's say Claude's 100/month) to a median developer salary (let's say 100k/year to 200k/year), the difference is orders of magnitude. This fills like a gap that needs to close. I suspect llms are too cheap right now but will raise their prices to a point where only big companies will be able to afford subscriptions to use them. I think soon we will see models that are only sold at very high prices.

terabytest 2mo ago
LLMs are not as cheap on enterprise plans.
lluisantoni 2mo ago
Also, something else to add. At first I thought no one wants to build data centers in hotter areas in the middle of deserts (many places in the American continent). So nobody would spend money building a data center in the Chihuahuan Desert for instance. However, a game of latencies will either require cover llm access from these areas, or make people move closer to the other data centers. In the former, llm prices will go up; in the latter, there will be a migration towards data centers that increase the price of the areas around.
- KeplerBoy 2mo ago
  Who cares about a few ms more latency on an LLM API? Maybe for voice, but most other use-cases are quite latency insensitive.
  - goalieca 2mo ago
    Yeah, the customer support use case is already grinding me even worse than offshoring to India.
- mythrwy 2mo ago
  They are building data centers in the Chihuahuan Desert right now. Meta has a huge one planned right outside El Paso.

digitcatphd 2mo ago

I would argue we still have not even really gotten started. What do we have in the decade ahead? Robotics in every household, models 10x+ faster and more intelligent than today. Really no significant impact in life sciences, R&D, and 'offline' world / robotics today as of yet, which is where most of the value will live.

Waterluvian 2mo ago
The absolutely massive scale and influence of the Web happened after the dot com burst.
Cthulhu_ 2mo ago
Robotics in the household has been the realm of science fiction for decades and it still hasn't happened. We get dedicated, compact machines like dishwashers and washing machine/dryers, that's it. Most recent innovation has been the automatic vacuum. If you want someone else to do household chores, hire someone. You can pay someone to do your house chores for years for the cost that these things will have initially.
- ghaff 2mo ago
  >Most recent innovation has been the automatic vacuum Which are pretty useless for a lot of home layouts and degree of putting cords etc. away. I took a look a few years back and got a stick vac instead. (And have a monthly housekeeper who does a lot more than a robo-vac would.)
- novia 2mo ago
  What it we would prefer that there were not other people in our homes for interpersonal reasons?
  - kibwen 2mo ago
    All robotic home appliances will feature cameras with which people will be watching you and microphones with which people will be listening to you, all the time, forever.

Aldipower 2mo ago

The bubble in the US pops maybe. China is only limited by chips, not costs.

delfinom 2mo ago
It's entirely possible China has a little bit of a bubble too when it comes to development investment vs demand. But obviously the bubble in the US is basically a whale compared to whatever small fish China is.

effnorwood 2mo ago

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ozgung 2mo ago

Note that the “AI Bubble” term used here is only defined in the context of market speculation. If you are not an investor of AI companies then there is nothing to worry about for you. If you are an investor, then you should know that people can’t really predict when bubbles burst. Every prediction in the markets is a speculation and some investors can simply bets against the popular expectations to make good money. Movements of AI stocks shouldn’t be confused with “AI as a technology” and “AI as a business”. Market valuation is a different game.

rickydroll 2mo ago
I'm not an intentional investor in AI companies. I have index funds, which still expose me to the risk of AI froth. Although yes, AI as a technology is still in its early stages, and I believe it's a sound technology for us to work with. I also think we're solving the wrong problem (removing office work) versus solving problems in the sciences, like running and monitoring biotech labs.

Hoasi 2mo ago

Of course we know it. It’s been obvious since at least 2023. Everyone in AI oversells, except a few companies that built an actual business with revenue, like Midjourney. There is no AGI coming anytime soon no matter how much hype is being thrown around. We are not in the singularity. However, peak bullshit is NEAR.

CuriouslyC 2mo ago
The trick the frontier labs have done is define AGI as "better than humans at the vast majority of valuable knowledge work" which is definitely not what most people think it means.
- exographicskip 2mo ago
  > define AGI as "better than humans at the vast majority of valuable knowledge work" Isn't that superintelligence?

northernsausage 2mo ago

I mean we are due our 6-8 year financial crash that we won't learn from. Once again it'll be coming from the USA's feral financial investments all to be bailed out by the tax player whilst the rest of the world picks up the pieces. Maybe its time we moved away from the petro-dollar if the USA can't be trusted to keep its finances in order.

ozlikethewizard 2mo ago
Financial markets are already diversifying away from dollar as the sole reserve currency. Think swiss francs are doing pretty good.

jillesvangurp 2mo ago

There's a bubble around data centers, mainly. That's fueled by projected demand of AI and assumptions companies make about how the pie for that revenue is going to be divided up. What's very real is the rapidly growing amount of revenue for both OpenAI and Anthropic. That's already tens of billions per year and growing quite rapidly. Investments against that kind of revenue aren't completely horrible. To a point. But at the multi trillion dollar valuation level, of course there are going to be issues with living up to those expectations. In my view some of the base assumptions are looking not so solid currently. It's not a given that OpenAI and Anthropic will end up with most of the revenue. The Chinese trust Silicon Valley just about as much as vice versa. Which is why they are doing their own models, chips, and data centers. This is driving a rapid commoditization for things like frontier models, open model weights, and chips. This in turn gives countries outside the US a lot of options to stay independent. Which burst the bubble that all that global revenue was going to flow towards Silicon Valley. Some of that still might. But that will have to happen based on cost and merit. There are also geopolitical circumstances that cause most data center plans to be bottle necked on permitting, chip shortages, grid connectivity, availability of gas turbines, gas, solar panels, inverters, batteries, water, and other resources. As it turns out, you can't just willy nilly plan for hundreds of GW of data centers and expect those to pop into existence overnight along with all the needed infrastructure. Most of the announced/planned capacity for this will likely not be realized. Certainly not this decade. 5-10% by 2035 would be a lot given all the constraints and scarcity. No amount of reality distortion can change the physical constraints on this topic. The good news is that most of the money needed for this hasn't been spent yet. And what has been spent won't be going to waste. Up and running data centers are a hot commodity right now. They won't be running idle if a bubble bursts. But probably investors dreaming of multi trillion dollar IPOs might be a bit more cautious now that SpaceX stock is trading well below its IPO value.

antibarbarus 2mo ago

Just before coming to read this article and thread, I read how Hyatt got rid of something like 30% of their call centre staff, and how the industry is gearing for replacing human work with AI. There is sadly ample fiscal headroom in mundane drone-like work that was being outsourced (still cheaply, I might add) that AI can replace and even do a marginally better job of. I suspect AI prices can even increase and it will still be profitable for enterprises. Companies like this will certainly keep expanding their AI use, and once they commit to that, there's little stopping them from moving to open models or local inference if need be. My concern is less over the bubble and more over the social cost of AI. Call centres and the like provide a tremendous number of jobs. As AI moves into enterprises more and more, where are all these people supposed to work? Become baristas? They certainly won't be "learning to code"... What sorts of social and other unrests will this cause? These forces I think will muddy the waters and make predictions difficult. Say what you want about the AI bubble, but if it pops, it will be different than previous ones. The bubble doesn't even need to burst because of the insane economic model, if enough people are economically devastated by it, it will cause ripple effects of its own.

DiBop 2mo ago
The thing is that companies that are investing in AI crap to replace mundane drone-like workers is that the AI will get better but more importantly we will get more used to the way behaves towards us. Right now we some janky-as-fuck implementations but we're currently being trained on how to react to AI just as much it is trained on us responding to it.

pu_pe 2mo ago

> And the fundamentals here are OpenAI and Anthropic, which are massively valued companies. They have humongous commitments and are generating real revenue on the order of twenty billion a year. I think the size of their commitments is predicated on demand. Anthropic's annualized revenue run rate is now close to $50 billion, a fivefold increase from a year before [1]. They are making big investments, like $200 billion on Google's TPUs over the next five years [2], but those numbers seem justified by their expected revenue this year alone. If Anthropic cannot capture that revenue, someone else will. Stock market valuations are a different beast, I personally think we have been due for a correction for ages now. But criticism of AI investment and particularly betting that it will all come crashing soon appears misguided to me. I can see a future where AI expenditures shifts around, not a future where everyone simply stops spending in AI all of a sudden. [1] https://www.marketscale.com/industries/software-and-technology/anthropics-47b-run-rate-googles-alphaevolve-ga-and-netflixs-genpage-signal-enterprise-ai-is-entering-a-new-operational-phase https://www.marketscale.com/industries/software-and-technolo... [2] https://www.resultsense.com/news/2026-05-06-anthropic-200bn-google-cloud-tpu/ https://www.resultsense.com/news/2026-05-06-anthropic-200bn-...

welwala 2mo ago

Wow I hope this is true. This can only be good for the world. I'm sure AI will still come but it is too disruptive now. It needs a slowdown. As usual all the greedy investors are to blame.

lousken 2mo ago

The sooner it pops, the better. Later on it will be even worse.

keeda 2mo ago

> If you look at most big tech earnings this quarter, with the exception of Amazon, almost all others lost significant value after reporting. Microsoft, Alphabet, Meta, and Apple did. Microsoft spiked on earnings, and is now actually about ~24% above it's pre-earning level. Alphabet did lose about 7% the day of the earnings, but it recovered and now, after MSFT earnings, is actually 9% above the pre-earnings level. Meta dropped 10% on earnings but is now back to its pre-earnings level. Apple dropped ~10% and has not recovered (yet) but it's also famously "sitting out the AI bubble", so not sure why it's included here other than a "tech stock that went down." Oracle has been dropping forever but after Microsoft's earnings it's climbing again. If you zoom out, the stories change, and as you keep zooming out, they keep changing all over again. My point is, 1) reading stocks in isolation is like reading tea leaves, and 2) if you want to point to any stocks, you should make sure they support your narrative.

eboy 2mo ago

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zombot 2mo ago

I'm looking forward to prices for RAM and SSDs returning to sane levels.