4 ms·

Wasn't it always seen as a "winner takes all" business?

by scotty79 2mo ago

sethops1 2mo ago
There is no "all", that's the point. There is no pot of gold at the end of the AI rainbow.
- TZubiri 2mo ago
  There's a lot of money changing hands, at least that's a spoil isn't it? And if the music stops, someone is going to end up holding it.
  - grey-area 2mo ago
    Well a lot of money is being spent, but is a lot of money being made? With circular deals it’s hard to tell.
    - dgellow 2mo ago
      NVIDIA, Micron, SK Hynix, and other hardware manufacturers, and also hyperscalers are the ones making the hard cash (unless you’re Oracle, that company is more than fucked)
      - grey-area 2mo ago
        They’re also at the centre of a lot of circular deals, nvidia in particular is notorious for it and still doing it. From last month: https://www.bloomberg.com/news/articles/2026-07-27/nvidia-s-750-billion-deals-revive-fear-of-ai-circular-financing https://www.bloomberg.com/news/articles/2026-07-27/nvidia-s-... Or from 2025: https://www.cnbc.com/2025/10/15/a-guide-to-1-trillion-worth-of-ai-deals-between-openai-nvidia.html https://www.cnbc.com/2025/10/15/a-guide-to-1-trillion-worth-...
        dgellow 2mo ago
        I know, but NVIDIA is also the main beneficiary from that whole scheme, what they get out of it is actual cash. They hyperscalers have a more complicated role though
        grey-area 2mo ago
        They also get sales, which prop up the extraordinary share price. That seems to be the main point of the circular deals.
        etempleton 2mo ago
        Nvidia is basically the house loaning money to the gamblers. They don’t care if the gamblers win or lose. They just care that people keep playing.
    - scotty79 2mo ago
      When somebody's spending someone else is making money.
      - grey-area 2mo ago
        With circular deals it’s hard to tell.
        scotty79 2mo ago
        If nobody is gaining, nobody is losing.
        TZubiri 2mo ago
        Even if topline is being artificially inflated for marketing reasons, if there's a pile of offsetting contracts, I would imagine there's always a risk of a differential in conditions that causes them to resolve asymmetrically. If company A and company B both have 100T$ of contracts with each other and 1T market cap each, it's hard to actually make them inert, any slight miscalc and one company goes bankrupt and its assets go to the winner. Hard to imagine a perfectly identical offsetting transaction let alone triangular or circular.
        rightbyte 2mo ago
        Nvidia and constructions companies certainly are. And a lot of middle men...
      - harpiaharpyja 2mo ago
        Except when it's that same someone else's money being spent.
- dgellow 2mo ago
  There is some gold, but it’s a fairly small amount compared to the ATM discussed by AI companies (basically software generation, software security, audio transcripts, translation, image processing, image generation, search, etc). So it’s not like there won’t be an AI industry in the future but it won’t be absolutely everywhere the way the AI boosters are projecting. Inference will be a low margin industry, training will be capex constrained and likely low margin too. And some services on top will have decent margins. But nothing like the datacenters full of PHDs Amodei and Altman are dreaming about. Just like any other technology
- tim333 2mo ago
  Most tech revolutions end up making a fair bit of money for successful businesses.
amelius 2mo ago
If there was one winner then that would make a lot of people very angry.
27183 2mo ago
> Wasn't it always seen as a "winner takes all" business? No. It was always a pyramid scheme marketed as a "winner takes all" business. But there's no winning. The only winners are those who cash out before it collapses. This is literally Web3 2.0.
- tim333 2mo ago
  AI isn't Web3.
  - 27183 2mo ago
    It is the same business model, just at a grander scale. There is no sustainable growth business underneath it, only vibes and hype, and the "future promise" of some miraculous breakthrough. It's becoming clearer by the minute that no such miracle is forthcoming. [edit] one small difference from web3 is that AI does seem to be at least marginally useful in some narrow verticals (devtools, infosec). That's pretty inconsequential, though. Those verticals can't supply the capital needed to sustain the industry. So on a macro scale that isn't relevant. When the dust settles I hope we end up in a place where we no longer accept lies and grift as pitchdecks and product briefs. If you have a technology, you demonstrate it, and only after a successful demonstration do you expect funding. We don't need to throw money at vaporware anymore, that's proven itself to be idiotic behavior over and over again.
    - tim333 2mo ago
      I'd say there's more. AI has been a staple of sci-fi and movies, a major field of academic research since Turing in the 1950s, predicted to be a big deal by major thinkers like John von Neumann, taken as a big deal by all the largest companies. Web3 on the other hand, none of that. I think it was some sort of crypto scam spinoff. Re. economics, I think AI will develop a bit like in the movies but hopefully not Terminator 2.
      - 27183 2mo ago
        I don't believe there's anything physically preventing the invention of AI. But nobody has done it. Until someone does it, it's some far off future thing. Anthropic, OpenAI, Google, Microsoft, et al. have not done it yet. They've done some interesting things with language models, but so far there's no sustainable business there. At least at nothing like the scale they've promised the markets. So the whole thing hinges on, at some point in the near future--before the music stops--one of these institutions making a huge breakthrough and discovering AI. But there's no indication we're any closer to that breakthrough now than we were 10, 20, 30, or 50 years ago. They sure do have a lot of compute at their disposal, but there's no clear engineering plan to use it to scale up AI. If this was a proven technology, there would be a clear path towards making it work. Advancing its industrial applications would be an engineering problem, not a science problem. AI is still science fiction (or at best a speculative theoretical research topic). That's not something sensible people throw money at, unless they've been scammed.

Wasn't it always seen as a "winner takes all" business?

sethops1 2mo ago

There is no "all", that's the point. There is no pot of gold at the end of the AI rainbow.

TZubiri 2mo ago
There's a lot of money changing hands, at least that's a spoil isn't it? And if the music stops, someone is going to end up holding it.
- grey-area 2mo ago
  Well a lot of money is being spent, but is a lot of money being made? With circular deals it’s hard to tell.
  - dgellow 2mo ago
    NVIDIA, Micron, SK Hynix, and other hardware manufacturers, and also hyperscalers are the ones making the hard cash (unless you’re Oracle, that company is more than fucked)
    - grey-area 2mo ago
      They’re also at the centre of a lot of circular deals, nvidia in particular is notorious for it and still doing it. From last month: https://www.bloomberg.com/news/articles/2026-07-27/nvidia-s-750-billion-deals-revive-fear-of-ai-circular-financing https://www.bloomberg.com/news/articles/2026-07-27/nvidia-s-... Or from 2025: https://www.cnbc.com/2025/10/15/a-guide-to-1-trillion-worth-of-ai-deals-between-openai-nvidia.html https://www.cnbc.com/2025/10/15/a-guide-to-1-trillion-worth-...
      - dgellow 2mo ago
        I know, but NVIDIA is also the main beneficiary from that whole scheme, what they get out of it is actual cash. They hyperscalers have a more complicated role though
        grey-area 2mo ago
        They also get sales, which prop up the extraordinary share price. That seems to be the main point of the circular deals.
        etempleton 2mo ago
        Nvidia is basically the house loaning money to the gamblers. They don’t care if the gamblers win or lose. They just care that people keep playing.
  - scotty79 2mo ago
    When somebody's spending someone else is making money.
    - grey-area 2mo ago
      With circular deals it’s hard to tell.
      - scotty79 2mo ago
        If nobody is gaining, nobody is losing.
        TZubiri 2mo ago
        Even if topline is being artificially inflated for marketing reasons, if there's a pile of offsetting contracts, I would imagine there's always a risk of a differential in conditions that causes them to resolve asymmetrically. If company A and company B both have 100T$ of contracts with each other and 1T market cap each, it's hard to actually make them inert, any slight miscalc and one company goes bankrupt and its assets go to the winner. Hard to imagine a perfectly identical offsetting transaction let alone triangular or circular.
        rightbyte 2mo ago
        Nvidia and constructions companies certainly are. And a lot of middle men...
    - harpiaharpyja 2mo ago
      Except when it's that same someone else's money being spent.
dgellow 2mo ago
There is some gold, but it’s a fairly small amount compared to the ATM discussed by AI companies (basically software generation, software security, audio transcripts, translation, image processing, image generation, search, etc). So it’s not like there won’t be an AI industry in the future but it won’t be absolutely everywhere the way the AI boosters are projecting. Inference will be a low margin industry, training will be capex constrained and likely low margin too. And some services on top will have decent margins. But nothing like the datacenters full of PHDs Amodei and Altman are dreaming about. Just like any other technology
tim333 2mo ago
Most tech revolutions end up making a fair bit of money for successful businesses.

amelius 2mo ago

If there was one winner then that would make a lot of people very angry.

27183 2mo ago

> Wasn't it always seen as a "winner takes all" business? No. It was always a pyramid scheme marketed as a "winner takes all" business. But there's no winning. The only winners are those who cash out before it collapses. This is literally Web3 2.0.

tim333 2mo ago
AI isn't Web3.
- 27183 2mo ago
  It is the same business model, just at a grander scale. There is no sustainable growth business underneath it, only vibes and hype, and the "future promise" of some miraculous breakthrough. It's becoming clearer by the minute that no such miracle is forthcoming. [edit] one small difference from web3 is that AI does seem to be at least marginally useful in some narrow verticals (devtools, infosec). That's pretty inconsequential, though. Those verticals can't supply the capital needed to sustain the industry. So on a macro scale that isn't relevant. When the dust settles I hope we end up in a place where we no longer accept lies and grift as pitchdecks and product briefs. If you have a technology, you demonstrate it, and only after a successful demonstration do you expect funding. We don't need to throw money at vaporware anymore, that's proven itself to be idiotic behavior over and over again.
  - tim333 2mo ago
    I'd say there's more. AI has been a staple of sci-fi and movies, a major field of academic research since Turing in the 1950s, predicted to be a big deal by major thinkers like John von Neumann, taken as a big deal by all the largest companies. Web3 on the other hand, none of that. I think it was some sort of crypto scam spinoff. Re. economics, I think AI will develop a bit like in the movies but hopefully not Terminator 2.
    - 27183 2mo ago
      I don't believe there's anything physically preventing the invention of AI. But nobody has done it. Until someone does it, it's some far off future thing. Anthropic, OpenAI, Google, Microsoft, et al. have not done it yet. They've done some interesting things with language models, but so far there's no sustainable business there. At least at nothing like the scale they've promised the markets. So the whole thing hinges on, at some point in the near future--before the music stops--one of these institutions making a huge breakthrough and discovering AI. But there's no indication we're any closer to that breakthrough now than we were 10, 20, 30, or 50 years ago. They sure do have a lot of compute at their disposal, but there's no clear engineering plan to use it to scale up AI. If this was a proven technology, there would be a clear path towards making it work. Advancing its industrial applications would be an engineering problem, not a science problem. AI is still science fiction (or at best a speculative theoretical research topic). That's not something sensible people throw money at, unless they've been scammed.