Ezra Klein's interview Friday with people who are on each side was interesting. I was at an internet company in the middle of dot com, that didn't survive but did sell off our business unit. Now I'm in the middle of AI hype. The similarities are staggering.
The "it's obviously a bubble" guy absolutely demolished the opposing view. I liked when he casually dropped how Anthropic + OpenAI + SpaceX are gonna end up being valued more than all post-WW2 IPOs combined. And that was like Exhibit 36 in his case.
Valuation is tied to value. Value is tied to economics. Economics is made up of real people who make purchase decisions based on what they can and are willing to pay.
The context provided simply demonstrates that the value is now detethered from the economics. Quite simply, who is going to pay to a level that dwarfs all post WWII IPOs? The valuation is higher than food and beverage. EVERYBODY needs food and beverage.
You believe that one company is going to replace a large percentage of the world’s economy and have no significant competition? That’s what the valuations tell us.
> I didn’t pick up on that at all, why does Reddit have to make everyone so heavily doom centered?
You gone outside lately? Maybe read a newspaper? Christ... Western democracies are crumbling; the US, France, the UK, and Germany are going broke. We are basically in a precursor to WW3, but this time with fucking nukes, and literally the US President has dementia (non-arguable), who also just happens to be a rapist, convicted felon, who not only tried to steal the 2020 election with fake electors, but also incited insurrection and kept US secrets in his clubhouse bathroom, with an utterly complicit Republican Congress and Supreme Court. We have the most corrupt, incompetent government in US HISTORY like seriously, this Congress has done less work than any other Congress. Both Congress and the SCOTUS have the lowest rating in modern history. France, Ukraine, Iran, Gaza and Israel, and Russia are LITERALLY ON FUCKING FIRE. Don't even get me started on the comparison to the Gilded Age wealth transfer... We are gonna hit an energy and food crisis come this winter, spring, and summer even if we unfuck SoH this second... AI is going to both displace a shitton of white-collar and educated workers and, at the same time, collapse the US /World economy because it's the only thing keeping everyone from slipping into a depression.
Are they really that similar? Strip away that it is computer based, digital tech and what's so similar? The dot com bubble had a lot of big businesses that didn't see a future for the internet and so they weren't investing in it. I remember people buying up domains like coke.com and holding them for years until coca cola finally wanted the domain and paid a couple million for it.
I don't really see the big business push back on AI like there was for the internet. Big business seems to be championing AI in the face of the general public. In the dot com it was reversed, people were championing the internet in the face of big business.
Undoubtedly there is a bubble but I don't see the overwhelming parallels to dot com. It's probably more like the housing crisis in 2008. It's like AI companies are collateralized debt obligations and the data centers are mortgage-backed securities.
The dot com bust had no government bail out and 2008 had "too big to fail". Isn't AI much closer to being too big to fail rather than just culling of companies that didn't actually do anything?
The circular financing going on now is similar to some of what was happening in 99-00. The argument about a revolutionary technology with people willing to invest at any valuation is similar to the internet. It's not identical, the Hyperscalers have more cash than the internet companies did. Nortel and Lucent could only have survived with continued growth beyond the needs of anyone. However the fact that there was more equipment installed then than there was any use for is clearly different
I think the other challenge now, is that the valuations are astronomical. Each individual AI company is valued as if it will 'win' the AI race. Any individual one of these valuations is possible, but combined they're ridiculous.
Only two are "over valued". I don't agree with that statement, but really, only two are are valued in the trillion + range. The Chinese labs are nowhere near that level of valuation, nor are other AI labs.
The big difference between now and then was that back then companies went public to build up. Now fucktons of private money has funnelled into these guys for years. When they ipo, it's shifting that to Joe public and the mutual funds, and the private guys can cash out and walk away more the merrier.
The bubble won't pop until they bug guys IPO. Then it may, and I don't think if it does it will be much longer after.
One big difference is that 99-00 was too early for broad internet adoption. Most people didn’t own computers and the telecom infrastructure was severely lacking.
I don’t see the same issues today. Everyone has a machine capable of accessing AI and the compute infrastructure buildout has taken place so much faster than during the dotcom bubble.
Dotcom bubble popped because people realize it would be another ten years before the majority of consumers were actually using the internet. That’s not the case with AI.
I tend to agree, there are similarities but also differences, not only adoption but also the dotcom failures were often about making traditional businesses online which turned out to be very hard anyway. Like pets.com, webvan etc
I can totally see one or more of the big companies running out of road and selling off a lot of assets cheaply which will hurt. Worst case in my mind is a cash rich giant like Google or Meta cleans up.
Most likely, overspend of capex relative to observed demand, a technology reliant on network effects for significant uptake (AI work is only a force multiplier if other people use AI, otherwise it remains at the slowest-human speed like right now), and a build-out financed by debt in an economy that's starting to heat up on inflation with rising Treasuries.
They're more similar in financing terms. In both cases there are / were massive expectations for the future - a very promising technology, "it will change the way we work, the way we live our lives" but there are not yet predictable profits from it.
There was / has been a gold rush amongst investors - throw money at it to try and make your company the biggest and most successful and then you'll be the one raking in the money when profits are realised.
As you say it's not an exact analogy - domain name squatting is perhaps a bit more like NFTs or all the different and useful blockchains we were promised or something. There was a mental model in those days where you would type in the name of the site you wanted to go to, whereas it's turned out that we just type what we want into the search bar and Google finds us what we want.
This kind of illustrates the problem - things that were expected to be very profitable (in this case domain names, but also important internet service brands like AOL) turned out to be much less valuable than expected. And investors had sunk tonnes of money into these companies. When financing money ran out, all these unprofitable companies were left unable to pay their employees and went bust. The price of tech stocks collapsed because everyone lost confidence in them - companies like Amazon and eBay survived because they were selling actual profit and generating revenues (if probably not much at the time).
The difference here is that the investment in unprofitable AI tech seems more concentrated in a handful of companies - Oracle, Musk's X, Open AI, Anthropic. I'm not sure that's the whole story because there's a lot of other companies building data centres - I see the Blue Owl investment company financing some of these and I think that's managed like a REIT; they put forward the money to build the data centres because they have a promise from the hyperscalers that they'll rent space in them when completed, but what happens if they go bust because they can't make money from AI and can't pay their bills? Big banks are involved.
At least Apple, Google, Microsoft and Meta have revenues from other sources - they're actually profitable from their products. I read this week that Nvidia has 75% profit margins on its graphics cards.
I keep seeing a lot of comments about how AI won’t go away and they’re annoyed with hearing this news so often. Bubbles popping don’t happen overnight and it doesn’t mean the product or commodity goes away.
Slightly less than half of all the dot com companies survived the bubble and the only ones who endured were the ones that could take a dip in their valuation for an extended period from 2000-2004. So yeah, you’ll be hearing about the bubble bursting for ~5 years and then you’ll look around and see only like five AI companies survived, mostly the ones attached to Microsoft, Google, Apple, and other companies. That’s how it is. Pay attention to the larger companies purchasing start ups and smaller companies filing bankruptcy. That’s your sign because it means AI isn’t as profitable as it seems and without some other product, you can’t subsidize the losses.
Something that’s often left out of the dot com bubble is the fiber build out. It was a massive over investment in fiber at the time and some companies got crushed. Others picked up a lot of cheap fiber and ultimately the internet was a massive success and the fiber probably led to our cloud computing capabilities today.
A crash doesn’t mean the data centers or other infrastructure is going away. But it might be too much CapEx that leads to some major players crashing and others getting some cheap stuff to build out.
Frontier AI labs crashing because the cost/results is abyssmal. AI labs focusing on cost/result ratio survives.
Also, economically wise, AI is currently a super strong catch up tool but a very bad bleeding edge one. If you use AI to build a moat, any AI labs are using your data to train on them 100% thus making it super easy for other companies to catchup.
I think this is very accurate, I think about how Amazon used all of its sellers data to undercut their own sellers on successful products and eventually cut them out going directly to the manufacturer. OpenAI and Claude code lets your code not be trained on but they can always do it and say sorry afterwards, what are we going to do?
Even then the frontier AI labs are not public companies and so the only people getting burned are institional investors. If they IPO and a ton of people buy in, thats sorta on them.
I am asking myself, does it currently make sense to use much AI? It changes completely every 12 month. So everything you learn is for nothing. Today I can one shoot a little tool that 2 years ago would cost much more effort turning build. And everything you build now might be difficult to maintain and will be rebuild in the future.
And for companies producing software, what is the benefit to be 10 times faster? Your customers will not buy 10 times more often. And users will not want to change versions 10 times more often. So it would be only a reduced head count. But if it is do easy to create something with just a prompt, everyone can do it and the result is nearly worthless.
I’d push back on the selling 10 times more software. The bigger benefit in my eyes is corporate IT. At least in my org, the narrative we’re going with is doing more with the same resources.
So say for example a lot of our software engineering is engaged in support activities for our mainframe systems. (A lot of financial services orgs are still like this). If we can shift from 75% of their time on support to only 50% of their time, we can focus more on improving our systems. There are ALOT of things we don’t do simply because we have to focus on keeping the lights on so to speak.
Does it justify AI valuations? I personally don’t think so. But even if the tools never improve further from today, they are very useful.
AI certainly can be helpful. I see people now being able to do things they previously would need help of a lot of other peoples (for writing code, creating picture) or a lot of time (organising/planing things, getting all the information).
For big companies I am sometimes not so sure. There is a lot of bureaucracy that does not produce revenue or profit. That grows over time and is only possible, because they have a very profitable core.
Management likes to believe they have some control and overview. Some of that is illusion. But this elusion has to be feed with data created from tool. A Lot of decision could have been decided more efficiently on a lower lever by people knowing what they do instead of trying to convince the higher ups. And if software is more easily created, there will be more of it, also more automated stuff. Certainly less people per CPU cycle. But does all of that improve what the profit the core of the company can generate?
Generally if you can go 10X faster you can cut 90% of your headcount and perform the same speed. (There are exceptions and specialties but it’s most true at large, scaled companies)
That is what they are actually aiming for, cutting cost a bunch without effecting delivery.
Data centers just dont have the lifespan to be as beneficiall in terms of the infrastructure built during the boom.
We'll reach year 5 and alot of the equipment purchased during the boom will no longer be functional and the capital simply will not exist to replace it unless there is some miracle business model that makes it hugely profitable.
I agree, AI is going nowhere but I think its forseeable that AI use will be more limited in the future, because companies will be forsed to run a sustainable business model (at least by the standards of every other business) and unprofitable uses will go by the wayside.
I think its truely likely that the high end ai models will be almost exclusively be for limited corporate use and the very rich.
"Data centers just dont have the lifespan to be as beneficiall in terms of the infrastructure built during the boom."
That's contrary to one of the primary issues we've been seeing in the actual construction of data centers, namely that grid access is one of the largest obstacles. Simply owning a building with access to 1 MW of power may be worth a lot if there's a demand for compute.
I shouldve been more specific as I was referring to the chips.
Its doubtless the buildings, or at least a good portion of them will remain usable And useful especially as the west begins its re-industrialisation. But in terms AI related activities I have my doubts, as I said, once the existing stock of chips becomes unusable/ obsolete.
Because it’s high cost R&D at its core. There’s not room in a good economy for lots of companies doing the same thing at high expense- where there’s not enough return. So some of them have to die.
There’s a good reason there’s only a handful of high grade pharma research companies globally and even they need patent protection which none of these AIs get.
If companies die then sure there will be reduced demand from them not needing R&D but there will also be less datacenters built by these now non existent companies.
I just don't see why that would result in overbuilding.
The data centers are *hysterically* profitable to operate. Serving the models is likewise extremely profitable (80+% margins on inference). Serving the models while doing R&D on the next generation of models is not profitable (though in Anthropic's case it's close). If there's any threat of a 'bubble pop' the labs can slow down on R&D and become comically profitable overnight.
The Internet we know today was birthed out of the dotcom bubble. I assume that is what will happen with AI. The bust will act as a survival of the fittest event where only the strongest companies survive.
I think one of the underappreciated issues that will crop up should a crash occur will be a delayed effect once hardware bought during the AI boom begins to fail.
The capital simply will not exist to replace enough of it unless a hugely profitable business model to justify that cost is discovered in the meantime.
Exactly this. Also people view the AI bubble as Anthropic/OpenAI/etc disappearing. That is not the most likely path, it is more likely the smaller companies like Character.AI fail and there is consolidation within the market, it becomes about who can provide the current services at a lower cost rather then the race for cutting edge service like it is today.
And google as the biggest internet company only had it IPO after the dot com bubble burst, while Yahoo does not exist anymore. Also amazons cash cow AWS only startet in 2006.
So it is not clear, if OpenAI and Anthropic will survive as companies.
A bubble bursting is making a lot more noise than some bankruptcy in the background. For the rest I agree with you. Companies will remains, akme of them. But more importantly the market will stabilize and the finance sector will stop allocating capital exclusively to AI.
The thing is the internet bubble popped but the internet did not go away and it actually supercharged the global economy and now there’s no imagining a world without internet. Why we would think AI would go a different path is more of an emotional take.
Isnt the main risk of this particular bubble bursting the scale of the likely loss in valuation rather than the loss of companies?
Like we're talking financial institution, government finance ruining numbers should there be a significant percentage dip
You're ultimately right though i just think perhaps youre underselling the scale of the crisis should the bubble burst and given broader implications on government borrowing, taxes, a collapse in demand for ai centric commodities etc etc.
I agree the only companies that will survive are those that have existing extremely profitable businesses that compliment ai development and use. Your big tech companies that survived the dot com bubble. I do think there will be some incredibly large victims of this crash. One of the big players will be struck off the board and others will be extremely damaged by the afforementioned collapse in ai related commodities. Nvidia could well suffer serious consequences if that 90% of their business deteriorates significantly. Sure there will always be a market, but the extent to which it will shrink could be a disaster in and of its self.
The bubble is the data center commitments and the assumption that all kinds of new products will emerge. So far, the new products have been scarce. The LLMs themselves are being competed into the ground where the cost will simple be electricity with thin margins. It's here, I use it literally all day at work. Tons of human involvement still and imo it's very much stalled on doing sophisticated things in a way that allows for the keepers of it to understand and be content with assuming responsibility of the creation.
I think the most interesting part of AI will happen when data centres full of extremely high-performance but largely unused kit slowly get older and less valuable. Things where the original owners may have gone bust, and the giants are buying the newer, more efficient kit, and someone thinks they can make money renting it out or selling it off in chunks.
I sure do. In early 2000, csco went from 55 to 80 in about a month. No increase in revenue or earnings, just analysts making increasingly optimistic forecasts. When the pe got over 200, the market suddenly realized this is crazy. Then when csco started falling everyone ran for the exits
Every big AI company is valued as if they're the winner who takes it all in a all-in on AI future. Even if that future comes to pass, all of them can't be winners, and it's possible that the real future winners haven't even broken to the mainstream yet, or will be the ones who pick up the pieces after the current big players crash.
The valuations - the PE ratios are as low as they’ve ever been. Earnings keep going up. The demand for intelligence is unlimited. This is too easy being on the other side of this trade from you all.
Check out the book "This time is different: eight centuries of financial folly"
The argument is not that AI won't be transformative and incredibly impactful -- its that every time a transformative technology has emerged, the initial exuberance has led to over investment because no one wants to miss out. No one is saying electricity, trains, telegraphs/phones, the internet etc was not transformative and profits could be made by investing in them. But in every case the initial investment craze led to crashes. And every time investors said "this time is different" and then the market crashed and took 10-20 years to recover.
Efficient market tend to work like a maximally fast PID controller. And that always oversteers. Only way to avoid that would be to artificially slow it down. And since nobody slowed this investment cycle down in time, there is massive overinvestment. No matter where the reasonable end point would be, the momentum forces it to go to high and then crash and recover before stabilising on a reasonable path. That could be avoided if you had to wait for real feedback, like making money from an investment before signing of the next round. But nobody does that.
It isn't possible for demand for anything to be unlimited. In fact, demand is currently around $500B while analysts estimate it would need to reach $6-8T in total by 2030 to make the existing investment in the segment viable. Very few companies consuming AI services are reporting a significant increase in their profits from doing so, and many report a negative ROI, so the argument for near-term skyrocketing demand is very shaky. The only companies actually making money in the AI pipeline aren't AI companies or AI consumers; they are, as ever in a gold rush, the ones selling shovels: Nvidia, Micron, Samsung, SK Hynix, Amazon, Microsoft, and Google.
The belief is that AI research will give us super intelligence that will transform all civilisation. Like making the Sahara green, infinite energy, new science, robot factories replacing humans. Otherwise it's a bubble. Will it also crash the whole economy? Either way, it's a win-win in my book.
Just two more weeks bro please bro you have to be believe me it's all going down in two weeks bro please, please believe me bro the collapse will happen any day now bro please the bubble will pop i promise bro please
Coreweave is about to go down and Anthropic and OpenAI are cash burning machines running out of other people's money to light on fire. I don't know if it'll crash in two weeks or two years, but so you see anyway out of this other than a crash?
There are going to be winners and losers. Maybe OpenAI and anthropic are amongst the winners but some of the capex here will plateau or drop when others don’t make it
They may be, or they may fail catastrophically and get scooped up by Google, Amazon, an Meta.
No one expected Lehman Brothers, Bear Stearns, or Washington Mutual to fail during the 2008 financial crisis, but Lehman Brothers had to liquidate, Washington Mutal got seized and sold to JPMorgan Chase, and Bear Stearns got a bailout and sold to JPMorgan Chase.
Neither of those companies are so big the same couldn't happen to them, and neither is in a position to be a buyer of another.
>Neither of those companies are so big the same couldn't happen to them
Both Anthropic and OpenAi are tiny compared to those companies. They are not publicly traded, so whatever their valuation is set at is pure speculation. They have very few assets. They have had hundreds of billions of capital pumped into them but have spent almost all of that over time.
I'm not saying they will fail or are worthless, they have brands and IP and certainly some amount of hardware that they own directly, but I am pretty confident they are fundamentally smaller than all those banks you mentioned, who had actual assets when all that started.
Yeah that was pretty much my point. They have no mechanism to save themselves when the bubble pops. Since they're not publicly traded, they don't currently have to worry about their stock plummeting to zero and then going under, but since neither are cash rich and operate on debt only, they have to keep raising funds. If the bubble pops and all the bigger companies that keep investing into them (particularly into openai) stop doing so, then those companies are immediately looking at chapter 11.
What if china continues focusing on light weight models - models that don’t have the insane hardware costs ?
China has proven time and time again that you don’t need to offer the best product - you only need to offer a product that is good enough and cheaper than the good product.
Any company that provides a model that is 75% as good with 40% of the operating costs (like several Chinese companies are working towards ) will win the AI race.
And once a company wins because their “good enough” model has captured the market they will be in a position to offer a cutting edge model - and then they will charge out the ass for it.
Were you around for other big failures in the past? There is just far too much shareholder money being called in and not enough productivity to offset it. It's called over leveraging - and all they're doing is trying to outspend it.
Bingo. If trump is still in office when it happens, they will have a bailout or a full scale government takeover. Nothing like the government owning a bunch of data centers and proprietary information that people have fed into these AI chat bots and being able to more adequately spy on their on citizens.
They probably won’t fail, but the negatives stories will pile up and they will eventually sell to a hyper scaler at a fraction of their current valuation
That’s my thought, it is going to be a slower burn over next few months to years. I think this Decembers typical sell off cycle will be a bit of a tell to how quick it might be.
Lol ... these will probably be famous last words before too long.
These companies promise they can do everything because they haven't figured out how to make money from it (yet). There'll be plenty of them betting on the wrong horse.
Yeah, it's absolutely rolling on hype. I was just bringing it back to OC's comment. Tesla is a shit business that only succeeds from hype, but unlike OC's suggestion, Tesla's tech isn't great. Like at all. Every model is shitty, with they cybertruck being basically an Edsel.
Even where the models are right as they stand, the demand is unfathomably great. A stock market crash due to liquidity crisis, or due to a lack of available current infrastructure is absolutely possible. But the technology is not going anywhere. The winners of AI will go on to generate immense market value and change the world as we know it, whether you like it or not. Just like the internet did after the dot com bubble.
Businesses are already capping usage limits or backing out completely. Open source models do much of what businesses need and don’t have the same confidentiality and security issues as frontier models. The technology may remain with us but the big companies and massive data center build out are likely to crash. It’s just nowhere near profitable enough.
This is pure cope. Of course my CFO is going to apply downward pressure on a quickly growing cost, but you best believe the productivity that comes with it wins the argument in the end. As good as they are NOW we're not paying CLOSE to what the business would be willing to pay. That's the reality of how good these tools are. Only thing keep the cost down is the competition to soak up as much market as possible as early as possible. You think we're considering switching to OpenAI after 6 (crazy fast) months building around Anthropic even with OpenAI like 60% the cost for similar capability? Nope. Anthropic could double their price and it's still be EASILY worth it for my company.
Here's the question that determines whether it's a bubble: If Anthropic were to double what they are charging, would they become profitable? If not, at what price do you think they would be able to operate from your money instead of investor money? Would you be willing to pay that when you can use less powerful models for free?
Every software company is shoehorning AI into their existing products. Customers didn’t ask for that and customers won’t miss it when it is gone.
Subscription counts for AI services have not gained the numbers expected. Every time subscription costs increase subscribers drop.
Costs to have access to AI tools for enterprise customers have risen sharply and in response enterprise customers have sharply decreased their spend on AI tools.
Even after all the cost increases every company that offers an AI tool is still doing so at a loss.
Anthropic's operating expenses are known to be profitable now and OpenAI is thought to be close. They are using investor cash on future infrastructure investments but the core business is quite sound.
Coreweave is not about to go down. You're buttchugging hopium.
Here's the thing, if we experience a hardware demand crash it won't actually bring prices down. There's a ton of pent up demand at the consumer side and the enterprise side. A lot of companies would love to deploy AI infrastructure for their business but can't justify the current high prices.
At some point it's pretty likely it will. That company has really bad books and their business model is still mostly on paper orders that can at any time go poof or have their plug bulled by customers.
I can't speak for every company but CoreWeave is probably the closest company I can think of to be dot-com-esque.
Lmao they absolutely have not been profitable. There’s always some caveat like “well if if you ignore training costs…” or “we got a $1 billion discount on compute this month…”. They won’t even tell us how their annualized run rate is calculated.
Until they go public and are forced to report numbers in a standard way you can’t trust what they say.
i still don't believe they are actually profitable using real modern accounting practices. I do vaguely believe they are in a position where, if they had to, they could become profitable (mostly by shuttering all training and new model development). So it's unlikely they'd actually go bankrupt, but given how good the open models are getting, their moat is eroding rapidly.
The way I see it, as compute price drops, self hosting will become more attractive. But data center costs will also come down,. So operating costs for companies like anthropic will also come right down. Especially when the shortages end
I don’t believe they are currently profitable either under normal standards but I also don’t care. Revenue went from 5 billion in 2025 to 16 billion last quarter. Thats not expected revenue, that’s real revenue. Their costs are expected to decline starting 2028 while revenue expects to grow.
They have proven their revenue is growing, I don’t see how a company about to clear over 100B in revenue next year is going to go bankrupt like Reddit wants them to. Reddit just recycles the same negative feedback loop no matter what
it depends entirely on what the cost of revenue is. they could be losing money on inference, though i don't believe they are.
We also don't know what their debt service is, though i think they've done some shell games to bury all that in subsidiaries. So we'll end up in a situation where a bunch of anthropic subsidiaries go bankrupt, the banks will be out billions of dollars of capex, and anthropic will still be worth a trillion dollars?
You are comparing 2 different metrics there: 5B is ACTUAL revenue for 2025, 16B is ARR for latest quarter. Their ARR for 2025 was like 10B, so assume half of that is the actual revenue.
Haha no one on Reddit is going to believe this narrative
Anthropic had $4.6 billion in revenue for all of 2025, compared with $16.8 billion in Q3 2026 alone. Their revenue growth is insane. And it’s expected 51% increase guidance.
Anyone saying a company that is increasing revenue this fast is going to crash is absolutely stupid
Like most articles like this that have been put out for a long time now. Will crash any day now! Generated plenty of clicks and engagement and eventually perhaps they'll be right. Eventually being the key word.
One thing I don’t see mentioned very often is the durability of these chips. If they’re running them full throttle constantly for maximum compute won’t the chips burn up in 3-5 years? So then all this capital invested in the chips would have to be reinvested to replace them? So that’s another however many billions of dollars invested in 5 years, how much profit do they expect to make in order to make that replacement rate sustainable? Especially given the open source models which are less powerful, but significantly less expensive. It seems to me businesses who want to use ai could manage to use the smaller cheaper ai to perform tasks which provide the practical needs without the massive compute to make a generalized ai that’s good at everything, because the open source models are good enough at what they actually need ai for.
Worse. A lot of the algorithms and development assumes better chips over time. So the data centers are buying new and better infrastructure (processors, GPUs, motherboards, blades, etc) before they've fully paid off the initial loans to buy the originals. In 2-3 years, your state of the art data center won't be state of the art.
plenty of datacenter builds have actually been postponed. even older gfx cards are still expensive, because you can still use them for lower tiers (if you rent them out). same with gaming cards - less ram, lower tier.
Actually been pretty much the opposite so far, compute is in high enough demand that H100s are still going strong at 5 to 6 years old now. The old 3 years and replace rule is seemingly broken at the moment, due to overwhelming compute demand. We'll see what happens to the demand once all this stuff starts imploding, but for the time being, 6 year old compute still doing duty cycles...
The Moore's law hasn't been dead, it just hit the diminishing returns on investment. But much of science has, too, look at fundamental physics - the last breakthroughs were in the 1930s (quantum mechanics, nuclear).
Funny, I know a former AI researcher who raised the same general point as your first half - all the huge investment has to pay off in (loosely) 5 years because everything that’s been spent explodes by then (I oversimplify in my idiot-ese).
Was reading about all the e-waste data centers will generate as they need to upgrade all their current hardware due to end of lifecycle. Hopefully someone will find a good way to repurpose/recycle, but the amount is staggering.
What could be worse for these businesses is people find ways to build a chip or process that makes all the training investment worth almost nothing. Example someone figures out how to do the same or better training at a tenth of the cost. All that investment to have a head start, wiped out.
Local models are the future. They will be cheaper and offer privacy.
The privacy thing is going to be the most valuable thing in tech for the next several decades.
Especially when it comes out that Microsoft and Google let everyone's personal and corporate SharePoint, email, OneDrive, Drive, etc data be quietly used to train things.
But if that were true you could train a bigger model on the existing infra, that's what keeps happening, everyone big and small take the efficiency wins found by open source labs
Well, for Google, they can fold any data center they have into being purely Google Cloud traditional business segments so there won't be a long term loss there. And their general money printer is largely just being temporarily diverted from cash on hand and buybacks.
How long does it take a chip/datacenter to pay for itself? It looks like an H100 is renting for $2.85/hr right now. If you bought it in Oct 2022 you'd barely be making your money back now... it's all a ponzi predicated on scams
Even consumer chips are lasting longer than that. An RTX 3090 which is over 6 years old now, is still selling used for MSRP. Datacenter grade stuff is even pricier.
It's not that clear cut that the chips will "burn up" in 3-5 years. If the cooling systems are designed properly and the power densities and current densities are kept at reasonable levels there is no reason why a majority of the chips couldn't survive for 10 years. It all depends on how they start to flake out and if the units can be identified and isolated or it becomes a widespread issue where every rack starts to fray at the edges all over.
Besides, what I am hearing now is that many users are completely happy squeezing out work from +3 year old hardware assuming it supports the suitable FP4 or FP8 or whatever data formats and there is enough VRAM.
That has been the case for over a decade. Amazon has an entire supply chain and network of companies whose entire business is recycling raw materials from old Amazon chips. This is part of why chip businesses do so well
Yeah that was crazy - and to think there was a time before the dot com busg that people actually thought we could monetize the Internet and like it would have a massive impact on society.
The AI bubble crashing has nothing to do with how useful or revolutionary the tech is. The dotcom bubble happened because people knew it was a game changer and everyone wanted in. That leads to an influx of money that can't possibly produce the results people expect, plus a bunch of companies riding the hype with no actual added value.
And in all three cases the most important variable was time.
It always takes a lot more time for these things to build out than people think. It took 20 years for the Internet to even start hitting it's potential. We are like 4 years into LLMs. They will have an impact, it's just going to take 15 more years. People have to build new processes and businesses up around these techs. It doesn't happen overnight, even if the tech is ready, because the limiting factor is us. The humans.
People seem to ignore this for some reason. The MAG 7 have so much cash and money generation even without AI. So how are they going to collapse?
Also, the next line up of companies, like broadcom, ASML, Micron all have a ton of hardware to produce for years to come. Is the expectation that data centers will just have no use and will sit there empty and no one will use them?
During and after the dot com crash the companies continue to grow their revenue and earnings. Today big tech and the most important AI stocks already at 20-30PE. Heck, memory at anywhere 2-8PE. There is not much room to fall with the industry growing
No, it’s a bubble. The two things are completely unrelated.
The bubble is because the amount of investment cannot return the yields needed to be viable. This happens with tons of markets. Housing is essential but it doesn’t mean a housing market can’t have a bubble (obviously). Something being revolutionary doesn’t mean that every company peddling it will all of a sudden make tons of money.
When it becomes evident that profits aren’t coming, people will pull their investments from all but the strongest bets, which will actually probably benefit from the bubble collapsing. Similar to how Google came out on top in the 2000s.
But that amount of reshuffling could have domino effects elsewhere in the economy.
Which companies are they going to pull their money out of? And who is going to pull their money out?
The MAG 7 alone make up nearly 40% of the NASDAQ. You think people are going to pull out of the most successful and profitable companies of all time? These companies that are currently extremely profitable even during a build phase where AI isn't showing profits? If AI peters out, who of the MAG7 are going to go bankrupt by stopping spending on AI buildouts and focusing on their profitable ventures?
Institutions make up 70-80% of trade volume. Do you think they will cash out? That's antithesis to their entire structure as organizations. They stay invested in the market.
JEV came in and has insane adoption. Every tech built on an LLM is about to get stomped by Type Safe AI. All that money and debt is a total loss and entire small towns have taken on massive liability and infrastructure costs for hundreds of acres that's are going to be as useful as the local Sears and its service center.
How do you see JEV taking over LLM based tech? I currently use it in conjunction with LLM agents and from what I can tell the capabilities of the two techs are quite different.
Type Safe AI is so yesterday. Laya: Released by Convai Innovations as an open-source (Apache 2.0) 421M parameter model, Laya runs locally and skips cloud round trips. It achieves ~33ms latency (roughly 7.8x faster than hosted Jev's ~236–276ms)
What's even crazier is how we used to think that the internet being monetized primarily by ads was a temporary embarrassment that would eventually be replaced by something that lends itself to less dysfunction.
I mean, it’s the same exact thing. There is a ton of money that is going to be made in AI but no one is quite sure how and no one is quite sure which companies will be the winners and losers.
It’s likely 1/50 of these start ups will churn out a ton of money but it’s an entirely new industry with so many unknowns, it feels a lot like people are investing blindly hoping to be the 1/50.
Same thing happened in the dot com, there was a mad dash and over investment in some terrible companies, with a few winners coming out insanely wealthy. Some people made money and the economy was forever changed but the market still crashed and lots of people lost a ton of money.
The internet was and is monetized and has a massive impact on society
A business plan of losing $5 on every delivery (kozmo.com) isn't a path to success.
A lot of the dot com businesses blew up because their vision and spend outstripped their revenue potential. And 10-20 years later, many companies stepped in and took those ideas to success after a tweak.
There's a saying in the tech industry - pioneers get the arrows. Lots of companies want to be the first mover into a space, but generally over history the first mover usually dies off and someone else takes up their idea/product/service and succeeds with it.
Lycos invented the truly useful web search, where are they now?
3com is the reason everyone's desktop has an ethernet jack. Where are they now?
Blackberry brought the smartphone era into existence, how did that go for them?
Right now these AI companies are rushing to be sacrificial pioneers, and when - not if - when they die, Google or Microsoft or Amazon's going to buy their bones for pennies on the dollar. And trillions will be lost on the pop of the bubble in the process.
AI, much like nuclear energy, is simply a technology that is not optimally or ethically useable in a system where individualistic owners of capital employ it to increase shareholder profit above all else.
The best uses for AI involve serving disabled communities who don’t have the income to sustain its use.
It’s so dumb people act like the bubble wasn’t real back then. There were a lot of bullshit companies that were way overvalued - and then they were gone. That doesn’t mean there were no survivors.
People just knew the internet would be huge, but couldn’t really tell what aspects would actually be useful so snake oil salesman could make a fortune. After the bubble popped the survivors had to actually prove themselves.
The main difference is that AI companies and AI technology are extremely relevant to national defense and thus the government has a vested interest in keeping these companies afloat.
Certainly some, maybe even many, will go under as they are too small/niche/poorly run to survive. But there isn’t going to be an industry collapse because the government won’t let it happen.
And others burned massive amounts of cash and went nowhere. Billions of dollars invested in companies that you've never heard of because they went under.
The ones that emerged stronger emerged so much stronger, though, that you'd actually be way ahead today if you put all your money into a NASDAQ index fund in 1999, despite the bubble crashing. For example if you bought QQQ on the first day it launched in March 1999 and held to today, you made 11% a year, which compounds to a 1,550% total return.
Doesn't prove you will always come out ahead if you buy during a bubble, but in the dot-com bubble specifically you would have.
We knew the Internet would be transformative, but not exactly how, and the full infrastructure didn't exist yet. Like, it was crazy to think pets.com was going to revolutionize commerce because the had the domain name.
Ai isn’t helping me buy other stuff? Like e commerce is already built out. What is AI going to do differently? I already ask it for the best deals which A, it doesn’t do, and B, does it for free and sends me to Amazon or somewhere? These are not the same things, there’s no obvious ROI in AI right now, and hasn’t for years. Dot com bubble everyone was trying to take a slice of selling, product or service. This is a service provided free that no one actually wants to pay for and would go back pretty quick to Google search for shopping again or whatever they use.
Make it so you can't find what you're looking for by ignoring what you type, showing you other shit, then when you ask why, say because it's being helpful.
At work we barely write code anymore. The tech has basically allowed for crazy levels of automation in white color jobs where companies have decent tooling for the models to use. Pretty much every company right now is spending massive amounts on tokens (I have one colleague who spent $19k in tokens last month). What you said might have been true 2 years ago, but now I definitely don't see that being the case. The new models are incredibly good. on the other hand I don't see anthropic and open ai being able to continue subsidizing everything. Likely there will be some pull back in spend.
I think the point is that both things can be right: the thing that's crashing can still be the future. The dotcom crash sure as hell happened, and here we are in post dotcom crash era where, well - the internet and .coms survived.
Many adults living through the dotcom crash, not fully understanding this thought: "Yep, screw that dumb technology. I'm glad all those capitalist assholes over invested and lost all that money. I'm glad the tech will die, or at the very least get well regulated and cease to be a threat!"...
Those same people would have scoffed if you told them that the internet will not only survive, it will rather quickly invade all aspects of our lives to the the degrees that you haven't even begun to think of yet. It was unimaginable.
Even *IF* AI does actually crash yugely, it would be a grave mistake to then assume that it isn't still going to rule your future. Those in control of the tech have imagined ways of using it that you haven't. We learned all of this with thedotcomcrash only a short quarter century ago...
Maybe the free versions don't but the paid versions will definitely do way more than just send you to Amazon. I will have it do a multi lingual search across borders in the EU for the best deals.
If you think there is no ROI from AI, the tool that has automated software development, that is bringing in hundreds of billions in revenue already, that has solved hundreds of long standing math problems, I think your biggest problem is pulling your head out of your ass.
You’re correct the return on investment is there. At like a multiple of .006 . They haven’t made hundreds of billions, they’ve spent around 1.5 trillion worldwide building it, but they’ve made about 110 billion! Wow!
As of now there isn't. Every new customer costs the ai companies more in computing than they can charge for their service. Right now, it doesn't scale and is a massive loss
The dot com bubble was really just investor hype centralized around an unsustainable business model. These AI companies are spending hundreds of billions of dollars to not even be profitable. And they are hiding hundreds of billions of dollars of debt. They are selling tokens at a loss to try and boost usage and dependence. The dot com bubble popped once investors realized the business model was unustainable and they weren't getting their money back. The only company really making any profit right now is Nvidia, primarily because they provide the real hardware these data centers run on. It does not take a degree in economics to see that there will need to be a major reshuffling of the operation behind these AI companies if they are ever going to be profitable.
My comment is geared to the idiots and morons like myself who might conflate the idea of the AI bubble bursting with a halt in technological progress and free porn.
I have been hearing for years that AI was going to replace me. I have a simple scheduling/data entry job. It never happened. Yet AI is solving mathematical equations that have never been solved. I don't understand the gap between what it can do, and what it can't.
In order to solve a Millennium Prize math puzzle earlier this year, Open AI spent $20M worth of computing power.
They won a $1M prize.
Can AI do your job today? Probably. But it’s currently economically inefficient, and once the venture capital dries up the business proposition won’t be profitable for years to come.
The NSF gets 100mil$ annually and can’t solve it for 90 years. OpenAI spent 20mil$ and solve it in 88 hours. It’s not about if AI can do your job anymore. It’s about can you do what AI can do.
They literally took a real mathematicians theory for solving the problem and stole it and basically just beat him to the punch with validation. AI didn't solve it on its own
Hundreds of thousands of jobs could of been replaced by automation of Excell for years and just mid level mangers and high level don't understand tech enough or the world to adapt
As an engineer, I can attest to the fact that most engineers have no idea how to use their skills to automate real world problems. It's one of the things that constantly depresses me about my day to day job. The majority of my coworkers are brilliant at some specialized segment of science or engineering but also don't seem to be able to apply it to anything of value.
If you look around for a moment you should find the articles showing how the math was solved most likely like everything else AI does, and it stole years of work from a human who was about to solve it already ;)
The human needed to show proof and it took time, it took milliseconds for the computer to steal all of that.
The economics subreddit is posting garbage from the dish rag, the New York Post?
Is this what we want? I don’t. Do you? You shouldn’t. But you do. Why? Is that allowed? Maybe. Am I stalling for a requirement to comment? I’ve lost my train of thought.
Between this article and all of the other highly truthful and very trustworthy articles you’ve published over the years, I’m confident I should definitely change my investment strategy based on your analysis.
Truly a brain dead surface level article making an obvious analogy that people have been making for years now while ignoring any differences that don’t fit their narrative.
Thesis could be right but this article doesn’t provide any sort of substantial argument. Superficial drivel.
Isn’t the NY Post a tabloid? How is this allowed on here? If the subreddit is looking for quality discussion and long responses shouldn’t sources like tabloids be disallowed?
Bubbles tend to pop during a wild peak of euphoria where finding naysayers is few and far between. There have been so many people cheering on and eagerly predicting this "pop" is coming imminently for years now. The bubble won't pop until those people quiet down and go long. Bubbles can inflate for years in the face of rising doubt, and eventually that doubt subsides and things accelerate and then poof. We've likely got years to go IMO.
It certainly isn't going to end while Micron and NVDA still have 90% and 80% profit margins. Companies like this can keep the datacenter buildout financing afloat just by moderating margins.
Lmao nah. If everybody is expecting it, then it won’t happen. It’ll likely be a series of smaller bubbles bursting without the widespread impact of the .com bubble. These lameass excuses for journalists are just writing the equivalent of low hanging fruit and selling it as news. Weak af
My guess is they're both too big and too critical to national security for the government to let them fail, and everyone knows it. Hell, they may have even engineered it to be this way.
In 2008 Citibank wasn’t allowed to fail, one reason is the us treasury relied on it. Same thing today, what platform do you think the us and other govts use?
Everyone has been calling the AI market crash for awhile now. I don't think it's happening. Just recently my bus driver gave me some AI stock tips. This is a good sign things are going well.
I mean it's probably not the best comparison. the internets been here for decades, AI just a few years basically. But if you're like a student and actually use AI properly, it's probably the best thing ever ngl. You have your own tutor that can help break down just about any concept/topic you want while it generated like infinite practice questions till you have it locked down.
I was practicising for a multiple choice exam, so I asked AI to look at the sample questions and content and come up with it's own. Then got my stepdad to quiz me.
I can't relate, it's usually done great for me and like just about everyone i know. if it really does wonky stuff like that you can direct it to be random like an actual test or something.
if you have a practice test/study guide you can send it and make it generate similar questions based on what you sent as a reference and so on
Everytime someone says AI is smart or good, there is a reply like this that says "well AI didnt work great for me once". However your anecdotal experience is in conflict with the data and collective judgement of people surveyed that work in engineering and science.
I don't mean to be rude but it might be a skill issue, wrt running the correct model with the correct amount of reasoning for the task at hand.
Regardless how useful the internet is it hasn't resulted in any meaningful productivity boom. The trillion dollar question is: "Will AI have a bigger impact on economic growth than the fax machine?"
We maybe in for another AI winter. But it will be a mild one. LLM’s work and are used by everyday people. Prior AI work was mostly confined to labs with limited non technical user interaction. Thr current generation of models works and they work well for solving all types of problems.
I think that’s the part that needs to be separated. Will OpenAI, Anthropic, or x survive? No idea. Will we all being using LLM’s if they fail. Definitely!
TIL: inverted indexes, TF-IDF, and graph centrality algorithms were invented by time-traveling AIs providing internet search decades before the existence of LLMs.
You are either intentionally arguing in bad faith or are too stupid to be taking part in this discussion and no im not referring to machine learning and other techniques which don’t boil oceans while choking out neighborhoods.
But why would it pop then if everyone thinks its here to stay and open ai, anthropic data centers start making 100s bilions dollars every year from selling the compute and their ai models? The demand is only gonna grow, open source models are also helping it.
No, it's not going anywhere, but most of the companies involved with it are going to implode hard. Anyone who works in front of a desk knows how cheap their companies are - and all of the AI that's being used is in the "first one's free" portion of the program. When the price increases come, companies won't pay, or will switch to cheaper models, or even host their own open source models.
When Copilot jacked their prices, the company I worked for issued an immediate directive halting all use of Copilot and switched to a super cheap Claude model instead. When that had its price go up, they switched to cheaper. less capable but 'good enough' models. Nearly all companies and users will follow this same behavior. My company is currently building out their own locally hosted AI from some of the better open source engines to be used for most day to day work, and reserving the wallet for the few things the open source one won't do well.
OpenAI , Anthropic and all the others are blowing through hundreds of BILLIONS of dollars in the quest to win the race, but the problem is the winner won't see payback on that spend. They need current customers to be willing to spend $1000/head per month to get there and based on everything I've seen at every company ever, they just ... won't spend that. They'll cheap out - as mentioned they already are. My company is hardly alone, this same play is being repeated across the industry as we speak.
Lo sviluppo Ai a certi livelli richiederà tempo e costi... è chiaro che le prossime generazioni dovrebbero seguire questo processo molto attentamente per valutare opportunità o fregature... secondo me finiranno come YouTube che monetizza dagli inserzionisti...se usi Gemini ti verrà fuori il popup di domino pizza...la pagano loro...la distillazione Ai porta a prodotti Ai economici e buoni che per la maggior parte dell'umanità è più che necessario...la super intelligenza interessa solo per scopi non nobili
Most of the little guys were never the target for revenue, they were looking for companies like the one I work for with 20K people, 4K of which are devs/tech roles. If they got the pricing they're dreaming of that would be at least 4M / month from my company alone. But as mentioned my company would rather go without than pay that.
As for the little guys, they'll constantly chase cheapest price or even go without. But bare metal local hosting isn't as hard or as expensive as it was, and it's working better and getting cheaper by the week. Decent local AI models run on that AMD Strix Halo chipset with tons of RAM really well, and you can go buy a ready to go machine with that for under 5K. If you have a handful of AI users in house that would pay for itself in less than a year if the cost per head for delivered service AI goes to $100/head/month.
This is a larger, stupider version of what Broadcom's doing with VMWare and the licensing costs there - and spoiler - that is going about as well, my company had thousands of VM hosts all running VMWare and is on track to completely ditch them by January.
Companies will pay if they can lay off people. They would gladly pay for the productivity boost. Saving money and using cheaper models might not be best way to go. Having one person with dozens of ai agents spending 100$k a month in api credits is better than having department of 20 people producing slop and spending 1000$.
The Internet didnt went anywhere aswell. Doesnt mean shit about the insane valuations of some of these companies.
Cisco is still in business and someone would argue they even are a better company now, but people that bought them at their height in the dot com era, only went into breakeven territory a few months ago.
Of course it's not going anywhere, but not all AI companies will be there. That's the crisis. After this, a few winners will continue AI while the absurd amounts of investment put into the losers will vanish and we'll all be poorer... except the winner companies and whoever they bribed.
A bunch of AI companies will go bankrupt but the data centres will still be there… they will go into chapter 11, and end up doing a debt for equity swap. The existing shareholders will lose their shirts, but the tech will keep running. The business will be restructured or acquired at well sub $tn valuations. Investment will slow down for a few years, but development will not stop entirely. Within years from now things will have settled into a new trajectory. This isn’t going to just go away, no matter how bad things get.
That’s exactly what happened in the dot com crisis, many companies folded and some continued. It’s just that “many” was a lot in a single sector , all at once.
The crash isn't about it going away. We still have the internet, despite the dot com crash. But what will change is that investors won't keep throwing money at any new idea that integrates AI. There's a huge difference between integrating AI, and doing so usefully/profitably. Future endeavours will need to be able to justify their pitch with actual use cases and business models that make sense and can be explained. That will lead to a drastic downturn in how much stuff you actually see AI in.
AI is going to stay, but demand isn't high enough to ever make back current investment once you start billing actual cost. Everyone who invested is just full of hopium that it's going to pay off.
Then you see Anthropic and IBM making major improvements in quantum computing, and it was $300 in compute. You don't need a trillion dollar buildout for that.
I'm sorry but you're treating demand as some static or linear variable. It is not.
The technology is moving incredibly fast and demand is correlated to AI capability which is increasing rapidly.
It is not a simple equation.
I don't know why you are talking about quantum computing? It has literally nothing to do with any of this. Quantum is a very niche use case - it's not a consumer product.
AI is a bubble for sure. The important companies of the next 25 years are more than likely existing right now. Facebook would be the one exception if you were looking to fully compare back to the dot com bust; otherwise they all existed.
Tesla is some bullshit and excluded from this post.
Your statement is itself the hopium of an AI hater. A.I. demand is growing very fast and rapidly doubling. It is very conceivable that all investments will pay off many times over. Time will tell.
I don't see how. Not because I don't think AI is revolutionary (I do), but because you can buy equipment and run pretty decent local models for anywhere from $2k-$30k (depending on what you're trying to do). Sure, it's a little more complicated than just signing into Claude, but it puts a meaningful ceiling on what companies can charge.
I guess maybe they can make money off enterprise software, but at some point it's just cheaper to hire people in-house to setup something for your company that is perfectly tailored to your needs.
Current local models are nothing compared to frontier models. I wouldn't trust a local model with a few lines of code or one function. Claude can write whole applications for me. Maybe things will change in the future but the gap seems to be getting wider.
it is awesome for what it is. It is nowhere close to Claude Opus 5.5 or Gpt 6 models and it requires hundreds of thousands of dollars or investment to run. It is not a local model.
Its not really… Dont get me wrong its really big jump, but you cant put it in same bucket as opus 5.5. And its competitive only if you run it on $100k hardware. So when you rent some gpu from datacenter for 8$ hour it can be really usefull, but still nowhere near frontier.
you're mispricing the error rate and the value of speed.
Competition is a meat grinder. You improve over your competition, you eat market share, you win.
This happens in time. Time is the luxury you do not have. Many businesses, on a working day, make profits that are many multiples of their compute and software costs. Like not even close.
This is exactly what ransomware groups target: they calculate the cost of lost business and that's how they decide what to emand. And they get paid a lot, because usually there's also the additional threat of them dumping often sensitive material on the open market. but mostly because the numbers often work out: you pay X to work again tomorrow. You'll make the difference and more in the week that you would have still been out of business after that.
So the key takeaway from that is this: many companies will pay milions for being back in business one or two weeks earlier. They pay not to waste time.
To these businesses, technology that saves hours a week is worth mllions in API costs.
Setting up a server that runs a local model can be very sensible and helpful but mostly when it comes to data retention and privacy laws.
For data they can share (or legally de-constrain using NDA clauses with the tech companies) the lower error rate of frontier model frees up exactly the same resource: time.
Errors you do not need to corrects, prompts that do not need repeating with slightly better wording, etc etc..
it al comes down to time. Time is worth a lot of money and the idea that 5% more errors a week is trivial is bonkers, because that 5% will probably end up in a re-run of the prompt, and then if that doesn't work people will do the work manually raising the variable cost of that portion of the work to 300% or about 15% of effort.
I see it a bit like warranties. if you do skill based work of any kind and you give some kind of warranty, having to re-do a few jobs every month or few months is fine.
it starts to hurt your profit and bottom line very very quickly if it becomes more than a few per month.
buying out errors by using better equipment almost always wins.
Imagine a construction worker who has to cancel a day job because his equipment fails.
How much better equipment could you have paid for because of that lost day? How many days will you lose over the next year if you buy the same shit equipment again?
that calculus is not trivial but it is routinely underestimated by people glamorizing off-frontier solutions.
Mostly it'd be the companies themselves doing the "it's going away" part.
Because frankly, it needs so many incredible improvements just to be baseline useful for more than a handful of assistance tasks that it's not feasible, perhaps not even possible with "mere" matrix heavy linear algebra.
The most successful uses are as assistance to people who already know what they're doing and they're offloading tiny tasks they're too lazy to do themselves while they handle the ones that can't be vibecoded.
For literally everything else, the result is... not good. Garbage in garbage out type of "we literally cannot use this because it's been generated by AI."
The demand is not there. Additionally, even with tokens being as cheap as they are, they're too expensive for many firms to allow limitless use, so they are significantly limiting the use of AI with low monthly limits.
Then it's not really taking off with the public at large. While at the time of the dotcom bubble the internet was out to about 50% of Americans, AI adoption across everyone in the US is... 2%.
It's not taking off.
So yeah, while I'm inclined to agree that it won't be going anywhere, I would like to caveat that it's probably not going anywhere the other direction, either. Because frankly, after the collapse there will be reluctance, and t he few companies left will have all the incentive in the world to change more for less, and it's already too expensive.
They are hoping they can create demand, which is why they've been forcing it SO HARD. But they have been largely, largely unsuccessful. "If you build it, they will come" is a business school dipshit idea. Like, this is an econ sub. Surely we can see that the successful stuff comes from actually servicing a demand--and I mean actually servicing, it means actively replacing everyone with AI that is as good or better than people and they by and large can't do it! The demand comes primarily from firms that just don't want to pay people, but they're swiftly realizing they can't use AI to do that.
What are you talking about? The frontier models can do any task and one shot it perfectly. It can work in apps and do everything on its own much better than 99% of humans and much faster. Majority off office jobs and whole deparments can easily be replaced by one singular ai pipeline. My friend decimated their old company, they were making business reports for about $40k, had 12 employees and it took 4 months. He can do it in 3 hours with 200$ subscription. (well the company still exists only because they are still able to get clueless customers that live in past and think this is normal) He took some of their customer and sells the same thing for $8k. Not bad… for doing basically nothing. And this is comming for all companies, the ai is getting so good it will absolutely decimate oldschool companies that canf adapt.
AI is getting integrated into everything, but most of it is garbage and nearly all the users are eager to jettison it as soon as the C-suite stops riding Silicon Valley's latest scam.
We were told to use a HIPAA compliant model called ELEOS.
It was supposedly going to shorten clinical notes. And the time needed to chart. It was horrendous. It took anywhere between 20-100 entries to “learn” your style but even then it would take your bullets and just construct something that was entirely foolish.
AI models are not here to stay. That’s clear enough.
I agree, I think it’s more from an investment perspective that you don’t really want to own shares of a company in a regulated industry, eg air travel, telecom, the returns are basically limited by regulation, and it’s likely AI will become a commoditized boring industry.
The more it’s pushed into places people don’t want it, the bigger the crash will be, but it’s coming, and hopefully will take the whole generative AI thing down with it.
The irony in this statement is that the internet also didn't go away after the dotcom crash and that AI was already here, in the current form even, for atleast 2/3 decades and goes back to almost the inception of the current dekstops. It just didn't get used for everything because running the model is expensive AF.
The companies just seem to think we finally got enough computational power to incorporate it everywhere while there's nowhere near enough for it (even now) and then we haven't talked about cost efficiency.
Don't forget that the dotcom bubble had lots of "internet" companies popping up promissing the world only to realise they weren't making profits while now we have AI companies promissing the world and more, they just haven't reached the stage yet were they discover they're not profitable even after their million to billion seed rounds.
The monetization portion isn't there yet. They are operating at a huge loss thinking there is a big market there. Can code without it but I can code so much more with it. Will figure out how to code using less tokens than what is what the. Current valuation is. It is going to significantly change how we work.
I'm enjoying burning the tokens on the cheap while I can.
I think it’s the future but I also think that it’s not going to be the end of things as we know it either. I guess I could be wrong but i see a lot of advantages to using it…but also I don’t see it just wholesale replacing humans at every level all that quickly. Maybe I’m wrong.
Bè è molto comoda da utilizzare...prima dovevi approfondire perdendo svariato tempo adesso fai prima, secondo me' i servizi AI free verranno monetizzati dagli sponsor pubblicitari. Tipo YouTube
I think eventually it will be the end of things as we know it, but I’m not sure that will even happen in the next 25 years. There are too many errors with AI and people are rolling it out way too fast, with little oversight. At some point something catastrophic will happen like a nuclear reactor meltdown, or a mistake in air traffic tools, widespread outages and banking freezes, etc., where a demand for more oversight will be inevitable. No doubt it will be a fascinating, horrendous, and long learning curve.
The issue is that we are there. The frontier models can now work in computer programs do whole complex workflows. It is at the point where it can replace 90%+ while colar jobs, most companies have not realized it yet and most people dont use it properly. But it has the capability already.
It’s not about AI disappearing, it’s about bursting the huge bubble that has been created by overhyping it right now. And it will burst, and seeing the Dow Jones is being carried by 5 AI countries and lots of people willingly or unwillingly invest in it, that is a scary idea.
Not many are saying that it’s going away but most feel that’s it’s possible uses are nowhere near enough to pay off the massive amounts of capital that have been dumped into them.
It's being integrated into everything, but the AI companies are selling tokens at a loss. Once they're forced to sell them for what they are actually worth, people won't be so willing to buy. They're adopting the same mindset from the dot com bubble that if they grow fast enough and captivate the attention of investors, they can worry about developing a sustainable business model later. The same hubris that caused the dot com bubble to pop in the first place.
They are not selling tokens at loss lol. Look at open router etc… How crazy cheep its to run deepseek etc… The margin the anthropic and open ai has on api is diabolical, its outright scamm. Api costs have probably around 95%+ margin. If they sold api credits 1/19 of the price they would still make profit.
Railroads were a key componet Iof industrialization and changed the world. The were obviously useful. Also responsible for mutiple bubbles, crashes, and depressions. Investing in railroads was a path to ruin that made almost noone rich. 180 years later they are still around and still useful.
As a hobby historian, who is too young to experience the dot com bubble burst, and who tends to believe that history repeats itself and if we forget history we’re bound to repeat the same mistake mistakes. So for those of you who experienced the dot com burst, what was it like, what happened to stocks, how did it affect jobs, economy etc. etc.?
If you could wait and didn’t sell your stocks, they came back. Much of the ai stock issues are in spv’s and private equity. So that’ll crash. It’s hard to say how it would affect general people though. The bigger issues for normal folks is the underlying job market issues and probably recession. Slow growth, higher inflation, people using credit cards for foood are probably a bigger issue for folks.
Where dot com was overall growth- think a new web site brought in new income, this ai boom is productivity- more cost neutral or falling revenue. It means to make room you fire people
Well... In short, valuations were nuts even for companies that had made almost no revenue. Here, you may have concerns about the fundamentals of AI but not whether Microsoft or Google are well established companies. It's just day and night difference.
That said, then and now, no one doubts the internet or AI are transformative technologies. There might be some destruction of value along the way but the application has a clear link to long term economic growth.
As an amateur historian, you should start by learning how to evaluate sources. In this case, the NY Post is what serious historians would politely call an unreliable source and less politely, a shit source. Before drawing historical conclusions, it helps to learn to distinguish credible primary sources and reputable scholarship from sensationalist nonsense.
I wasn’t investing, but went through the Dot Com crash. The biggest piece of advice is if you want to get defensive, don’t 100% pull out. Now, if you are heavily Nasdaq or SMH and want to convert that to SPY, I fail to see the issue. If you need to raise 20-30% cash so you can have flexibility, go for it. But like I held one super heavy tech 401k from 2009 until July. I decided it had done well enough and mean reversion is something I believe in, so I converted it to an 80/20 setup with SPY, World Index, and bonds.
Otherwise, I remember jobs in tech definitely were hurt by it all. There is a definite pre-2000 thing where I know people without degrees making half a mil today because they came through that era. But it was really nowhere near what the GFC was.
one of the main differences between the ai bubble and the dot com bubble are the size, thanks to social media and people being dumber than ever this bubble was able to grow way bigger than the dot com bubble before economic reality forced it to collapse.
the other difference is usable infrastructure the dot com bubble left behind infrastructure. (fibre optic cables)that are still being used to this day, ai infrastructure (chips) break down in 2/5 years and are extremely expensive.
what this difference in infrastructure longevity means is that the ai bubble will crash harder and take longer to recover than the dot commbubble.
I don't disagree with everything you said, but wanted to point out that the infrastructure being built to support AI isn't just microchips. It's massive data center facilities and the power generation to support them.
The chips themselves are roughly 50% of the cost, the rest is permanent/long term infrastructure.
Many outrageously over valued company like pets.com, lucent, govworks.com, Value America... went belly up really quickly. The rest took a kick in the nuts but managed to survive. I was in priceline at the time and went through two rounds of layoff. The news for tech workers were horrible in the media but in reality almost everyone found other tech jobs really quickly. Overall it was a pretty mild recession. If this bubble burst is like the dot com bubble we will be laughing.
Funny. Yes the dot com bubble burst was totally warranted. But the technology turned out to be, IMHO, even more powerful and far reaching than we anticipated.
I think either way we are doomed. If AI succeeds as predicted, a ton of people lose their jobs causing the economy to crash. If AI fails it drags the economy down with it. I just don’t see how anyone can see a way out that isn’t painful.
Thing about the AI crash is it's probably going to be worse.
There is an obscene amount of monetary and physical capital tied into AI adjacent ventures right now and when it goes it's probably going to take most of the economy with it for who knows how many years
The AI bubble is far more like the railroad bubbles if the 19th century than it is the dotcom bubble.
The dotcom bubble was a speculative asset bubble without much in the way of real assets or bonds backing it, like the Tulip bubble. Very little capital was lost, just bubble profits.
Datacenters and the bonds backing them are very real, much like rails were.
Nothing of substance was provided in this opinion piece (not surprised as it is NY Post) but while the AI trade could be a bubble like dot com, nothing in this article supports that viewpoint or even makes much of an argument
I do believe there is a bubble, but I don’t believe that AI will not be culture changing, just because currently most people do not find it overly useful does not mean that won’t change. Even just 5 years ago I was hell bent against ever ordering anything off the internet, now I do the majority of my shopping (minus groceries) online, if I can get high quality products that make my quality of life better and those products are also cheaper than at stores near me, I would be dumb to not purchase via the internet. Anyways I do not yet know how AI will change the world and how fast but it is here and it won’t be going away
These money hungry tyrants at the top will stop at nothing to replace their workers with AI and put everyone on universal basic income, barely surviving. Millions of new graduates with no jobs, private equity sucking the life out of the economy. Unemployment numbers getting fudged. All these billionaires are securing bunkers in different countries. They're getting afraid of their personal safety but are not stopping this AI train wreck. The greed is off the charts. So no I dont believe we'll see an AI bubble.
Someone is going be the Netscape - not sure who. But AI is here to stay, and eventually these companies will come back to earth and need to turn a profit. I would say this is less of a bubble here than the Internet. Frankly, that was at time when anyone with an idea got funding.
The data center boom will tail off; I expect some true innovation in this sector.
A LOT of people are going to be Netscape. I fear the big players have gotten “too big to fail” in the eyes of the US government. And this will be bailed out, with everyone else suffering.
I think there is a confusion here. When the dot com bubble popped internet did not disappear. I think Sam Altman kinda said it himself without realising: AI is likely gonna be a "by the meter" good, like electricity, water etc. but it means, it is gonna be a consumption good, a basic one, low margin, available roughly everywhere. There is really no attach, AI can write its own harness now, you can swap in minutes from one provider to another with very low friction. So the price will go down and down. AI/LLM will be everywhere I believe, but at a super low margin. So the bubble will burst, openai/anthropic who built their model on massively overpriced/over leveraged model will have a very very hard time, many datacenter projects will likely fail, and the era of ultra efficient/cheap token will take its place.
If not for the datacenters push, we would not be far from running DeepSeek flash on "cheap" (read about five thousands euros) hardware already. This is enough for a lot of pro work already. Maybe in a couple years when the dust has settled and efficiency is even better we can run it on prosumer 1.5 or 2k€ hw. 120B models, which are enough for most usages, can already run on hardware that costed about 2k before the rampocalypse.
AI is an ecosystem currently built around LLM (data centers, chips, etc) as the race to build out the technology is in its infancy. It could morph into edge AI which brings a greater security threat, more compute power in-device vs network, etc. or it could be tech that is essentially nationalized much like nuclear which brings with it even more cloud compute, SaaS, etc. point being nobody knows but almost everyone is positive AI only accelerates.
Power grid build out/refresh & cyber security are the only 100% safe bets IMO. Even within that there will be winners & losers. AI is here to stay, the real question is what happens when we reach the tipping point in a couple of years. How does society react?
First of all, Gasparino is a clown and the NY Post is not a website that should be posted as a high quality source on this sub
Second of all, the most successful businesses in the world today all say that they continue to see unprecedented demand for data center/AI compute for the foreseeable future. Unless all these companies are lying/exaggerating, then there’s no reason to think it’s about to burst anytime soon
The dot com crash didn't happen because there was no demand for internet or internet-based businesses. It burst because of overinflated business valuations, excessive borrowing, reckless lending, and overblown hype. There's plenty of demand for AI, but that doesn't mean all these AI businesses can deliver their promised ROI in a reasonable time frame.
I dont know where this is coming from as corporations are really only just getting started with a.i and when they see the benefits in certain areas, they will spend more on it.
Sicuramente ci saranno vincitori e vinti come tutti i nuovi cicli, attualmente il mercato è tutto in questo settore, può capitare che certi capitali si spostino in altri settori nel tempo, per adesso comunque i guadagni delle più grosse sono straordinari.
If you look at the bear case, its not that big tech is broke; it's that 90% of the revenue is just 5 hyperscalers buying GPUs from each other in a giant capex circle jerk. They'd argue the actual end-user apps aren't making anywhere near enough money to justify the trillion-dollar infrastructure spend. If enterprise ROI doesn't show up fast, those capex budgets get slashed, and the house of cards wobbles, especially if you're an over-levered neo cloud.
People have been talking about a bubble bursting and a crushing recession following since 2015. Covid brought a crash, if you can remember that, and then we are right back up again, with new highs reached regularly, like nothing ever happened.
Bubbles don’t burst when everyone talks about it: they “melt up.” And it’s not likely there will be an economic downturn in the second half of a presidency: it makes more sense politically to juice up returns and let it all crash after the election. (This is also what typically happens, historically.)
Holy AI glazing in comments. Super fast engagement all in unison and acting fully obtuse of the real limitations of AI profitability, the risk in their circular funding and lack of economies of scale which results in AI companies like openAI and anthropic never becoming profitable. This will break and investors are going to be left holding the bag.
The only reason these companies will be floated by the government is due to theor abilities to spy on the populace, enable unmanned autonomous drone swarms and attempt to sway public opinion with botted content looks around.
Step 1) Save up cash
Step 2) AI stocks crash
Step 3) Buy up AI stock
Step 4) Hold a profit when the government bails out the AI industry and the stocks take off again
The thing about a bubble... It's going to happen when people least expect, not when every headline, from every other media site is calling it. If everyone is calling a bubble, we still got ways to go, it's likely more we are climbing a "wall of worry". When the average redditor has capitulated, that's when we might be at the top, but right now if you go into any given reddit, everyone is saying "bubble". That's just not how economics works.
I guess this guy is a billionaire right being able to call this stuff. Must be nice. I hope he details all his short positions so we can congratulate him.
The Nasdaq (QQQ) doubled the year before it crashed (1999-2000). If this is the top, max draw down is about 30%. It'll only be a gift of cheaper high cash flow companies. Please yes. The 2000 crash was cheaper unprofitable companies, almost all didn't have the cash to survive. Everyone complains about everything being too expensive until they get punched in the mouth. Cheaper stocks are a gift for the wealthy.
I actually believe this is probably accurate, but I also remember the first NY Post headline I ever saw, as I took my sister to JFK on the day after Reagan fired the striking air traffic controllers in 1981: TERROR IN THE SKIES
Regardless of hype and fashion trends around the latest silly videos, AI is absolutely here to stay. The speed of uptake in industry (regulated ones included) is a clue to just how much value there is in the tool already. The pace of advancement is amazing, and that's just what makes the headlines. The 'boring' stuff going on outside of Social Media attention is what is really fascinating.
There will always be reactionaries, as there has been to every tech advancement, just in the last few decades people have found reasons to hate 'The Internet', Mobile Phones, even Microwave Ovens, but they are all still with us because they all deliver genuine value in our daily lives.
I wonder how many people sat out on all the profits so far waiting for the crash.. Will the AI market crash? Maybe…. Is it like the .com bubble? Earnings so far don’t say so…
Investment bubbles are an important part of the way that societies digest new technology.
The new technology comes along and everyone has ideas on how it might be useful. The various entrepreneurs go out and try a bunch of those ideas. There is no track record yet, so the investor class is just investing based on how good of a story the entrepreneurs can tell.
Eventually we discover which of the ideas were good ideas and which weren't as business fail or succeed. That creates the track record that lets the investor class have better discernment on what ventures they should back.
It's inevitable that the bubble will pop because the only way it wouldn't pop is if every single use case was valuable (highly unlikely) or if the investor class has been very restrained (also unlikely).
This doesn't mean that the pop will be soon or big. It's possible that most of the use cases are strong ones. The biggest difference between this tech and most others is that it is actually faster than the regular business cycle. What was a ridiculous use case last week can become completely viable next week because a new model got released. This is one of the reasons that the AI companies keep finding investors, they keep showing astonishing improvement in the capabilities of the systems. One could almost imagine it as a series of cascading bubbles and as each one winds down another bigger one sucks up the investors leaving the last round of bad decisions.
GTA6 will be the bridge over troubled waters, retail, private equity, Elon, Warren B, pension plans will all find a safe haven in the burning glow of TTWO revenue.
AI demise will just be an opportunity at the very real bottom, then it all roars back and the wealth inequality continues...
I don't think this is levered like GFC2008 or as cheesy as the dot com crash. The dot com was literally people hyping domain names with no real business at all.
This correction will be a doozy, but probably not as bad as those last 2 stinkers.
The ai bubble still has a long way to go before it reaches that level. For context, during the dot com bubble the s&p was sitting at 45 at its peak. Right now we fall in the 25-26 range. The top companies during the dot com bubble were trading with P/E upwards of 300. Anthropic isn’t public yet but we know they are planning a 2 trillion dollar ipo and their revenue is about 17 billion which puts them around a P/E ratio of 117, way below the peaks of the top companies of the dot com era.
It is a bubble but, the hyper-scalers are extremely profitable solid businesses. Whatever burst we do see will most likely be underwhelming- AI will rapidly change our society/economy. I believe there will be significant revenues generated in areas we do not currently understand.
To paraphrase the old expression, experts have successfully predicted 15 of the last 8 recessions.
Maybe the author is correct. But experts have been claiming that the AI bubble is going to pop any day now, for the last three years.
And more to the point...even assuming this person is correct, let's look at what happened after the dot-com crash.
It laid the foundation for what essentially became the complete digitization of modern society.
There's really no question at this point that AI is here to stay, and will continue to improve. The technology is demonstrably viable.
It's fair to argue that a given company is over-valued, or that some companies might go bankrupt.
And my response to that is...so what?
Let's game this out: let's say Anthropic and OpenAI go bankrupt.
What happens in a bankruptcy?
Debts are renogotiated with creditors. Assets are sold.
What it doesn't mean, is that the technology goes away. Ownership may be transferred, or lenders may take a haircut, but someone still ends up with the source code, data centers, IP, etc.
This is why I find it so odd / shortsighted when people root for the failure of these AI companies.
OpenAI going bankrupt won't stop AI development. All it will do is cause economic harm to a large number of people. The technology will continue to move forward, regardless of which company takes the lead.
To put it another way, Netscape disappearing didn't end internet browsing and search. It just meant that Google took over.
Except with valuations an order of magnitude or more higher. Making the collapse worse. At least there are fewer companies involved. But there doesn't look like a happy ending in the near future.
Jfc just get it over with already. The longer this charade continues the worse the fallout when the music stops. There will be reasonable uses for AI when the dust settles but I’m so sick of the relentless hype, doom and prognostics.
I don't think it will bust. Most of the stock market is riding on 7 companies and AI to deliver. At most of it does it'll just hurt retirees and reset most of the populations portfolios to 0.
AI is definitely too big to fail now. With commercial real estate, car manufacturers, and other countries being bailed out by Uncle Sam no difference. Rising prices for everyone.
Generally helps to print away the 40trillion debt.
I think it'll be much worse than .com if it ever came apart.
It’s not too big to fail lmao. That’s what the companies WANT you to believe. A bunch of unprofitable startups, openAI and Anthropic included, will go to zero. Oracle may go to zero and have its database business sold off/acquired. Nvidia and the hyperscalers will crash a bit and eventually recover because they’re still otherwise profitable. AI tech will live on, but the fad/hype will pass like it did for VR, metaverse, cryptocurrencies and NFTs. The real losers will be venture capitalists who got rug pulled, WeWork style. Oracle bondholders too. Bailouts will be politically toxic and won’t be attempted. Unlike 2008, the world will keep turning if the tech startups go bust. Market gains will simply reset to ~2022 levels + inflation adjustment.
Never too big to fail, have you seen some of the debt the companies building data centers have? And how much the big ai companies are pulling in vs investment. It’s scary as hell. If it bursts it will be bad…
Too big to fail make sense when we are talking about banks or financial institutions, because they trade have loans issued to many people, firms, and countries around the globe. AI isn't too big to fail.
There’s a bit of a difference.. anything bailed out by the gov ultimately had a path to profitability, but for now AI still doesn’t. Unless it’s ad revenue. That’s the only seeming way they can turn their massive costs into profit. No one will buy access to AI if prices go up to profitable levels.
There is hesitancy to implement ads. I’m glad that is the case but I’m not sure why. Maybe it won’t generate enough still? Probably won’t ruin the experience anymore than ads anywhere else already do. So I don’t know.
Anyway, AI is currently a black hole for money. It goes in and never comes out. A bailout doesn’t fix that problem.
I can't wait until the bubble goes and AI no longer exists at all. It's been such a plague on the land that nobody will miss it at all.
That's exactly what I would say if I was a person who didn't understand that 1) if there is a bubble, it going will not be the end of AI and 2) a lot of people actually like and even enjoy AI, because my interests aren't universal.
It really seems like the anti-AI crowd (which is shrinking, by the way) is itching for an economic crash that will wash away all the grime from the internet. But that's never happening. If there is an economic crash, it's entirely more likely that you, the reader, get fucked by it than OpenAI and Anthropic.
This sort of thing is nothing new, the doomsayers predict crashes and bubble bursts constantly, but in this case it's mostly wishful thinking. OpenAI and Anthropic have viable pathways to profitability if they really feel the squeeze and have to go that way. They've got something essential and they know it.
AI is the future, even if this supposed bubble goes. The future doesn't stop coming because you really, really want it to.
That’s never going to happen. Reddit wants AI to poof but it won’t. Look at PROFITS between the dot com bubble crash and now. Cisco was #1 making 2.7B profits at their peak. Nvidia is #1 right now at 120B PROFITS.
Reddit is retarded, there’s no way a company making 120B profits year after year with forecasted growth is going crash and take AI down with it. Reddit has no idea the financial capacity and capabilities of these mega growth companies
Nvidia makes useful stuff that can be used for things other than AI. If AI dies, Nvidia will take a hit and continue as always. It's the AI-only companies that are gonna blow up.
No, a future where people stop thinking for themselves and become even more stupid as we are already seeing, where all communication is easily manipulated by a few at the top, where real human creativity is dead, truth no longer matters, and the environment is further destroyed.
Is it though? It’s easily 10x-ing software engineering productivity and will soon be 100x-ing. Recent model releases are getting absolutely insanely good. To the point you can effectively give them large, abstract coding assignments that used to take entire teams to implement.
Sure, it’s bad for employment of brute force coders, but productivity enhancers of that level are not dissimilar from the invention of the steam engine, which as we all know completely changed economics as we know it.
AI is going to have a downturn at some point, as the bad speculative investments go bust, but the industry as a whole is not going anywhere.
NY Post. The dot-com bubble is nothing like today's stock market. Back then 4 guys and a website were trading at 500x future earnings. Aside from PLTR or TSLA, TTM PE ratios are relatively tame. NVDA is trading at something like 26x TTM earnings; Walmart is trading at 45x TTM earnings. And all of these companies have real employees, sizable fixed cost infrastructures, real customer bases, and real technology.
Don't platform the ny post this is bottom tier garbage. Bubble or not, every government on earth with a GDP greater than North Korea is fully invested in AI. If it goes to zero then so does the global economy. Trying to profit from the hypothetical decline won't help if money becomes worthless.
I think as long as we say "it's about to burst"... it will not burst - if I recall, the articles I read about the dot com bubble was that basically just about before it burst, all the nay sayers were saying "damn... I guess.... this is a new normal and I was wrong" - boom then it bursts.
So as long as there are skeptics I feel that we have not yet reached that end stage.
AlfredRWallace | 3 hours ago
Ezra Klein's interview Friday with people who are on each side was interesting. I was at an internet company in the middle of dot com, that didn't survive but did sell off our business unit. Now I'm in the middle of AI hype. The similarities are staggering.
big-papito | 3 hours ago
Even the bubble denier guy conceded that things are getting close to the edge of a disaster.
Bill_Nihilist | 2 hours ago
The "it's obviously a bubble" guy absolutely demolished the opposing view. I liked when he casually dropped how Anthropic + OpenAI + SpaceX are gonna end up being valued more than all post-WW2 IPOs combined. And that was like Exhibit 36 in his case.
daviddisco | 50 minutes ago
That argument seems to be "this is so big I can't imagine it so must be false." Not a good argument IMO.
williamshakemyspeare | 35 minutes ago
It’s not that.
Valuation is tied to value. Value is tied to economics. Economics is made up of real people who make purchase decisions based on what they can and are willing to pay.
The context provided simply demonstrates that the value is now detethered from the economics. Quite simply, who is going to pay to a level that dwarfs all post WWII IPOs? The valuation is higher than food and beverage. EVERYBODY needs food and beverage.
TheGloomyWoodpecker | 34 minutes ago
> Valuation is tied to value.
Umm don’t look at the stock market then
williamshakemyspeare | 33 minutes ago
We’re looking. That’s why we think there’s a bubble.
championstuffz | 35 minutes ago
The argument is more that PE is nonexistent and somehow they're valued as such, something has to give.
jghaines | 33 minutes ago
You believe that one company is going to replace a large percentage of the world’s economy and have no significant competition? That’s what the valuations tell us.
Kincar | 12 minutes ago
The first to AGI or ASI will probably win this big game of monopoly we play.
Gloobbie | 3 hours ago
I didn’t pick up on that at all, why does Reddit have to make everyone so heavily doom centered?
content_enjoy3r | 2 hours ago
Probably because everything sucks and is getting worse in every aspect, unless you're a billionaire.
coke_and_coffee | an hour ago
This isn’t true at all. You just spend too much time online.
0o0o0o0o0o0z | 14 minutes ago
Bro..
ants_are_everywhere | an hour ago
Same reason predatory preachers preach fire and brimstone.
People who are afraid of doom are easier to manipulate. Social media is a giant ~~advertising~~ manipulation machine.
Gloobbie | an hour ago
Someone gets it
miaomiaomiao | an hour ago
Too much internet
0o0o0o0o0o0z | 17 minutes ago
> I didn’t pick up on that at all, why does Reddit have to make everyone so heavily doom centered?
You gone outside lately? Maybe read a newspaper? Christ... Western democracies are crumbling; the US, France, the UK, and Germany are going broke. We are basically in a precursor to WW3, but this time with fucking nukes, and literally the US President has dementia (non-arguable), who also just happens to be a rapist, convicted felon, who not only tried to steal the 2020 election with fake electors, but also incited insurrection and kept US secrets in his clubhouse bathroom, with an utterly complicit Republican Congress and Supreme Court. We have the most corrupt, incompetent government in US HISTORY like seriously, this Congress has done less work than any other Congress. Both Congress and the SCOTUS have the lowest rating in modern history. France, Ukraine, Iran, Gaza and Israel, and Russia are LITERALLY ON FUCKING FIRE. Don't even get me started on the comparison to the Gilded Age wealth transfer... We are gonna hit an energy and food crisis come this winter, spring, and summer even if we unfuck SoH this second... AI is going to both displace a shitton of white-collar and educated workers and, at the same time, collapse the US /World economy because it's the only thing keeping everyone from slipping into a depression.
Antique_Remote_5536 | 3 hours ago
Big papito
seldom_r | 2 hours ago
Are they really that similar? Strip away that it is computer based, digital tech and what's so similar? The dot com bubble had a lot of big businesses that didn't see a future for the internet and so they weren't investing in it. I remember people buying up domains like coke.com and holding them for years until coca cola finally wanted the domain and paid a couple million for it.
I don't really see the big business push back on AI like there was for the internet. Big business seems to be championing AI in the face of the general public. In the dot com it was reversed, people were championing the internet in the face of big business.
Undoubtedly there is a bubble but I don't see the overwhelming parallels to dot com. It's probably more like the housing crisis in 2008. It's like AI companies are collateralized debt obligations and the data centers are mortgage-backed securities.
The dot com bust had no government bail out and 2008 had "too big to fail". Isn't AI much closer to being too big to fail rather than just culling of companies that didn't actually do anything?
AlfredRWallace | 2 hours ago
The circular financing going on now is similar to some of what was happening in 99-00. The argument about a revolutionary technology with people willing to invest at any valuation is similar to the internet. It's not identical, the Hyperscalers have more cash than the internet companies did. Nortel and Lucent could only have survived with continued growth beyond the needs of anyone. However the fact that there was more equipment installed then than there was any use for is clearly different
dflek | an hour ago
I think the other challenge now, is that the valuations are astronomical. Each individual AI company is valued as if it will 'win' the AI race. Any individual one of these valuations is possible, but combined they're ridiculous.
Kincar | 10 minutes ago
Only two are "over valued". I don't agree with that statement, but really, only two are are valued in the trillion + range. The Chinese labs are nowhere near that level of valuation, nor are other AI labs.
sven_ftw | 52 minutes ago
The big difference between now and then was that back then companies went public to build up. Now fucktons of private money has funnelled into these guys for years. When they ipo, it's shifting that to Joe public and the mutual funds, and the private guys can cash out and walk away more the merrier.
The bubble won't pop until they bug guys IPO. Then it may, and I don't think if it does it will be much longer after.
AlfredRWallace | 46 minutes ago
That was discussed on Ezra Klein’s episode, how IPOs used to be about fund raising to allow growth.
sven_ftw | 42 minutes ago
Ah okay (didn't watch it).
coke_and_coffee | an hour ago
One big difference is that 99-00 was too early for broad internet adoption. Most people didn’t own computers and the telecom infrastructure was severely lacking.
I don’t see the same issues today. Everyone has a machine capable of accessing AI and the compute infrastructure buildout has taken place so much faster than during the dotcom bubble.
Dotcom bubble popped because people realize it would be another ten years before the majority of consumers were actually using the internet. That’s not the case with AI.
jambox888 | 10 minutes ago
I tend to agree, there are similarities but also differences, not only adoption but also the dotcom failures were often about making traditional businesses online which turned out to be very hard anyway. Like pets.com, webvan etc
I can totally see one or more of the big companies running out of road and selling off a lot of assets cheaply which will hurt. Worst case in my mind is a cash rich giant like Google or Meta cleans up.
bollvirtuoso | an hour ago
Most likely, overspend of capex relative to observed demand, a technology reliant on network effects for significant uptake (AI work is only a force multiplier if other people use AI, otherwise it remains at the slowest-human speed like right now), and a build-out financed by debt in an economy that's starting to heat up on inflation with rising Treasuries.
So no real parallels.
strolls | 23 minutes ago
They're more similar in financing terms. In both cases there are / were massive expectations for the future - a very promising technology, "it will change the way we work, the way we live our lives" but there are not yet predictable profits from it.
There was / has been a gold rush amongst investors - throw money at it to try and make your company the biggest and most successful and then you'll be the one raking in the money when profits are realised.
As you say it's not an exact analogy - domain name squatting is perhaps a bit more like NFTs or all the different and useful blockchains we were promised or something. There was a mental model in those days where you would type in the name of the site you wanted to go to, whereas it's turned out that we just type what we want into the search bar and Google finds us what we want.
This kind of illustrates the problem - things that were expected to be very profitable (in this case domain names, but also important internet service brands like AOL) turned out to be much less valuable than expected. And investors had sunk tonnes of money into these companies. When financing money ran out, all these unprofitable companies were left unable to pay their employees and went bust. The price of tech stocks collapsed because everyone lost confidence in them - companies like Amazon and eBay survived because they were selling actual profit and generating revenues (if probably not much at the time).
Even a successful profitable company like Cisco - it took 25 years for the stock price to recover from the dot com crash because investors were throwing money like water at anything tech or internet related.
The difference here is that the investment in unprofitable AI tech seems more concentrated in a handful of companies - Oracle, Musk's X, Open AI, Anthropic. I'm not sure that's the whole story because there's a lot of other companies building data centres - I see the Blue Owl investment company financing some of these and I think that's managed like a REIT; they put forward the money to build the data centres because they have a promise from the hyperscalers that they'll rent space in them when completed, but what happens if they go bust because they can't make money from AI and can't pay their bills? Big banks are involved.
At least Apple, Google, Microsoft and Meta have revenues from other sources - they're actually profitable from their products. I read this week that Nvidia has 75% profit margins on its graphics cards.
abothanspy | an hour ago
Remindme! In 4 years please
AlfredRWallace | an hour ago
See you in 4 years.
FearlessPark4588 | an hour ago
Was there a clear winner of that debate? Seemed like a draw to me.
Honkey85 | 35 minutes ago
Only this time the technology will save 95% staff.
brakeled | 3 hours ago
I keep seeing a lot of comments about how AI won’t go away and they’re annoyed with hearing this news so often. Bubbles popping don’t happen overnight and it doesn’t mean the product or commodity goes away.
Slightly less than half of all the dot com companies survived the bubble and the only ones who endured were the ones that could take a dip in their valuation for an extended period from 2000-2004. So yeah, you’ll be hearing about the bubble bursting for ~5 years and then you’ll look around and see only like five AI companies survived, mostly the ones attached to Microsoft, Google, Apple, and other companies. That’s how it is. Pay attention to the larger companies purchasing start ups and smaller companies filing bankruptcy. That’s your sign because it means AI isn’t as profitable as it seems and without some other product, you can’t subsidize the losses.
KIDWHOSBORED | 3 hours ago
Something that’s often left out of the dot com bubble is the fiber build out. It was a massive over investment in fiber at the time and some companies got crushed. Others picked up a lot of cheap fiber and ultimately the internet was a massive success and the fiber probably led to our cloud computing capabilities today.
A crash doesn’t mean the data centers or other infrastructure is going away. But it might be too much CapEx that leads to some major players crashing and others getting some cheap stuff to build out.
Aware-Individual-827 | 2 hours ago
Most likely scenario?
Frontier AI labs crashing because the cost/results is abyssmal. AI labs focusing on cost/result ratio survives.
Also, economically wise, AI is currently a super strong catch up tool but a very bad bleeding edge one. If you use AI to build a moat, any AI labs are using your data to train on them 100% thus making it super easy for other companies to catchup.
BoltSLAMMER | 2 hours ago
I think this is very accurate, I think about how Amazon used all of its sellers data to undercut their own sellers on successful products and eventually cut them out going directly to the manufacturer. OpenAI and Claude code lets your code not be trained on but they can always do it and say sorry afterwards, what are we going to do?
growaway9172 | 32 minutes ago
Even then the frontier AI labs are not public companies and so the only people getting burned are institional investors. If they IPO and a ton of people buy in, thats sorta on them.
NoNameSwitzerland | 2 hours ago
I am asking myself, does it currently make sense to use much AI? It changes completely every 12 month. So everything you learn is for nothing. Today I can one shoot a little tool that 2 years ago would cost much more effort turning build. And everything you build now might be difficult to maintain and will be rebuild in the future.
And for companies producing software, what is the benefit to be 10 times faster? Your customers will not buy 10 times more often. And users will not want to change versions 10 times more often. So it would be only a reduced head count. But if it is do easy to create something with just a prompt, everyone can do it and the result is nearly worthless.
KIDWHOSBORED | 2 hours ago
I’d push back on the selling 10 times more software. The bigger benefit in my eyes is corporate IT. At least in my org, the narrative we’re going with is doing more with the same resources.
So say for example a lot of our software engineering is engaged in support activities for our mainframe systems. (A lot of financial services orgs are still like this). If we can shift from 75% of their time on support to only 50% of their time, we can focus more on improving our systems. There are ALOT of things we don’t do simply because we have to focus on keeping the lights on so to speak.
Does it justify AI valuations? I personally don’t think so. But even if the tools never improve further from today, they are very useful.
NoNameSwitzerland | an hour ago
AI certainly can be helpful. I see people now being able to do things they previously would need help of a lot of other peoples (for writing code, creating picture) or a lot of time (organising/planing things, getting all the information).
For big companies I am sometimes not so sure. There is a lot of bureaucracy that does not produce revenue or profit. That grows over time and is only possible, because they have a very profitable core.
Management likes to believe they have some control and overview. Some of that is illusion. But this elusion has to be feed with data created from tool. A Lot of decision could have been decided more efficiently on a lower lever by people knowing what they do instead of trying to convince the higher ups. And if software is more easily created, there will be more of it, also more automated stuff. Certainly less people per CPU cycle. But does all of that improve what the profit the core of the company can generate?
urza5589 | an hour ago
Generally if you can go 10X faster you can cut 90% of your headcount and perform the same speed. (There are exceptions and specialties but it’s most true at large, scaled companies)
That is what they are actually aiming for, cutting cost a bunch without effecting delivery.
BalianofReddit | an hour ago
Data centers just dont have the lifespan to be as beneficiall in terms of the infrastructure built during the boom.
We'll reach year 5 and alot of the equipment purchased during the boom will no longer be functional and the capital simply will not exist to replace it unless there is some miracle business model that makes it hugely profitable.
I agree, AI is going nowhere but I think its forseeable that AI use will be more limited in the future, because companies will be forsed to run a sustainable business model (at least by the standards of every other business) and unprofitable uses will go by the wayside.
I think its truely likely that the high end ai models will be almost exclusively be for limited corporate use and the very rich.
lokethedog | 14 minutes ago
"Data centers just dont have the lifespan to be as beneficiall in terms of the infrastructure built during the boom."
That's contrary to one of the primary issues we've been seeing in the actual construction of data centers, namely that grid access is one of the largest obstacles. Simply owning a building with access to 1 MW of power may be worth a lot if there's a demand for compute.
BalianofReddit | 5 minutes ago
We agree on the point you raised.
I shouldve been more specific as I was referring to the chips.
Its doubtless the buildings, or at least a good portion of them will remain usable And useful especially as the west begins its re-industrialisation. But in terms AI related activities I have my doubts, as I said, once the existing stock of chips becomes unusable/ obsolete.
omgFWTbear | 2 hours ago
The data centers are purpose-built and functionally die in ~5 years.
This is way more like beanie babies than the fiber boom.
Danne660 | 2 hours ago
Well so far we haven't seen any overbuilding of datacenters.
Unlike the fiber all the datacenters get used as soon as they are built.
NiceWeather4Leather | an hour ago
… for now when there’s too many frontier AI companies. We don’t need like 10 companies on the leading edge bleeding money, it doesn’t make sense.
Danne660 | an hour ago
I don't understand what you are saying, if we don't need 10 companies doing this then that would point towards there being less then 10 in the future.
Why would less companies result in more datacenter being built rather then more companies resulting in that?
NiceWeather4Leather | an hour ago
Because it’s high cost R&D at its core. There’s not room in a good economy for lots of companies doing the same thing at high expense- where there’s not enough return. So some of them have to die.
There’s a good reason there’s only a handful of high grade pharma research companies globally and even they need patent protection which none of these AIs get.
Danne660 | 56 minutes ago
If companies die then sure there will be reduced demand from them not needing R&D but there will also be less datacenters built by these now non existent companies.
I just don't see why that would result in overbuilding.
Grasses4Asses | an hour ago
But no one's figured out how to charge the actual running costs associated with these data centers.
They're enormous money sinks. You can't scale your way to profit if you lose money on every sale.
BullockHouse | an hour ago
The data centers are *hysterically* profitable to operate. Serving the models is likewise extremely profitable (80+% margins on inference). Serving the models while doing R&D on the next generation of models is not profitable (though in Anthropic's case it's close). If there's any threat of a 'bubble pop' the labs can slow down on R&D and become comically profitable overnight.
keepitfriend | an hour ago
Fibre doesn’t wear out every 3 years
Richandler | an hour ago
Losses can be a good thing. We done way too much in the last 20-years to prevent losses for the rich.
Ashamed-Status-9668 | an hour ago
The Internet we know today was birthed out of the dotcom bubble. I assume that is what will happen with AI. The bust will act as a survival of the fittest event where only the strongest companies survive.
BalianofReddit | an hour ago
I think one of the underappreciated issues that will crop up should a crash occur will be a delayed effect once hardware bought during the AI boom begins to fail.
The capital simply will not exist to replace enough of it unless a hugely profitable business model to justify that cost is discovered in the meantime.
urza5589 | 2 hours ago
Exactly this. Also people view the AI bubble as Anthropic/OpenAI/etc disappearing. That is not the most likely path, it is more likely the smaller companies like Character.AI fail and there is consolidation within the market, it becomes about who can provide the current services at a lower cost rather then the race for cutting edge service like it is today.
a_library_socialist | an hour ago
The small companies don't have to take delivery of trillions of data center contracts in 2027. The big American ones do.
ants_are_everywhere | an hour ago
There are soooo many AI companies that nobody has ever heard of.
NoNameSwitzerland | 2 hours ago
And google as the biggest internet company only had it IPO after the dot com bubble burst, while Yahoo does not exist anymore. Also amazons cash cow AWS only startet in 2006.
So it is not clear, if OpenAI and Anthropic will survive as companies.
coke_and_coffee | an hour ago
Yahoo still exists…
baconboner69xD | 34 minutes ago
It certainly does lol. It sucks though. People in this thread want this to happen so badly they’re going to will it out of existence
haarp1 | 2 hours ago
the same happened with railways, internet fiber...
ebfortin | 2 hours ago
A bubble bursting is making a lot more noise than some bankruptcy in the background. For the rest I agree with you. Companies will remains, akme of them. But more importantly the market will stabilize and the finance sector will stop allocating capital exclusively to AI.
BalianofReddit | an hour ago
Lets put it this way. I wouldnt want to be in charge of the US federal debt should a crash occur.
Its nightmare level bad should the US' AI fueled GDP growth all but dissappear overnight
getwhirleddotcom | an hour ago
The thing is the internet bubble popped but the internet did not go away and it actually supercharged the global economy and now there’s no imagining a world without internet. Why we would think AI would go a different path is more of an emotional take.
BalianofReddit | an hour ago
Isnt the main risk of this particular bubble bursting the scale of the likely loss in valuation rather than the loss of companies?
Like we're talking financial institution, government finance ruining numbers should there be a significant percentage dip
You're ultimately right though i just think perhaps youre underselling the scale of the crisis should the bubble burst and given broader implications on government borrowing, taxes, a collapse in demand for ai centric commodities etc etc.
I agree the only companies that will survive are those that have existing extremely profitable businesses that compliment ai development and use. Your big tech companies that survived the dot com bubble. I do think there will be some incredibly large victims of this crash. One of the big players will be struck off the board and others will be extremely damaged by the afforementioned collapse in ai related commodities. Nvidia could well suffer serious consequences if that 90% of their business deteriorates significantly. Sure there will always be a market, but the extent to which it will shrink could be a disaster in and of its self.
Richandler | an hour ago
The bubble is the data center commitments and the assumption that all kinds of new products will emerge. So far, the new products have been scarce. The LLMs themselves are being competed into the ground where the cost will simple be electricity with thin margins. It's here, I use it literally all day at work. Tons of human involvement still and imo it's very much stalled on doing sophisticated things in a way that allows for the keepers of it to understand and be content with assuming responsibility of the creation.
catratsat | 43 minutes ago
What if I told you it’s already been deflating this entire year? Where has the nasdaq gone in the last 6 months?
Some-Leopard5025 | 56 minutes ago
It's a damn shame the internet went away after the dotcom bubble.
TheYoungCPA | 3 hours ago
Yeah I work in the M&A tax space and the current valuations are way out of wack.
Most of the active advisors I work with are rebalancing and lowering exposure to the Mag 7.
Not investment advice, but an observation.
Agreeable-One2022 | 3 hours ago
This probably is most logical answer I have seen
Ai is valuable but I m not sure it’s worth the current multi trillion valuations
TheYoungCPA | 3 hours ago
It will be transformative and will get better with time, though I doubt all of the big players today will be winners in 10 years.
haloimplant | 3 hours ago
Yeah internet eventually took over everything but the bubble popped and all the over speculation was wiped out first
Ivashkin | 2 hours ago
I think the most interesting part of AI will happen when data centres full of extremely high-performance but largely unused kit slowly get older and less valuable. Things where the original owners may have gone bust, and the giants are buying the newer, more efficient kit, and someone thinks they can make money renting it out or selling it off in chunks.
TheYoungCPA | 3 hours ago
History doesn’t repeat but it rhymes with
Antique_Remote_5536 | 2 hours ago
Rhymes with what
weightedslanket | 2 hours ago
rhymes with orange
TheYoungCPA | 2 hours ago
Itself, I missed a word
Antique_Remote_5536 | 2 hours ago
Ah my bad
pacman2081 | 3 hours ago
look at the internet era
Cisco, Google, Amazon were new companies that did not exist before
TheYoungCPA | 3 hours ago
Does anyone here remember the Cisco stock run up and crash?
Beneficial-Neat-6200 | 2 hours ago
I sure do. In early 2000, csco went from 55 to 80 in about a month. No increase in revenue or earnings, just analysts making increasingly optimistic forecasts. When the pe got over 200, the market suddenly realized this is crazy. Then when csco started falling everyone ran for the exits
mutqkqkku | an hour ago
Every big AI company is valued as if they're the winner who takes it all in a all-in on AI future. Even if that future comes to pass, all of them can't be winners, and it's possible that the real future winners haven't even broken to the mainstream yet, or will be the ones who pick up the pieces after the current big players crash.
hibikir_40k | 3 hours ago
Someone right now is massively overvalued. At the same time, some are still bargains, even at crazy valuations. The question is who.
TheYoungCPA | 3 hours ago
Bingo bango bongo I agree
khay3088 | 2 hours ago
Not just who but when. We could see valuations rise 50% more before the bubble 'pops' and drops 40%.
HeKnee | 3 hours ago
Its the problem with companies now being valued on ebita alone it seems.
TheYoungCPA | 3 hours ago
How else do you value these? Assets or comp sales? Uncharted territory.
You do have an argument that this is different and a part of me agrees, I just don’t think every company is going to be a winner in this.
Imhazmb | 3 hours ago
The valuations - the PE ratios are as low as they’ve ever been. Earnings keep going up. The demand for intelligence is unlimited. This is too easy being on the other side of this trade from you all.
shingkai | 3 hours ago
Check out the book "This time is different: eight centuries of financial folly"
The argument is not that AI won't be transformative and incredibly impactful -- its that every time a transformative technology has emerged, the initial exuberance has led to over investment because no one wants to miss out. No one is saying electricity, trains, telegraphs/phones, the internet etc was not transformative and profits could be made by investing in them. But in every case the initial investment craze led to crashes. And every time investors said "this time is different" and then the market crashed and took 10-20 years to recover.
NoNameSwitzerland | 2 hours ago
Efficient market tend to work like a maximally fast PID controller. And that always oversteers. Only way to avoid that would be to artificially slow it down. And since nobody slowed this investment cycle down in time, there is massive overinvestment. No matter where the reasonable end point would be, the momentum forces it to go to high and then crash and recover before stabilising on a reasonable path. That could be avoided if you had to wait for real feedback, like making money from an investment before signing of the next round. But nobody does that.
carsncode | 2 hours ago
It isn't possible for demand for anything to be unlimited. In fact, demand is currently around $500B while analysts estimate it would need to reach $6-8T in total by 2030 to make the existing investment in the segment viable. Very few companies consuming AI services are reporting a significant increase in their profits from doing so, and many report a negative ROI, so the argument for near-term skyrocketing demand is very shaky. The only companies actually making money in the AI pipeline aren't AI companies or AI consumers; they are, as ever in a gold rush, the ones selling shovels: Nvidia, Micron, Samsung, SK Hynix, Amazon, Microsoft, and Google.
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newgrounds | an hour ago
If I have to read a gold rush shovel/pickaxe or Dutch tulip analogy again I am going to pull my eyeballs out. Get a new line, I beg you 😭
Adunaiii | 2 hours ago
The belief is that AI research will give us super intelligence that will transform all civilisation. Like making the Sahara green, infinite energy, new science, robot factories replacing humans. Otherwise it's a bubble. Will it also crash the whole economy? Either way, it's a win-win in my book.
TheYoungCPA | 3 hours ago
Go ahead and ignore Capex ratios, be my guest. Not every company is going to win on this.
solarpanzer | 2 hours ago
A negative number is a low number.
BarryDamonCabineer | 2 hours ago
We're really discussing New York Post articles in r/economics?
Surely I should not be required for my comment to contain at least 140 characters in discussing New York Post articles in r/economics
BlaxicanXIX | 3 hours ago
Just two more weeks bro please bro you have to be believe me it's all going down in two weeks bro please, please believe me bro the collapse will happen any day now bro please the bubble will pop i promise bro please
Sadly_NotAPlatypus | 3 hours ago
Coreweave is about to go down and Anthropic and OpenAI are cash burning machines running out of other people's money to light on fire. I don't know if it'll crash in two weeks or two years, but so you see anyway out of this other than a crash?
Kastranrob | 3 hours ago
It is not going to crash. It will shed some weight and adapt. there is no way Anthropic and OpenAI is going to fail at this stage.
TheYoungCPA | 3 hours ago
There are going to be winners and losers. Maybe OpenAI and anthropic are amongst the winners but some of the capex here will plateau or drop when others don’t make it
Adlehyde | 3 hours ago
They may be, or they may fail catastrophically and get scooped up by Google, Amazon, an Meta.
No one expected Lehman Brothers, Bear Stearns, or Washington Mutual to fail during the 2008 financial crisis, but Lehman Brothers had to liquidate, Washington Mutal got seized and sold to JPMorgan Chase, and Bear Stearns got a bailout and sold to JPMorgan Chase.
Neither of those companies are so big the same couldn't happen to them, and neither is in a position to be a buyer of another.
TheYoungCPA | 3 hours ago
Fully agree
pagerussell | an hour ago
>Neither of those companies are so big the same couldn't happen to them
Both Anthropic and OpenAi are tiny compared to those companies. They are not publicly traded, so whatever their valuation is set at is pure speculation. They have very few assets. They have had hundreds of billions of capital pumped into them but have spent almost all of that over time.
I'm not saying they will fail or are worthless, they have brands and IP and certainly some amount of hardware that they own directly, but I am pretty confident they are fundamentally smaller than all those banks you mentioned, who had actual assets when all that started.
Adlehyde | an hour ago
Yeah that was pretty much my point. They have no mechanism to save themselves when the bubble pops. Since they're not publicly traded, they don't currently have to worry about their stock plummeting to zero and then going under, but since neither are cash rich and operate on debt only, they have to keep raising funds. If the bubble pops and all the bigger companies that keep investing into them (particularly into openai) stop doing so, then those companies are immediately looking at chapter 11.
irvmuller | 3 hours ago
I mean, the companies can survive while their stock crumbles, they have to sell off parts, and they lay off people. I’d still call that a crash.
rhino369 | 3 hours ago
Even if AI doesn’t fail, the first implementers aren’t always the winners.
AoL and Yahoo had to fail to make way for Comcast and Google to replace them.
ADHDavid | an hour ago
I really don't see any other startups acquiring the raw compute needed to play ball with the current giants rn.
WorldsBestPapa | 37 minutes ago
What if china continues focusing on light weight models - models that don’t have the insane hardware costs ?
China has proven time and time again that you don’t need to offer the best product - you only need to offer a product that is good enough and cheaper than the good product.
Any company that provides a model that is 75% as good with 40% of the operating costs (like several Chinese companies are working towards ) will win the AI race.
And once a company wins because their “good enough” model has captured the market they will be in a position to offer a cutting edge model - and then they will charge out the ass for it.
Evening_Literature75 | 3 hours ago
The difference between shedding weight and crashing is the velocity
TorontoBiker | 3 hours ago
And the end result.
They are not remotely the same things.
daisy0808 | 2 hours ago
Were you around for other big failures in the past? There is just far too much shareholder money being called in and not enough productivity to offset it. It's called over leveraging - and all they're doing is trying to outspend it.
nixed9 | 3 hours ago
The literal numbers say it’s not a sustainable business in its current iteration
My money is on taxpayer bailouts
JesseJames41 | 2 hours ago
Bingo. If trump is still in office when it happens, they will have a bailout or a full scale government takeover. Nothing like the government owning a bunch of data centers and proprietary information that people have fed into these AI chat bots and being able to more adequately spy on their on citizens.
space_monster | 57 minutes ago
My money is on nation state investments because they want to accelerate science.
Tirras | 27 minutes ago
Bailouts will not save these companies, their business models will remain unprofitable.
thethirstypretzel | 2 hours ago
They probably won’t fail, but the negatives stories will pile up and they will eventually sell to a hyper scaler at a fraction of their current valuation
max_vette | 2 hours ago
Openai and anthropic are worth more than the entire nasdaq during the dot Com boom.
Shedding some weight will be a massacre
weatherwar | 2 hours ago
If you normalize correctly no they're not lmfao.
Ididnotpostthat | 3 hours ago
That’s my thought, it is going to be a slower burn over next few months to years. I think this Decembers typical sell off cycle will be a bit of a tell to how quick it might be.
Rolifant | an hour ago
Lol ... these will probably be famous last words before too long.
These companies promise they can do everything because they haven't figured out how to make money from it (yet). There'll be plenty of them betting on the wrong horse.
Western_Animal1553 | 3 hours ago
Failing financially. Its tech is prob great but its a shit business
JoJackthewonderskunk | 3 hours ago
So is tesla
Randolpho | 2 hours ago
Tesla’s tech is shit, tho
JoJackthewonderskunk | 2 hours ago
Agreed but its still rolling on hype which likely Anthropic and OpenAi will as well
Randolpho | 2 hours ago
Yeah, it's absolutely rolling on hype. I was just bringing it back to OC's comment. Tesla is a shit business that only succeeds from hype, but unlike OC's suggestion, Tesla's tech isn't great. Like at all. Every model is shitty, with they cybertruck being basically an Edsel.
JoJackthewonderskunk | 2 hours ago
That cybertruck is an abomination.
haloimplant | 3 hours ago
What does "weight shedding" look like to you
BondageLover1989 | 3 hours ago
US government will bail out Anthropic and OpenAi. It's a security necessity.
Western_Animal1553 | 3 hours ago
That'll be well received
BondageLover1989 | 3 hours ago
Does anybody give a fuck what Joe Citizen thinks? What happened at the last crisis?
TheYoungCPA | 3 hours ago
In general this is a really good point about political discourse in this country lol
matjoeman | 2 hours ago
Just like everything else this administration has done.
pacman2081 | 3 hours ago
Won't happen. Govt will seize the assets and hand it over to another American company for pennies. The equity holders will be screwed
weatherwar | 2 hours ago
They absolutely won't.
Anthropic will not need a bail out, so that's moot. OpenAI will get bought up by or merge with someone if it comes to that.
wainbros66 | an hour ago
Even where the models are right as they stand, the demand is unfathomably great. A stock market crash due to liquidity crisis, or due to a lack of available current infrastructure is absolutely possible. But the technology is not going anywhere. The winners of AI will go on to generate immense market value and change the world as we know it, whether you like it or not. Just like the internet did after the dot com bubble.
Scary_Mountain130 | 36 minutes ago
Businesses are already capping usage limits or backing out completely. Open source models do much of what businesses need and don’t have the same confidentiality and security issues as frontier models. The technology may remain with us but the big companies and massive data center build out are likely to crash. It’s just nowhere near profitable enough.
joshTheGoods | 22 minutes ago
This is pure cope. Of course my CFO is going to apply downward pressure on a quickly growing cost, but you best believe the productivity that comes with it wins the argument in the end. As good as they are NOW we're not paying CLOSE to what the business would be willing to pay. That's the reality of how good these tools are. Only thing keep the cost down is the competition to soak up as much market as possible as early as possible. You think we're considering switching to OpenAI after 6 (crazy fast) months building around Anthropic even with OpenAI like 60% the cost for similar capability? Nope. Anthropic could double their price and it's still be EASILY worth it for my company.
Sad-Set-5817 | 10 minutes ago
Here's the question that determines whether it's a bubble: If Anthropic were to double what they are charging, would they become profitable? If not, at what price do you think they would be able to operate from your money instead of investor money? Would you be willing to pay that when you can use less powerful models for free?
WorldsBestPapa | 53 minutes ago
Demand is not as great as is claimed.
Every software company is shoehorning AI into their existing products. Customers didn’t ask for that and customers won’t miss it when it is gone.
Subscription counts for AI services have not gained the numbers expected. Every time subscription costs increase subscribers drop.
Costs to have access to AI tools for enterprise customers have risen sharply and in response enterprise customers have sharply decreased their spend on AI tools.
Even after all the cost increases every company that offers an AI tool is still doing so at a loss.
This shit cannot go on forever.
Dougthehamster | an hour ago
It’s a magic technology. It is not a bubble. It is going to radically transform your next ten years of life. You need to focus on learning it.
daviddisco | 17 minutes ago
Anthropic's operating expenses are known to be profitable now and OpenAI is thought to be close. They are using investor cash on future infrastructure investments but the core business is quite sound.
Rudefire | 16 minutes ago
I love when people say this like no other successful startup in history has scaled by focusing on growth burn before profitability.
fumar | 3 hours ago
Coreweave is not about to go down. You're buttchugging hopium.
Here's the thing, if we experience a hardware demand crash it won't actually bring prices down. There's a ton of pent up demand at the consumer side and the enterprise side. A lot of companies would love to deploy AI infrastructure for their business but can't justify the current high prices.
BoxOk5053 | 3 hours ago
At some point it's pretty likely it will. That company has really bad books and their business model is still mostly on paper orders that can at any time go poof or have their plug bulled by customers.
I can't speak for every company but CoreWeave is probably the closest company I can think of to be dot-com-esque.
The owners already made their money anyway.
big-papito | 3 hours ago
There are very few scenarios where Coreweave can pay off its debt. Unless Nvidia bails them out, which Jensen said they won't.
Traum77 | 3 hours ago
Market has it at a 63% chance, based on CDS, last I saw. Not a guarantee, but people are actively betting against it.
mankiw | 3 hours ago
> do you see any way out of this other than a crash?
The firms in question continue to make a lot of money.
cwood92 | 2 hours ago
No, continue to generate a lot of revenue but they are losing money way faster
BoxOk5053 | 3 hours ago
CRWV no others probably. CRWV still isn't really making any money.
npc_housecat | 3 hours ago
Anthropics been in profit, since Q2. And they just reported a 45%increase in revenue Q3 from q2 to $16B
cornhole99 | 3 hours ago
Are you memeing? We all saw how they’re defining “profit”
McOmghall | 3 hours ago
In profit if you don't discount the costs lmao
WhipsAndMarkovChains | 3 hours ago
Lmao they absolutely have not been profitable. There’s always some caveat like “well if if you ignore training costs…” or “we got a $1 billion discount on compute this month…”. They won’t even tell us how their annualized run rate is calculated.
Until they go public and are forced to report numbers in a standard way you can’t trust what they say.
sudoku7 | 3 hours ago
Read the way they define profitable. It's definitely not GAAP.
jeffwulf | 3 hours ago
They define profitable as revenue exceeding cash expenses.
big-papito | 3 hours ago
LOL. "Adjusted profit". Their definition not mine. You know what that means? It means not counting the costs.
CentralHarlem | 3 hours ago
Surely you jest.
itsANOMALEEZ | 2 hours ago
In medieval times the court jester was the only one in the entire kingdom allowed to speak to speak the truth
davvblack | 3 hours ago
i still don't believe they are actually profitable using real modern accounting practices. I do vaguely believe they are in a position where, if they had to, they could become profitable (mostly by shuttering all training and new model development). So it's unlikely they'd actually go bankrupt, but given how good the open models are getting, their moat is eroding rapidly.
Humble_Insurance8294 | 3 hours ago
if they shut down training, everyone switches to open source on 6 months tops
that's the problem
davvblack | 3 hours ago
right, which also means the time horizon to cash in on their training investment isn't infinite: it's work that goes stale in 6 months.
npc_housecat | 3 hours ago
The way I see it, as compute price drops, self hosting will become more attractive. But data center costs will also come down,. So operating costs for companies like anthropic will also come right down. Especially when the shortages end
jeffwulf | 2 hours ago
They are profitable based on ammount of revenue exceeding cash spent. They are discounting non-cash costs like equity grants.
Gloobbie | 3 hours ago
I don’t believe they are currently profitable either under normal standards but I also don’t care. Revenue went from 5 billion in 2025 to 16 billion last quarter. Thats not expected revenue, that’s real revenue. Their costs are expected to decline starting 2028 while revenue expects to grow.
They have proven their revenue is growing, I don’t see how a company about to clear over 100B in revenue next year is going to go bankrupt like Reddit wants them to. Reddit just recycles the same negative feedback loop no matter what
davvblack | 3 hours ago
it depends entirely on what the cost of revenue is. they could be losing money on inference, though i don't believe they are.
We also don't know what their debt service is, though i think they've done some shell games to bury all that in subsidiaries. So we'll end up in a situation where a bunch of anthropic subsidiaries go bankrupt, the banks will be out billions of dollars of capex, and anthropic will still be worth a trillion dollars?
pacman2081 | 3 hours ago
If your revenues are $100 billion and your expenses are $150 billion, you will go bankrupt eventually
McOmghall | 2 hours ago
You are comparing 2 different metrics there: 5B is ACTUAL revenue for 2025, 16B is ARR for latest quarter. Their ARR for 2025 was like 10B, so assume half of that is the actual revenue.
Gloobbie | 3 hours ago
Haha no one on Reddit is going to believe this narrative
Anthropic had $4.6 billion in revenue for all of 2025, compared with $16.8 billion in Q3 2026 alone. Their revenue growth is insane. And it’s expected 51% increase guidance.
Anyone saying a company that is increasing revenue this fast is going to crash is absolutely stupid
Lichensuperfood | 2 hours ago
How can you only look at one side of the equation?
Humble_Insurance8294 | 3 hours ago
cope
weatherwar | 2 hours ago
Agreed, the cope by the anti-AI faction is pretty funny.
SaxRohmer | 3 hours ago
also a new york post article that’s scant on details and citations
RedDawn172 | an hour ago
Like most articles like this that have been put out for a long time now. Will crash any day now! Generated plenty of clicks and engagement and eventually perhaps they'll be right. Eventually being the key word.
PraetorianXVIII | 3 hours ago
You're cute
Dabaumb101 | an hour ago
Michael Burry is that you?!
PlebNoodle | 51 minutes ago
any day now
conifurr | 3 hours ago
One thing I don’t see mentioned very often is the durability of these chips. If they’re running them full throttle constantly for maximum compute won’t the chips burn up in 3-5 years? So then all this capital invested in the chips would have to be reinvested to replace them? So that’s another however many billions of dollars invested in 5 years, how much profit do they expect to make in order to make that replacement rate sustainable? Especially given the open source models which are less powerful, but significantly less expensive. It seems to me businesses who want to use ai could manage to use the smaller cheaper ai to perform tasks which provide the practical needs without the massive compute to make a generalized ai that’s good at everything, because the open source models are good enough at what they actually need ai for.
musashisamurai | 2 hours ago
Worse. A lot of the algorithms and development assumes better chips over time. So the data centers are buying new and better infrastructure (processors, GPUs, motherboards, blades, etc) before they've fully paid off the initial loans to buy the originals. In 2-3 years, your state of the art data center won't be state of the art.
haarp1 | 2 hours ago
plenty of datacenter builds have actually been postponed. even older gfx cards are still expensive, because you can still use them for lower tiers (if you rent them out). same with gaming cards - less ram, lower tier.
SanDiegoDude | 2 hours ago
Actually been pretty much the opposite so far, compute is in high enough demand that H100s are still going strong at 5 to 6 years old now. The old 3 years and replace rule is seemingly broken at the moment, due to overwhelming compute demand. We'll see what happens to the demand once all this stuff starts imploding, but for the time being, 6 year old compute still doing duty cycles...
J_NonServiam | 2 hours ago
Another issue is we're reaching diminishing returns on chip manufacturing - Moore's law has been dead a good while now.
Adunaiii | 2 hours ago
The Moore's law hasn't been dead, it just hit the diminishing returns on investment. But much of science has, too, look at fundamental physics - the last breakthroughs were in the 1930s (quantum mechanics, nuclear).
Separate-Client-3213 | 2 hours ago
> won’t the chips burn up in 3-5 years
No, modern chips are pretty resilient if given sufficient cooling and proper voltage/current.
But they will be pretty useless after ~5 years, aka competition can likely do on 1 chip that takes you ~2-3 chips at lower electricity usage.
Richandler | an hour ago
Every company will have a composition of old and new stock. If their demand needs old chips, they'll continue to run them.
omgFWTbear | 2 hours ago
Funny, I know a former AI researcher who raised the same general point as your first half - all the huge investment has to pay off in (loosely) 5 years because everything that’s been spent explodes by then (I oversimplify in my idiot-ese).
Financial-Barnacle79 | 2 hours ago
Was reading about all the e-waste data centers will generate as they need to upgrade all their current hardware due to end of lifecycle. Hopefully someone will find a good way to repurpose/recycle, but the amount is staggering.
Mountain_rage | 2 hours ago
What could be worse for these businesses is people find ways to build a chip or process that makes all the training investment worth almost nothing. Example someone figures out how to do the same or better training at a tenth of the cost. All that investment to have a head start, wiped out.
alilhillbilly | 2 hours ago
That's already happening.
Local models are the future. They will be cheaper and offer privacy.
The privacy thing is going to be the most valuable thing in tech for the next several decades.
Especially when it comes out that Microsoft and Google let everyone's personal and corporate SharePoint, email, OneDrive, Drive, etc data be quietly used to train things.
unnaturalpenis | an hour ago
But if that were true you could train a bigger model on the existing infra, that's what keeps happening, everyone big and small take the efficiency wins found by open source labs
newgrounds | an hour ago
Well, for Google, they can fold any data center they have into being purely Google Cloud traditional business segments so there won't be a long term loss there. And their general money printer is largely just being temporarily diverted from cash on hand and buybacks.
Beneficial-Neat-6200 | 2 hours ago
The chips are not going to wear out. As long as they don't overheat, they can last a decade or until they become obsolete (maybe 5 or 6 years)
[OP] CallMePyro | an hour ago
How long does it take a chip/datacenter to pay for itself? It looks like an H100 is renting for $2.85/hr right now. If you bought it in Oct 2022 you'd barely be making your money back now... it's all a ponzi predicated on scams
growaway9172 | 27 minutes ago
Even consumer chips are lasting longer than that. An RTX 3090 which is over 6 years old now, is still selling used for MSRP. Datacenter grade stuff is even pricier.
Elukka | 50 minutes ago
It's not that clear cut that the chips will "burn up" in 3-5 years. If the cooling systems are designed properly and the power densities and current densities are kept at reasonable levels there is no reason why a majority of the chips couldn't survive for 10 years. It all depends on how they start to flake out and if the units can be identified and isolated or it becomes a widespread issue where every rack starts to fray at the edges all over.
Besides, what I am hearing now is that many users are completely happy squeezing out work from +3 year old hardware assuming it supports the suitable FP4 or FP8 or whatever data formats and there is enough VRAM.
OneOverXII | 42 minutes ago
That has been the case for over a decade. Amazon has an entire supply chain and network of companies whose entire business is recycling raw materials from old Amazon chips. This is part of why chip businesses do so well
nylockian | 3 hours ago
Yeah that was crazy - and to think there was a time before the dot com busg that people actually thought we could monetize the Internet and like it would have a massive impact on society.
Major-Mushroom-5806 | 3 hours ago
The AI bubble crashing has nothing to do with how useful or revolutionary the tech is. The dotcom bubble happened because people knew it was a game changer and everyone wanted in. That leads to an influx of money that can't possibly produce the results people expect, plus a bunch of companies riding the hype with no actual added value.
FEMA_Camp_Survivor | 2 hours ago
Same as with the railroads
pagerussell | an hour ago
And in all three cases the most important variable was time.
It always takes a lot more time for these things to build out than people think. It took 20 years for the Internet to even start hitting it's potential. We are like 4 years into LLMs. They will have an impact, it's just going to take 15 more years. People have to build new processes and businesses up around these techs. It doesn't happen overnight, even if the tech is ready, because the limiting factor is us. The humans.
evolflush | 2 hours ago
Which companies right now have further to fall in this bubble burst though - ‘ai’ companies are mainly mag 7
Tkins | 53 minutes ago
People seem to ignore this for some reason. The MAG 7 have so much cash and money generation even without AI. So how are they going to collapse?
Also, the next line up of companies, like broadcom, ASML, Micron all have a ton of hardware to produce for years to come. Is the expectation that data centers will just have no use and will sit there empty and no one will use them?
JackieChanX95 | 2 hours ago
During and after the dot com crash the companies continue to grow their revenue and earnings. Today big tech and the most important AI stocks already at 20-30PE. Heck, memory at anywhere 2-8PE. There is not much room to fall with the industry growing
Mysterious-Arm6660 | an hour ago
That seems like an argument against it being a bubble, sine most of the public is still in denial about how revolutionary AI will be
Major-Mushroom-5806 | an hour ago
No, it’s a bubble. The two things are completely unrelated.
The bubble is because the amount of investment cannot return the yields needed to be viable. This happens with tons of markets. Housing is essential but it doesn’t mean a housing market can’t have a bubble (obviously). Something being revolutionary doesn’t mean that every company peddling it will all of a sudden make tons of money.
When it becomes evident that profits aren’t coming, people will pull their investments from all but the strongest bets, which will actually probably benefit from the bubble collapsing. Similar to how Google came out on top in the 2000s.
But that amount of reshuffling could have domino effects elsewhere in the economy.
Tkins | 49 minutes ago
Which companies are they going to pull their money out of? And who is going to pull their money out?
The MAG 7 alone make up nearly 40% of the NASDAQ. You think people are going to pull out of the most successful and profitable companies of all time? These companies that are currently extremely profitable even during a build phase where AI isn't showing profits? If AI peters out, who of the MAG7 are going to go bankrupt by stopping spending on AI buildouts and focusing on their profitable ventures?
Institutions make up 70-80% of trade volume. Do you think they will cash out? That's antithesis to their entire structure as organizations. They stay invested in the market.
livestrong2109 | 3 hours ago
JEV came in and has insane adoption. Every tech built on an LLM is about to get stomped by Type Safe AI. All that money and debt is a total loss and entire small towns have taken on massive liability and infrastructure costs for hundreds of acres that's are going to be as useful as the local Sears and its service center.
blazeit420casual | 2 hours ago
How do you see JEV taking over LLM based tech? I currently use it in conjunction with LLM agents and from what I can tell the capabilities of the two techs are quite different.
redp1ne | 2 hours ago
Type Safe AI is so yesterday. Laya: Released by Convai Innovations as an open-source (Apache 2.0) 421M parameter model, Laya runs locally and skips cloud round trips. It achieves ~33ms latency (roughly 7.8x faster than hosted Jev's ~236–276ms)
livestrong2109 | 2 hours ago
What are you talking about
WATTHEBALL | 2 hours ago
Trust him, I'm a doctor.
redp1ne | 2 hours ago
Funny, that's what the last guy said, and he turned out to be a dentist.
Tkins | 49 minutes ago
You should read into Jevons Paradox.
haecceity123 | 3 hours ago
What's even crazier is how we used to think that the internet being monetized primarily by ads was a temporary embarrassment that would eventually be replaced by something that lends itself to less dysfunction.
TheActuaryist | 2 hours ago
I mean, it’s the same exact thing. There is a ton of money that is going to be made in AI but no one is quite sure how and no one is quite sure which companies will be the winners and losers.
It’s likely 1/50 of these start ups will churn out a ton of money but it’s an entirely new industry with so many unknowns, it feels a lot like people are investing blindly hoping to be the 1/50.
Same thing happened in the dot com, there was a mad dash and over investment in some terrible companies, with a few winners coming out insanely wealthy. Some people made money and the economy was forever changed but the market still crashed and lots of people lost a ton of money.
falcongsr | 2 hours ago
History doesn’t repeat, but it sure does rhyme.
The supply/demand dynamics are much different this time, but there will definitely be winners and losers.
rtietatomic | 2 hours ago
Two things are true.
The internet was and is monetized and has a massive impact on society
A business plan of losing $5 on every delivery (kozmo.com) isn't a path to success.
A lot of the dot com businesses blew up because their vision and spend outstripped their revenue potential. And 10-20 years later, many companies stepped in and took those ideas to success after a tweak.
There's a saying in the tech industry - pioneers get the arrows. Lots of companies want to be the first mover into a space, but generally over history the first mover usually dies off and someone else takes up their idea/product/service and succeeds with it.
Lycos invented the truly useful web search, where are they now?
3com is the reason everyone's desktop has an ethernet jack. Where are they now?
Blackberry brought the smartphone era into existence, how did that go for them?
Right now these AI companies are rushing to be sacrificial pioneers, and when - not if - when they die, Google or Microsoft or Amazon's going to buy their bones for pennies on the dollar. And trillions will be lost on the pop of the bubble in the process.
Long-Blood | 3 hours ago
Tbf no one was walking around with internet access in their pockets back then
HomeworkInevitable99 | 3 hours ago
People knew it would grow hugely and all wanted to get in at the first floor. Many Fri by the wayside, but those that survived won hugely.
AmoebeSins | 3 hours ago
In the future - "Tbf no one was walking around with AI and internet access implanted in their brains back then"
Long-Blood | 3 hours ago
Yea. After initial the ai bust.
Its not about the usefulness of the tech.
Its about the irrationality of the investors and the current limitations of the monetary system
BaldBeardedBookworm | 3 hours ago
AI, much like nuclear energy, is simply a technology that is not optimally or ethically useable in a system where individualistic owners of capital employ it to increase shareholder profit above all else.
The best uses for AI involve serving disabled communities who don’t have the income to sustain its use.
pacman2081 | 3 hours ago
Internet had massive impact on society. the companies started during dot com bubble were questionable.
Some companies slumped during dot com burst and emerged stronger - Amazon, Netflix, Priceline, EBAY
alQamar | 3 hours ago
It’s so dumb people act like the bubble wasn’t real back then. There were a lot of bullshit companies that were way overvalued - and then they were gone. That doesn’t mean there were no survivors.
People just knew the internet would be huge, but couldn’t really tell what aspects would actually be useful so snake oil salesman could make a fortune. After the bubble popped the survivors had to actually prove themselves.
The same will happen with ai.
JMer806 | 2 hours ago
The main difference is that AI companies and AI technology are extremely relevant to national defense and thus the government has a vested interest in keeping these companies afloat.
Certainly some, maybe even many, will go under as they are too small/niche/poorly run to survive. But there isn’t going to be an industry collapse because the government won’t let it happen.
earthsprogression | 3 hours ago
And others burned massive amounts of cash and went nowhere. Billions of dollars invested in companies that you've never heard of because they went under.
That's the bubble part.
Pugsly007 | 2 hours ago
Lots of people lost lots of money.
mmarkDC | 3 hours ago
The ones that emerged stronger emerged so much stronger, though, that you'd actually be way ahead today if you put all your money into a NASDAQ index fund in 1999, despite the bubble crashing. For example if you bought QQQ on the first day it launched in March 1999 and held to today, you made 11% a year, which compounds to a 1,550% total return.
Doesn't prove you will always come out ahead if you buy during a bubble, but in the dot-com bubble specifically you would have.
santagoo | 3 hours ago
Both things can be true. The dot com bubble was real and a crash did happen. And we got a useful communication infrastructure out of it.
Specialist_Dark_3668 | 3 hours ago
The word "useful" is underselling it.
No nation or industry without internet will ever be able to compete with one with it.
The internet was nothing short of a paradigm change in human history.
falcongsr | 2 hours ago
AI will be the same, and there will still be winners and losers just as before.
BigDaddySteve999 | 2 hours ago
We knew the Internet would be transformative, but not exactly how, and the full infrastructure didn't exist yet. Like, it was crazy to think pets.com was going to revolutionize commerce because the had the domain name.
SlicedBreadBeast | 3 hours ago
Ai isn’t helping me buy other stuff? Like e commerce is already built out. What is AI going to do differently? I already ask it for the best deals which A, it doesn’t do, and B, does it for free and sends me to Amazon or somewhere? These are not the same things, there’s no obvious ROI in AI right now, and hasn’t for years. Dot com bubble everyone was trying to take a slice of selling, product or service. This is a service provided free that no one actually wants to pay for and would go back pretty quick to Google search for shopping again or whatever they use.
TransitJohn | 2 hours ago
Make it so you can't find what you're looking for by ignoring what you type, showing you other shit, then when you ask why, say because it's being helpful.
eight_cups_of_coffee | 2 hours ago
At work we barely write code anymore. The tech has basically allowed for crazy levels of automation in white color jobs where companies have decent tooling for the models to use. Pretty much every company right now is spending massive amounts on tokens (I have one colleague who spent $19k in tokens last month). What you said might have been true 2 years ago, but now I definitely don't see that being the case. The new models are incredibly good. on the other hand I don't see anthropic and open ai being able to continue subsidizing everything. Likely there will be some pull back in spend.
CisFishstick | 2 hours ago
I think the point is that both things can be right: the thing that's crashing can still be the future. The dotcom crash sure as hell happened, and here we are in post dotcom crash era where, well - the internet and .coms survived.
Many adults living through the dotcom crash, not fully understanding this thought: "Yep, screw that dumb technology. I'm glad all those capitalist assholes over invested and lost all that money. I'm glad the tech will die, or at the very least get well regulated and cease to be a threat!"...
Those same people would have scoffed if you told them that the internet will not only survive, it will rather quickly invade all aspects of our lives to the the degrees that you haven't even begun to think of yet. It was unimaginable.
The same is happening right now. It's hard to imagine the ways AI is going to impact our lives. AI Babysitters, for example - from the guy who says that a few eggs need to be broken to make omelet or some shit...
Even *IF* AI does actually crash yugely, it would be a grave mistake to then assume that it isn't still going to rule your future. Those in control of the tech have imagined ways of using it that you haven't. We learned all of this with the dotcom crash only a short quarter century ago...
FocsSus | 2 hours ago
Maybe the free versions don't but the paid versions will definitely do way more than just send you to Amazon. I will have it do a multi lingual search across borders in the EU for the best deals.
The coding is game changing.
Grouchy_Rule_8935 | 3 hours ago
If you think there is no ROI from AI, the tool that has automated software development, that is bringing in hundreds of billions in revenue already, that has solved hundreds of long standing math problems, I think your biggest problem is pulling your head out of your ass.
musashisamurai | 2 hours ago
Except ROI is also based on what has been spent. Lots of money has been spent, far more than what AI companies have made so far.
SlicedBreadBeast | 2 hours ago
You’re correct the return on investment is there. At like a multiple of .006 . They haven’t made hundreds of billions, they’ve spent around 1.5 trillion worldwide building it, but they’ve made about 110 billion! Wow!
MaterialAstronaut298 | 2 hours ago
As of now there isn't. Every new customer costs the ai companies more in computing than they can charge for their service. Right now, it doesn't scale and is a massive loss
AwkwardTickler | 2 hours ago
Lol ROI. OpenAI and Anthropic are not profitable. Their cost per inference increases. No economies of scale.
onesillyg4y | 19 minutes ago
What are the revolutionary new software being released with the help of AI? It has been like at least a year of strong enough models and yet
Nothing in my life relating to tech or software has changed
No-Breakfast-6749 | 40 minutes ago
The dot com bubble was really just investor hype centralized around an unsustainable business model. These AI companies are spending hundreds of billions of dollars to not even be profitable. And they are hiding hundreds of billions of dollars of debt. They are selling tokens at a loss to try and boost usage and dependence. The dot com bubble popped once investors realized the business model was unustainable and they weren't getting their money back. The only company really making any profit right now is Nvidia, primarily because they provide the real hardware these data centers run on. It does not take a degree in economics to see that there will need to be a major reshuffling of the operation behind these AI companies if they are ever going to be profitable.
nylockian | 36 minutes ago
My comment is geared to the idiots and morons like myself who might conflate the idea of the AI bubble bursting with a halt in technological progress and free porn.
ryandury | 3 hours ago
Hahaha yeah, that stupid .com thing sure did burst
r2k-in-the-vortex | 2 hours ago
Internet being important part of everyday life in 2026 didn't help Beenz.com investors in 2001.
Single_Extension1810 | 52 minutes ago
I have been hearing for years that AI was going to replace me. I have a simple scheduling/data entry job. It never happened. Yet AI is solving mathematical equations that have never been solved. I don't understand the gap between what it can do, and what it can't.
NotAcutallyaPanda | 21 minutes ago
In order to solve a Millennium Prize math puzzle earlier this year, Open AI spent $20M worth of computing power.
They won a $1M prize.
Can AI do your job today? Probably. But it’s currently economically inefficient, and once the venture capital dries up the business proposition won’t be profitable for years to come.
vhax123456 | 14 minutes ago
The NSF gets 100mil$ annually and can’t solve it for 90 years. OpenAI spent 20mil$ and solve it in 88 hours. It’s not about if AI can do your job anymore. It’s about can you do what AI can do.
Serienmorder985 | 6 minutes ago
Fuck off.
They literally took a real mathematicians theory for solving the problem and stole it and basically just beat him to the punch with validation. AI didn't solve it on its own
arrowsgopewpew | 17 minutes ago
VC will not dry up anytime soon. There is so much dry powder out there and it’s building up.
ssczoxylnlvayiuqjx | 26 minutes ago
I find modern Claude Sonnet and Opus are far more capable than I ever imagined possible.
That said, it’s almost “too cheap” right now. If a weeks’ worth of human work can be done in 30 minutes and cost $100, something’s gotta give…
dragon-queen | 20 minutes ago
It’s not really that cheap. These companies are charging consumers less than 10% of their costs.
ssczoxylnlvayiuqjx | 4 minutes ago
I never went to business school but I think that could be part of the problem…
Spenraw | 12 minutes ago
Adapting tech has always been problem
Hundreds of thousands of jobs could of been replaced by automation of Excell for years and just mid level mangers and high level don't understand tech enough or the world to adapt
haskell_rules | 4 minutes ago
As an engineer, I can attest to the fact that most engineers have no idea how to use their skills to automate real world problems. It's one of the things that constantly depresses me about my day to day job. The majority of my coworkers are brilliant at some specialized segment of science or engineering but also don't seem to be able to apply it to anything of value.
-XanderCrews- | 6 minutes ago
Well…it SAID it solved those. I can say that too. Neither of us can show our work.
Able_Commercial8277 | 4 minutes ago
If you look around for a moment you should find the articles showing how the math was solved most likely like everything else AI does, and it stole years of work from a human who was about to solve it already ;) The human needed to show proof and it took time, it took milliseconds for the computer to steal all of that.
Forikorder | 44 minutes ago
LLMs (by design) hallucinate and make things up to get the result its prompted for
if it messes up an equation 99 times it doesn't matter if it gets it right once
on the other hand if it invents data even once that can ripple into massive issues
0xd3ad54311 | 20 minutes ago
Determinism. Can you prove the output of the AI is valid, therefore ignoring hallucinations? Mathematical proofs are by their nature provable.
How do you prove a schedule?
Coffee_Transfusion | an hour ago
Damn.
The economics subreddit is posting garbage from the dish rag, the New York Post?
Is this what we want? I don’t. Do you? You shouldn’t. But you do. Why? Is that allowed? Maybe. Am I stalling for a requirement to comment? I’ve lost my train of thought.
CaspinLange | 3 hours ago
Thank you, New York Post.
Between this article and all of the other highly truthful and very trustworthy articles you’ve published over the years, I’m confident I should definitely change my investment strategy based on your analysis.
ShnaugShmark | 2 hours ago
Truly a brain dead surface level article making an obvious analogy that people have been making for years now while ignoring any differences that don’t fit their narrative.
Thesis could be right but this article doesn’t provide any sort of substantial argument. Superficial drivel.
TheActuaryist | 3 hours ago
Isn’t the NY Post a tabloid? How is this allowed on here? If the subreddit is looking for quality discussion and long responses shouldn’t sources like tabloids be disallowed?
i_empathetic | 41 minutes ago
Bubbles tend to pop during a wild peak of euphoria where finding naysayers is few and far between. There have been so many people cheering on and eagerly predicting this "pop" is coming imminently for years now. The bubble won't pop until those people quiet down and go long. Bubbles can inflate for years in the face of rising doubt, and eventually that doubt subsides and things accelerate and then poof. We've likely got years to go IMO.
It certainly isn't going to end while Micron and NVDA still have 90% and 80% profit margins. Companies like this can keep the datacenter buildout financing afloat just by moderating margins.
1098duc_w_the_termi | an hour ago
Lmao nah. If everybody is expecting it, then it won’t happen. It’ll likely be a series of smaller bubbles bursting without the widespread impact of the .com bubble. These lameass excuses for journalists are just writing the equivalent of low hanging fruit and selling it as news. Weak af
FrostyMasterpiece400 | an hour ago
So dear Oracle, what do you see in your Crystal ball of these companies borrowing at 9% on depreciating assets?
iamwayycoolerthanyou | 3 hours ago
My guess is they're both too big and too critical to national security for the government to let them fail, and everyone knows it. Hell, they may have even engineered it to be this way.
pacman2081 | 3 hours ago
"they're both too big and too critical to national security for the government to let them fail"
they will be seized for pennies on the dollars
BedditTedditReddit | 2 hours ago
You’re talking about oracle here.
In 2008 Citibank wasn’t allowed to fail, one reason is the us treasury relied on it. Same thing today, what platform do you think the us and other govts use?
Oracle. That’s why they won’t let it go down
Pugsly007 | 2 hours ago
If you want to see what’s wrong with this country look no further than Larry Ellison.
r2k-in-the-vortex | 2 hours ago
And which governement has enough money to bail out this bubble? Not the US government that is already battling with it's own debt crisis.
Richandler | an hour ago
The US government prints its money. It can't run out.
r2k-in-the-vortex | an hour ago
Zimbwabwe printed it's own money, it did run out. As did every other country that ever fucked up its finances.
EyeBusy | 47 minutes ago
Everyone has been calling the AI market crash for awhile now. I don't think it's happening. Just recently my bus driver gave me some AI stock tips. This is a good sign things are going well.
hokageace | 3 hours ago
Anybody who works in front of a desk should know how much AI is getting integrated into everything.
This is not going anywhere... unfortunately.
chipbod | 2 hours ago
AI isn’t going anywhere, but the market boom will.
The internet didn’t go away after the dotcom bust, but the market was a bubble.
Mitrafolk | 2 hours ago
In general, the internet seems slightly more useful to me than artificial intelligence.
Specialist-Roll-3806 | 2 hours ago
I mean it's probably not the best comparison. the internets been here for decades, AI just a few years basically. But if you're like a student and actually use AI properly, it's probably the best thing ever ngl. You have your own tutor that can help break down just about any concept/topic you want while it generated like infinite practice questions till you have it locked down.
Buttonsafe | an hour ago
I was practicising for a multiple choice exam, so I asked AI to look at the sample questions and content and come up with it's own. Then got my stepdad to quiz me.
Literally every correct answer was D.
Specialist-Roll-3806 | 39 minutes ago
I can't relate, it's usually done great for me and like just about everyone i know. if it really does wonky stuff like that you can direct it to be random like an actual test or something.
if you have a practice test/study guide you can send it and make it generate similar questions based on what you sent as a reference and so on
growaway9172 | 22 minutes ago
Everytime someone says AI is smart or good, there is a reply like this that says "well AI didnt work great for me once". However your anecdotal experience is in conflict with the data and collective judgement of people surveyed that work in engineering and science.
I don't mean to be rude but it might be a skill issue, wrt running the correct model with the correct amount of reasoning for the task at hand.
madhewprague | 17 minutes ago
Thats simply delusional.
devliegende | an hour ago
Regardless how useful the internet is it hasn't resulted in any meaningful productivity boom. The trillion dollar question is: "Will AI have a bigger impact on economic growth than the fax machine?"
spez_eats_nazi_ass | 2 hours ago
Except there are multiple times when ai did in fact go away. Ai winter is a term coined prior to this bubble. Internet was fine without it.
re_me | an hour ago
We maybe in for another AI winter. But it will be a mild one. LLM’s work and are used by everyday people. Prior AI work was mostly confined to labs with limited non technical user interaction. Thr current generation of models works and they work well for solving all types of problems.
I think that’s the part that needs to be separated. Will OpenAI, Anthropic, or x survive? No idea. Will we all being using LLM’s if they fail. Definitely!
LamermanSE | 2 hours ago
But internet was not fine without AI. An internet without AI means an internet without search engines which is useless.
look | an hour ago
TIL: inverted indexes, TF-IDF, and graph centrality algorithms were invented by time-traveling AIs providing internet search decades before the existence of LLMs.
LamermanSE | an hour ago
You know that AI isn't exclusive to LLMs tight? AI existed several decades before that, which search engines have utilized for decades.
spez_eats_nazi_ass | an hour ago
You are either intentionally arguing in bad faith or are too stupid to be taking part in this discussion and no im not referring to machine learning and other techniques which don’t boil oceans while choking out neighborhoods.
LamermanSE | an hour ago
So you're talking about LLMs and not AI? Be precise instead of a prick.
Candid_Cat_5921 | 2 hours ago
I mean the internet didn’t go anywhere either. It wasn’t the tech that imploded, it was the insane valuations and loans
Pugsly007 | 2 hours ago
You mean like…. Now?
Candid_Cat_5921 | an hour ago
Yeah, I’m saying even if the bubble breaks, AI is here to stay. It doesn’t matter if every front desk is using it, the bubble can still pop.
madhewprague | 14 minutes ago
But why would it pop then if everyone thinks its here to stay and open ai, anthropic data centers start making 100s bilions dollars every year from selling the compute and their ai models? The demand is only gonna grow, open source models are also helping it.
rtietatomic | 2 hours ago
No, it's not going anywhere, but most of the companies involved with it are going to implode hard. Anyone who works in front of a desk knows how cheap their companies are - and all of the AI that's being used is in the "first one's free" portion of the program. When the price increases come, companies won't pay, or will switch to cheaper models, or even host their own open source models.
When Copilot jacked their prices, the company I worked for issued an immediate directive halting all use of Copilot and switched to a super cheap Claude model instead. When that had its price go up, they switched to cheaper. less capable but 'good enough' models. Nearly all companies and users will follow this same behavior. My company is currently building out their own locally hosted AI from some of the better open source engines to be used for most day to day work, and reserving the wallet for the few things the open source one won't do well.
OpenAI , Anthropic and all the others are blowing through hundreds of BILLIONS of dollars in the quest to win the race, but the problem is the winner won't see payback on that spend. They need current customers to be willing to spend $1000/head per month to get there and based on everything I've seen at every company ever, they just ... won't spend that. They'll cheap out - as mentioned they already are. My company is hardly alone, this same play is being repeated across the industry as we speak.
Mistery_White_boy | an hour ago
Lo sviluppo Ai a certi livelli richiederà tempo e costi... è chiaro che le prossime generazioni dovrebbero seguire questo processo molto attentamente per valutare opportunità o fregature... secondo me finiranno come YouTube che monetizza dagli inserzionisti...se usi Gemini ti verrà fuori il popup di domino pizza...la pagano loro...la distillazione Ai porta a prodotti Ai economici e buoni che per la maggior parte dell'umanità è più che necessario...la super intelligenza interessa solo per scopi non nobili
Maleficent_Flow_8355 | an hour ago
Bare metal only works at a certain scale. The vast majority will need to buy tokens from somewhere. Hosting isn’t cheap.
rtietatomic | 37 minutes ago
Most of the little guys were never the target for revenue, they were looking for companies like the one I work for with 20K people, 4K of which are devs/tech roles. If they got the pricing they're dreaming of that would be at least 4M / month from my company alone. But as mentioned my company would rather go without than pay that.
As for the little guys, they'll constantly chase cheapest price or even go without. But bare metal local hosting isn't as hard or as expensive as it was, and it's working better and getting cheaper by the week. Decent local AI models run on that AMD Strix Halo chipset with tons of RAM really well, and you can go buy a ready to go machine with that for under 5K. If you have a handful of AI users in house that would pay for itself in less than a year if the cost per head for delivered service AI goes to $100/head/month.
This is a larger, stupider version of what Broadcom's doing with VMWare and the licensing costs there - and spoiler - that is going about as well, my company had thousands of VM hosts all running VMWare and is on track to completely ditch them by January.
madhewprague | 22 minutes ago
Companies will pay if they can lay off people. They would gladly pay for the productivity boost. Saving money and using cheaper models might not be best way to go. Having one person with dozens of ai agents spending 100$k a month in api credits is better than having department of 20 people producing slop and spending 1000$.
nullusx | 2 hours ago
The Internet didnt went anywhere aswell. Doesnt mean shit about the insane valuations of some of these companies.
Cisco is still in business and someone would argue they even are a better company now, but people that bought them at their height in the dot com era, only went into breakeven territory a few months ago.
kigurumibiblestudies | 2 hours ago
Of course it's not going anywhere, but not all AI companies will be there. That's the crisis. After this, a few winners will continue AI while the absurd amounts of investment put into the losers will vanish and we'll all be poorer... except the winner companies and whoever they bribed.
Jaideco | 2 hours ago
A bunch of AI companies will go bankrupt but the data centres will still be there… they will go into chapter 11, and end up doing a debt for equity swap. The existing shareholders will lose their shirts, but the tech will keep running. The business will be restructured or acquired at well sub $tn valuations. Investment will slow down for a few years, but development will not stop entirely. Within years from now things will have settled into a new trajectory. This isn’t going to just go away, no matter how bad things get.
hokageace | 2 hours ago
Some companies will go bankrupt because in a market of 1000s, some always do.
To compare this to the .com bubble is just pure ignorance.
NiceWeather4Leather | an hour ago
That’s exactly what happened in the dot com crisis, many companies folded and some continued. It’s just that “many” was a lot in a single sector , all at once.
GenericFatGuy | 2 hours ago
The crash isn't about it going away. We still have the internet, despite the dot com crash. But what will change is that investors won't keep throwing money at any new idea that integrates AI. There's a huge difference between integrating AI, and doing so usefully/profitably. Future endeavours will need to be able to justify their pitch with actual use cases and business models that make sense and can be explained. That will lead to a drastic downturn in how much stuff you actually see AI in.
NoNameSwitzerland | 2 hours ago
So the time of PET.AI is over. (That was not intended to be a link. But maybe it is sign that the website is not in use)
GenericFatGuy | 2 hours ago
I'm genuinely shocked that's available right now.
Mistery_White_boy | an hour ago
Di aziende Ai truffa ne salteranno fuori sicuramente, ma è un settore che rimarrà
No_Aesthetic | 3 hours ago
>Anybody who works in front of a desk should know how much the internetis getting integrated into everything.
>This is not going anywhere... unfortunately.
hokageace in the 90s
_bones__ | an hour ago
AI is going to stay, but demand isn't high enough to ever make back current investment once you start billing actual cost. Everyone who invested is just full of hopium that it's going to pay off.
Then you see Anthropic and IBM making major improvements in quantum computing, and it was $300 in compute. You don't need a trillion dollar buildout for that.
Fun-Amoeba8015 | 36 minutes ago
I'm sorry but you're treating demand as some static or linear variable. It is not.
The technology is moving incredibly fast and demand is correlated to AI capability which is increasing rapidly.
It is not a simple equation.
I don't know why you are talking about quantum computing? It has literally nothing to do with any of this. Quantum is a very niche use case - it's not a consumer product.
hokageace | an hour ago
Compare the money made in the early 2000s to now. Did anybody imagine tech companies would get this big? Of course not.
People saying this stuff have no imagination.
Master_Flower_5343 | 12 minutes ago
AI is a bubble for sure. The important companies of the next 25 years are more than likely existing right now. Facebook would be the one exception if you were looking to fully compare back to the dot com bust; otherwise they all existed.
Tesla is some bullshit and excluded from this post.
daviddisco | an hour ago
Your statement is itself the hopium of an AI hater. A.I. demand is growing very fast and rapidly doubling. It is very conceivable that all investments will pay off many times over. Time will tell.
tongmengjia | 56 minutes ago
I don't see how. Not because I don't think AI is revolutionary (I do), but because you can buy equipment and run pretty decent local models for anywhere from $2k-$30k (depending on what you're trying to do). Sure, it's a little more complicated than just signing into Claude, but it puts a meaningful ceiling on what companies can charge.
I guess maybe they can make money off enterprise software, but at some point it's just cheaper to hire people in-house to setup something for your company that is perfectly tailored to your needs.
daviddisco | 52 minutes ago
Current local models are nothing compared to frontier models. I wouldn't trust a local model with a few lines of code or one function. Claude can write whole applications for me. Maybe things will change in the future but the gap seems to be getting wider.
meltbox | 33 minutes ago
Have you tried GLM 5.3? It’s very competitive with equivalent sized frontier models.
daviddisco | 29 minutes ago
it is awesome for what it is. It is nowhere close to Claude Opus 5.5 or Gpt 6 models and it requires hundreds of thousands of dollars or investment to run. It is not a local model.
madhewprague | 26 minutes ago
Its not really… Dont get me wrong its really big jump, but you cant put it in same bucket as opus 5.5. And its competitive only if you run it on $100k hardware. So when you rent some gpu from datacenter for 8$ hour it can be really usefull, but still nowhere near frontier.
QuinQuix | 40 minutes ago
you're mispricing the error rate and the value of speed.
Competition is a meat grinder. You improve over your competition, you eat market share, you win.
This happens in time. Time is the luxury you do not have. Many businesses, on a working day, make profits that are many multiples of their compute and software costs. Like not even close.
This is exactly what ransomware groups target: they calculate the cost of lost business and that's how they decide what to emand. And they get paid a lot, because usually there's also the additional threat of them dumping often sensitive material on the open market. but mostly because the numbers often work out: you pay X to work again tomorrow. You'll make the difference and more in the week that you would have still been out of business after that.
So the key takeaway from that is this: many companies will pay milions for being back in business one or two weeks earlier. They pay not to waste time.
To these businesses, technology that saves hours a week is worth mllions in API costs.
Setting up a server that runs a local model can be very sensible and helpful but mostly when it comes to data retention and privacy laws.
For data they can share (or legally de-constrain using NDA clauses with the tech companies) the lower error rate of frontier model frees up exactly the same resource: time.
Errors you do not need to corrects, prompts that do not need repeating with slightly better wording, etc etc..
it al comes down to time. Time is worth a lot of money and the idea that 5% more errors a week is trivial is bonkers, because that 5% will probably end up in a re-run of the prompt, and then if that doesn't work people will do the work manually raising the variable cost of that portion of the work to 300% or about 15% of effort.
I see it a bit like warranties. if you do skill based work of any kind and you give some kind of warranty, having to re-do a few jobs every month or few months is fine.
it starts to hurt your profit and bottom line very very quickly if it becomes more than a few per month.
buying out errors by using better equipment almost always wins.
Imagine a construction worker who has to cancel a day job because his equipment fails.
How much better equipment could you have paid for because of that lost day? How many days will you lose over the next year if you buy the same shit equipment again?
that calculus is not trivial but it is routinely underestimated by people glamorizing off-frontier solutions.
Routine-Wolf-2907 | an hour ago
internet didn't go anywhere. that doesn't mean bubble didn't pop in early 2000
JofersGames | an hour ago
The internet didn’t go anywhere
Didn’t mean a bunch of people didn’t lose money
If things scale the way they imply
I imagine the data centers will be what we didn’t need
Local models will be good enough
And prices on subscriptions need to 10x for them to survive
If the difference in quality is like 20%
But the cost difference is 0 or 1000 a month
Most will pick 0
QaraKha | an hour ago
Mostly it'd be the companies themselves doing the "it's going away" part.
Because frankly, it needs so many incredible improvements just to be baseline useful for more than a handful of assistance tasks that it's not feasible, perhaps not even possible with "mere" matrix heavy linear algebra.
The most successful uses are as assistance to people who already know what they're doing and they're offloading tiny tasks they're too lazy to do themselves while they handle the ones that can't be vibecoded.
For literally everything else, the result is... not good. Garbage in garbage out type of "we literally cannot use this because it's been generated by AI."
The demand is not there. Additionally, even with tokens being as cheap as they are, they're too expensive for many firms to allow limitless use, so they are significantly limiting the use of AI with low monthly limits.
Then it's not really taking off with the public at large. While at the time of the dotcom bubble the internet was out to about 50% of Americans, AI adoption across everyone in the US is... 2%.
It's not taking off.
So yeah, while I'm inclined to agree that it won't be going anywhere, I would like to caveat that it's probably not going anywhere the other direction, either. Because frankly, after the collapse there will be reluctance, and t he few companies left will have all the incentive in the world to change more for less, and it's already too expensive.
They are hoping they can create demand, which is why they've been forcing it SO HARD. But they have been largely, largely unsuccessful. "If you build it, they will come" is a business school dipshit idea. Like, this is an econ sub. Surely we can see that the successful stuff comes from actually servicing a demand--and I mean actually servicing, it means actively replacing everyone with AI that is as good or better than people and they by and large can't do it! The demand comes primarily from firms that just don't want to pay people, but they're swiftly realizing they can't use AI to do that.
madhewprague | 8 minutes ago
What are you talking about? The frontier models can do any task and one shot it perfectly. It can work in apps and do everything on its own much better than 99% of humans and much faster. Majority off office jobs and whole deparments can easily be replaced by one singular ai pipeline. My friend decimated their old company, they were making business reports for about $40k, had 12 employees and it took 4 months. He can do it in 3 hours with 200$ subscription. (well the company still exists only because they are still able to get clueless customers that live in past and think this is normal) He took some of their customer and sells the same thing for $8k. Not bad… for doing basically nothing. And this is comming for all companies, the ai is getting so good it will absolutely decimate oldschool companies that canf adapt.
TerminalObsessions | an hour ago
AI is getting integrated into everything, but most of it is garbage and nearly all the users are eager to jettison it as soon as the C-suite stops riding Silicon Valley's latest scam.
lifting_cardio | an hour ago
We were told to use a HIPAA compliant model called ELEOS.
It was supposedly going to shorten clinical notes. And the time needed to chart. It was horrendous. It took anywhere between 20-100 entries to “learn” your style but even then it would take your bullets and just construct something that was entirely foolish.
AI models are not here to stay. That’s clear enough.
Impossible_Way7017 | an hour ago
I agree, I think it’s more from an investment perspective that you don’t really want to own shares of a company in a regulated industry, eg air travel, telecom, the returns are basically limited by regulation, and it’s likely AI will become a commoditized boring industry.
jc1257 | 2 hours ago
The more it’s pushed into places people don’t want it, the bigger the crash will be, but it’s coming, and hopefully will take the whole generative AI thing down with it.
Expert_Ambition349 | an hour ago
The irony in this statement is that the internet also didn't go away after the dotcom crash and that AI was already here, in the current form even, for atleast 2/3 decades and goes back to almost the inception of the current dekstops. It just didn't get used for everything because running the model is expensive AF.
The companies just seem to think we finally got enough computational power to incorporate it everywhere while there's nowhere near enough for it (even now) and then we haven't talked about cost efficiency.
Don't forget that the dotcom bubble had lots of "internet" companies popping up promissing the world only to realise they weren't making profits while now we have AI companies promissing the world and more, they just haven't reached the stage yet were they discover they're not profitable even after their million to billion seed rounds.
codedigger | 29 minutes ago
The monetization portion isn't there yet. They are operating at a huge loss thinking there is a big market there. Can code without it but I can code so much more with it. Will figure out how to code using less tokens than what is what the. Current valuation is. It is going to significantly change how we work.
I'm enjoying burning the tokens on the cheap while I can.
MaddogFinland | 2 hours ago
I think it’s the future but I also think that it’s not going to be the end of things as we know it either. I guess I could be wrong but i see a lot of advantages to using it…but also I don’t see it just wholesale replacing humans at every level all that quickly. Maybe I’m wrong.
Mistery_White_boy | 2 hours ago
Bè è molto comoda da utilizzare...prima dovevi approfondire perdendo svariato tempo adesso fai prima, secondo me' i servizi AI free verranno monetizzati dagli sponsor pubblicitari. Tipo YouTube
asmartermartyr | an hour ago
I think eventually it will be the end of things as we know it, but I’m not sure that will even happen in the next 25 years. There are too many errors with AI and people are rolling it out way too fast, with little oversight. At some point something catastrophic will happen like a nuclear reactor meltdown, or a mistake in air traffic tools, widespread outages and banking freezes, etc., where a demand for more oversight will be inevitable. No doubt it will be a fascinating, horrendous, and long learning curve.
madhewprague | 23 minutes ago
The issue is that we are there. The frontier models can now work in computer programs do whole complex workflows. It is at the point where it can replace 90%+ while colar jobs, most companies have not realized it yet and most people dont use it properly. But it has the capability already.
spez_eats_nazi_ass | 2 hours ago
Already killed and pulled stuff because it’s too expensive.
No-Tomatillo3698 | an hour ago
It’s not about AI disappearing, it’s about bursting the huge bubble that has been created by overhyping it right now. And it will burst, and seeing the Dow Jones is being carried by 5 AI countries and lots of people willingly or unwillingly invest in it, that is a scary idea.
BetaPositiveSCI | an hour ago
I'm old enough to still have devices with virtual assistants installed on them.
mrb1585357890 | an hour ago
Two different things. The bubble and the tech.
There was a railroad bubble that collapsed but railroads are still here. Likewise internet.
davidw223 | an hour ago
Not many are saying that it’s going away but most feel that’s it’s possible uses are nowhere near enough to pay off the massive amounts of capital that have been dumped into them.
SemiSente | an hour ago
The Internet also went Places. But not every Company in dot-com did. The bubble wasnt about the tech, but about the companies.
Docteur_Lulu_ | an hour ago
Internet also did not go away. It did not prevent the bubble from bursting. The two can be true at the same time.
No-Breakfast-6749 | 51 minutes ago
It's being integrated into everything, but the AI companies are selling tokens at a loss. Once they're forced to sell them for what they are actually worth, people won't be so willing to buy. They're adopting the same mindset from the dot com bubble that if they grow fast enough and captivate the attention of investors, they can worry about developing a sustainable business model later. The same hubris that caused the dot com bubble to pop in the first place.
madhewprague | 18 minutes ago
They are not selling tokens at loss lol. Look at open router etc… How crazy cheep its to run deepseek etc… The margin the anthropic and open ai has on api is diabolical, its outright scamm. Api costs have probably around 95%+ margin. If they sold api credits 1/19 of the price they would still make profit.
Forikorder | 48 minutes ago
doesn't mean it won't pop, doesnt mean its not financially unsustainable
meltbox | 36 minutes ago
Yeah it’ll be used to prefill everything with workers actually making it work
SnooConfections6085 | 18 minutes ago
Railroads were a key componet Iof industrialization and changed the world. The were obviously useful. Also responsible for mutiple bubbles, crashes, and depressions. Investing in railroads was a path to ruin that made almost noone rich. 180 years later they are still around and still useful.
findingjasper | an hour ago
As a hobby historian, who is too young to experience the dot com bubble burst, and who tends to believe that history repeats itself and if we forget history we’re bound to repeat the same mistake mistakes. So for those of you who experienced the dot com burst, what was it like, what happened to stocks, how did it affect jobs, economy etc. etc.?
juliankennedy23 | an hour ago
It's the reason we no longer have an internet.... honestly it really wasn't that big a deal and it's extremely overshadowed by 9/11 a few years later.
Now the 2008 crash on the other hand....
seattleJJFish | 35 minutes ago
If you could wait and didn’t sell your stocks, they came back. Much of the ai stock issues are in spv’s and private equity. So that’ll crash. It’s hard to say how it would affect general people though. The bigger issues for normal folks is the underlying job market issues and probably recession. Slow growth, higher inflation, people using credit cards for foood are probably a bigger issue for folks.
Where dot com was overall growth- think a new web site brought in new income, this ai boom is productivity- more cost neutral or falling revenue. It means to make room you fire people
FewWait38 | 11 minutes ago
That's not true a huge amount of companies went bankrupt and their stock ended up worthless
Ruined_Passion_7355 | 10 minutes ago
> Much of the ai stock issues are in spv’s and private equity.
And now they're trying to dump on retail through IPO.
RepresentativeBig211 | 37 minutes ago
Well... In short, valuations were nuts even for companies that had made almost no revenue. Here, you may have concerns about the fundamentals of AI but not whether Microsoft or Google are well established companies. It's just day and night difference.
That said, then and now, no one doubts the internet or AI are transformative technologies. There might be some destruction of value along the way but the application has a clear link to long term economic growth.
Ruined_Passion_7355 | 9 minutes ago
> valuations were nuts even for companies that had made almost no revenue.
The equivalent of that would be openai and anthropic, who's expenses are climbing just as fast as revenue.
R-ten-K | 17 minutes ago
As an amateur historian, you should start by learning how to evaluate sources. In this case, the NY Post is what serious historians would politely call an unreliable source and less politely, a shit source. Before drawing historical conclusions, it helps to learn to distinguish credible primary sources and reputable scholarship from sensationalist nonsense.
Cav829 | 20 minutes ago
I wasn’t investing, but went through the Dot Com crash. The biggest piece of advice is if you want to get defensive, don’t 100% pull out. Now, if you are heavily Nasdaq or SMH and want to convert that to SPY, I fail to see the issue. If you need to raise 20-30% cash so you can have flexibility, go for it. But like I held one super heavy tech 401k from 2009 until July. I decided it had done well enough and mean reversion is something I believe in, so I converted it to an 80/20 setup with SPY, World Index, and bonds.
Otherwise, I remember jobs in tech definitely were hurt by it all. There is a definite pre-2000 thing where I know people without degrees making half a mil today because they came through that era. But it was really nowhere near what the GFC was.
Outrageous_Floor4801 | 11 minutes ago
one of the main differences between the ai bubble and the dot com bubble are the size, thanks to social media and people being dumber than ever this bubble was able to grow way bigger than the dot com bubble before economic reality forced it to collapse.
the other difference is usable infrastructure the dot com bubble left behind infrastructure. (fibre optic cables)that are still being used to this day, ai infrastructure (chips) break down in 2/5 years and are extremely expensive.
what this difference in infrastructure longevity means is that the ai bubble will crash harder and take longer to recover than the dot commbubble.
jeeeaar | 7 minutes ago
I don't disagree with everything you said, but wanted to point out that the infrastructure being built to support AI isn't just microchips. It's massive data center facilities and the power generation to support them.
The chips themselves are roughly 50% of the cost, the rest is permanent/long term infrastructure.
Anachronism-- | 10 minutes ago
In 1996 Alan Greenspan gave his ‘irrational exuberance’ speech and everyone knew a crash was coming. The crash came 4 years later…
ishtar_the_move | 5 minutes ago
Many outrageously over valued company like pets.com, lucent, govworks.com, Value America... went belly up really quickly. The rest took a kick in the nuts but managed to survive. I was in priceline at the time and went through two rounds of layoff. The news for tech workers were horrible in the media but in reality almost everyone found other tech jobs really quickly. Overall it was a pretty mild recession. If this bubble burst is like the dot com bubble we will be laughing.
SenpaiMilkydoo1985 | an hour ago
Nasdaq fell almost 80% and didn’t make a new nominal ATH for 15 years. Our economy would collapse if that happened again.
richze | 26 minutes ago
The nasdaq was a smaller basket and still new at the time
smilebitinexile | 3 hours ago
Funny. Yes the dot com bubble burst was totally warranted. But the technology turned out to be, IMHO, even more powerful and far reaching than we anticipated.
gardenfold99 | 3 hours ago
Which this will be
SgtBadManners | 2 hours ago
My advisor sold a significant amount of AI stock in the last 20-30 days. Still have some but definitely pulled a chunk out.
Called to ask if I was okay with the taxes I would owe if he sold and moved to money markets.
[OP] CallMePyro | an hour ago
Damn they sold at the bottom? Brutal
Outrageous_Floor4801 | 9 minutes ago
the bottom? what money is ai going to make it really most of the stock market, whos the customer?
PfernFSU | an hour ago
I think either way we are doomed. If AI succeeds as predicted, a ton of people lose their jobs causing the economy to crash. If AI fails it drags the economy down with it. I just don’t see how anyone can see a way out that isn’t painful.
Solarinarium | 24 minutes ago
Thing about the AI crash is it's probably going to be worse.
There is an obscene amount of monetary and physical capital tied into AI adjacent ventures right now and when it goes it's probably going to take most of the economy with it for who knows how many years
Spenraw | 11 minutes ago
What people need to be talking about more is why it's starting to crash
These models are moving open source and getting to the point they can just reverse engineer any software
It's leading to the end of trade marks and software protection
And that means alot
SnooConfections6085 | 24 minutes ago
The AI bubble is far more like the railroad bubbles if the 19th century than it is the dotcom bubble.
The dotcom bubble was a speculative asset bubble without much in the way of real assets or bonds backing it, like the Tulip bubble. Very little capital was lost, just bubble profits.
Datacenters and the bonds backing them are very real, much like rails were.
NitroLada | an hour ago
Nothing of substance was provided in this opinion piece (not surprised as it is NY Post) but while the AI trade could be a bubble like dot com, nothing in this article supports that viewpoint or even makes much of an argument
PipelineBertaCoin69 | 3 hours ago
I do believe there is a bubble, but I don’t believe that AI will not be culture changing, just because currently most people do not find it overly useful does not mean that won’t change. Even just 5 years ago I was hell bent against ever ordering anything off the internet, now I do the majority of my shopping (minus groceries) online, if I can get high quality products that make my quality of life better and those products are also cheaper than at stores near me, I would be dumb to not purchase via the internet. Anyways I do not yet know how AI will change the world and how fast but it is here and it won’t be going away
PoopyisSmelly | 2 hours ago
The difference is that earnings growth were no where near where they are today back then.
For 3-4 years it wasnt strong at all prior to the crash.
The bubble is in chip stocks, not Google, Amazon, Microsoft etc.
Tough_Wear_5839 | 2 hours ago
These money hungry tyrants at the top will stop at nothing to replace their workers with AI and put everyone on universal basic income, barely surviving. Millions of new graduates with no jobs, private equity sucking the life out of the economy. Unemployment numbers getting fudged. All these billionaires are securing bunkers in different countries. They're getting afraid of their personal safety but are not stopping this AI train wreck. The greed is off the charts. So no I dont believe we'll see an AI bubble.
FU_red-dit_bots | an hour ago
And these are companies that will receive a taxpayer funded bailout.
Along with the banks, car companies, and airlines.
Because when you're big enough you no longer have to worry about responsibly running a company.
chriskbrown50 | an hour ago
Someone is going be the Netscape - not sure who. But AI is here to stay, and eventually these companies will come back to earth and need to turn a profit. I would say this is less of a bubble here than the Internet. Frankly, that was at time when anyone with an idea got funding.
The data center boom will tail off; I expect some true innovation in this sector.
JoeInOR | 19 minutes ago
NVDA seems likely to be Cisco - Cisco is still around, but it took 25 years for its stock to reach the heights it had in 2000.
Master_Flower_5343 | 10 minutes ago
I always love the picks and shovels argument; the only firms you’ve heard of from the California gold rush is Levis and Wells Fargo.
AltruisticCap12 | 44 minutes ago
A LOT of people are going to be Netscape. I fear the big players have gotten “too big to fail” in the eyes of the US government. And this will be bailed out, with everyone else suffering.
Chew-bro-cabra | 3 hours ago
Been hearing about this bubble popping for a year now, I'll believe it when I see it. We're in too deep, this shit ain't going nowhere unfortunately.
h310dOr | 3 hours ago
I think there is a confusion here. When the dot com bubble popped internet did not disappear. I think Sam Altman kinda said it himself without realising: AI is likely gonna be a "by the meter" good, like electricity, water etc. but it means, it is gonna be a consumption good, a basic one, low margin, available roughly everywhere. There is really no attach, AI can write its own harness now, you can swap in minutes from one provider to another with very low friction. So the price will go down and down. AI/LLM will be everywhere I believe, but at a super low margin. So the bubble will burst, openai/anthropic who built their model on massively overpriced/over leveraged model will have a very very hard time, many datacenter projects will likely fail, and the era of ultra efficient/cheap token will take its place.
Clone95 | 3 hours ago
Yea they’ll make it so portable and efficient you don’t need data centers and runs on your own hardware.
fckingmiracles | 2 hours ago
That's the dream.
h310dOr | an hour ago
If not for the datacenters push, we would not be far from running DeepSeek flash on "cheap" (read about five thousands euros) hardware already. This is enough for a lot of pro work already. Maybe in a couple years when the dust has settled and efficiency is even better we can run it on prosumer 1.5 or 2k€ hw. 120B models, which are enough for most usages, can already run on hardware that costed about 2k before the rampocalypse.
Stunning_Star_6019 | an hour ago
AI is an ecosystem currently built around LLM (data centers, chips, etc) as the race to build out the technology is in its infancy. It could morph into edge AI which brings a greater security threat, more compute power in-device vs network, etc. or it could be tech that is essentially nationalized much like nuclear which brings with it even more cloud compute, SaaS, etc. point being nobody knows but almost everyone is positive AI only accelerates.
Power grid build out/refresh & cyber security are the only 100% safe bets IMO. Even within that there will be winners & losers. AI is here to stay, the real question is what happens when we reach the tipping point in a couple of years. How does society react?
haloimplant | 3 hours ago
It's too big to fail?
jokull1234 | 3 hours ago
First of all, Gasparino is a clown and the NY Post is not a website that should be posted as a high quality source on this sub
Second of all, the most successful businesses in the world today all say that they continue to see unprecedented demand for data center/AI compute for the foreseeable future. Unless all these companies are lying/exaggerating, then there’s no reason to think it’s about to burst anytime soon
Nanerpoodin | 3 hours ago
The dot com crash didn't happen because there was no demand for internet or internet-based businesses. It burst because of overinflated business valuations, excessive borrowing, reckless lending, and overblown hype. There's plenty of demand for AI, but that doesn't mean all these AI businesses can deliver their promised ROI in a reasonable time frame.
spez_eats_nazi_ass | 2 hours ago
I’m here for the bad faith arguments from booster bots that will claim dark fiber is the same as gpus and $10T in debt based spending is good.
MetalWorking3915 | 3 hours ago
I dont know where this is coming from as corporations are really only just getting started with a.i and when they see the benefits in certain areas, they will spend more on it.
Bman282828 | 2 hours ago
The dot com bubble had a ton of shell companies where as with Ai there are staggering earnings for most of the companies so that is a key difference.
Mistery_White_boy | 2 hours ago
Sicuramente ci saranno vincitori e vinti come tutti i nuovi cicli, attualmente il mercato è tutto in questo settore, può capitare che certi capitali si spostino in altri settori nel tempo, per adesso comunque i guadagni delle più grosse sono straordinari.
Grasses4Asses | an hour ago
Are they? I thought Open AI pulled in something like 50 billion a year? Which certainly isn't terrible, but it's not future-defining tech profits.
HeyItsYourDad_AMA | 58 minutes ago
If you look at the bear case, its not that big tech is broke; it's that 90% of the revenue is just 5 hyperscalers buying GPUs from each other in a giant capex circle jerk. They'd argue the actual end-user apps aren't making anywhere near enough money to justify the trillion-dollar infrastructure spend. If enterprise ROI doesn't show up fast, those capex budgets get slashed, and the house of cards wobbles, especially if you're an over-levered neo cloud.
omniumoptimus | 3 hours ago
People have been talking about a bubble bursting and a crushing recession following since 2015. Covid brought a crash, if you can remember that, and then we are right back up again, with new highs reached regularly, like nothing ever happened.
Bubbles don’t burst when everyone talks about it: they “melt up.” And it’s not likely there will be an economic downturn in the second half of a presidency: it makes more sense politically to juice up returns and let it all crash after the election. (This is also what typically happens, historically.)
AwkwardTickler | 2 hours ago
Holy AI glazing in comments. Super fast engagement all in unison and acting fully obtuse of the real limitations of AI profitability, the risk in their circular funding and lack of economies of scale which results in AI companies like openAI and anthropic never becoming profitable. This will break and investors are going to be left holding the bag.
The only reason these companies will be floated by the government is due to theor abilities to spy on the populace, enable unmanned autonomous drone swarms and attempt to sway public opinion with botted content looks around.
Elegant-Animator-777 | 2 hours ago
Tell me what you think of my plan.
Step 1) Save up cash Step 2) AI stocks crash Step 3) Buy up AI stock Step 4) Hold a profit when the government bails out the AI industry and the stocks take off again
amulie | 2 hours ago
The thing about a bubble... It's going to happen when people least expect, not when every headline, from every other media site is calling it. If everyone is calling a bubble, we still got ways to go, it's likely more we are climbing a "wall of worry". When the average redditor has capitulated, that's when we might be at the top, but right now if you go into any given reddit, everyone is saying "bubble". That's just not how economics works.
Chriscic | 2 hours ago
I guess this guy is a billionaire right being able to call this stuff. Must be nice. I hope he details all his short positions so we can congratulate him.
alanzo123 | an hour ago
The Nasdaq (QQQ) doubled the year before it crashed (1999-2000). If this is the top, max draw down is about 30%. It'll only be a gift of cheaper high cash flow companies. Please yes. The 2000 crash was cheaper unprofitable companies, almost all didn't have the cash to survive. Everyone complains about everything being too expensive until they get punched in the mouth. Cheaper stocks are a gift for the wealthy.
coleman57 | an hour ago
I actually believe this is probably accurate, but I also remember the first NY Post headline I ever saw, as I took my sister to JFK on the day after Reagan fired the striking air traffic controllers in 1981: TERROR IN THE SKIES
SardiPax | 53 minutes ago
Regardless of hype and fashion trends around the latest silly videos, AI is absolutely here to stay. The speed of uptake in industry (regulated ones included) is a clue to just how much value there is in the tool already. The pace of advancement is amazing, and that's just what makes the headlines. The 'boring' stuff going on outside of Social Media attention is what is really fascinating.
There will always be reactionaries, as there has been to every tech advancement, just in the last few decades people have found reasons to hate 'The Internet', Mobile Phones, even Microwave Ovens, but they are all still with us because they all deliver genuine value in our daily lives.
stone316 | 52 minutes ago
I wonder how many people sat out on all the profits so far waiting for the crash.. Will the AI market crash? Maybe…. Is it like the .com bubble? Earnings so far don’t say so…
SgathTriallair | 46 minutes ago
Investment bubbles are an important part of the way that societies digest new technology.
The new technology comes along and everyone has ideas on how it might be useful. The various entrepreneurs go out and try a bunch of those ideas. There is no track record yet, so the investor class is just investing based on how good of a story the entrepreneurs can tell.
Eventually we discover which of the ideas were good ideas and which weren't as business fail or succeed. That creates the track record that lets the investor class have better discernment on what ventures they should back.
It's inevitable that the bubble will pop because the only way it wouldn't pop is if every single use case was valuable (highly unlikely) or if the investor class has been very restrained (also unlikely).
This doesn't mean that the pop will be soon or big. It's possible that most of the use cases are strong ones. The biggest difference between this tech and most others is that it is actually faster than the regular business cycle. What was a ridiculous use case last week can become completely viable next week because a new model got released. This is one of the reasons that the AI companies keep finding investors, they keep showing astonishing improvement in the capabilities of the systems. One could almost imagine it as a series of cascading bubbles and as each one winds down another bigger one sucks up the investors leaving the last round of bad decisions.
Responsible-Age-1495 | 38 minutes ago
GTA6 will be the bridge over troubled waters, retail, private equity, Elon, Warren B, pension plans will all find a safe haven in the burning glow of TTWO revenue.
AI demise will just be an opportunity at the very real bottom, then it all roars back and the wealth inequality continues...
I don't think this is levered like GFC2008 or as cheesy as the dot com crash. The dot com was literally people hyping domain names with no real business at all.
This correction will be a doozy, but probably not as bad as those last 2 stinkers.
Forward_Patient_1427 | 9 minutes ago
The ai bubble still has a long way to go before it reaches that level. For context, during the dot com bubble the s&p was sitting at 45 at its peak. Right now we fall in the 25-26 range. The top companies during the dot com bubble were trading with P/E upwards of 300. Anthropic isn’t public yet but we know they are planning a 2 trillion dollar ipo and their revenue is about 17 billion which puts them around a P/E ratio of 117, way below the peaks of the top companies of the dot com era.
WholePut1414 | 2 hours ago
It is a bubble but, the hyper-scalers are extremely profitable solid businesses. Whatever burst we do see will most likely be underwhelming- AI will rapidly change our society/economy. I believe there will be significant revenues generated in areas we do not currently understand.
mhizzle | 3 hours ago
At least we can all rest easy as we fall asleep tonight, knowing that there was no way that anyone could have seen this coming.
(Words words words)
TheMagicalLawnGnome | 2 hours ago
To paraphrase the old expression, experts have successfully predicted 15 of the last 8 recessions.
Maybe the author is correct. But experts have been claiming that the AI bubble is going to pop any day now, for the last three years.
And more to the point...even assuming this person is correct, let's look at what happened after the dot-com crash.
It laid the foundation for what essentially became the complete digitization of modern society.
There's really no question at this point that AI is here to stay, and will continue to improve. The technology is demonstrably viable.
It's fair to argue that a given company is over-valued, or that some companies might go bankrupt.
And my response to that is...so what?
Let's game this out: let's say Anthropic and OpenAI go bankrupt.
What happens in a bankruptcy?
Debts are renogotiated with creditors. Assets are sold.
What it doesn't mean, is that the technology goes away. Ownership may be transferred, or lenders may take a haircut, but someone still ends up with the source code, data centers, IP, etc.
This is why I find it so odd / shortsighted when people root for the failure of these AI companies.
OpenAI going bankrupt won't stop AI development. All it will do is cause economic harm to a large number of people. The technology will continue to move forward, regardless of which company takes the lead.
To put it another way, Netscape disappearing didn't end internet browsing and search. It just meant that Google took over.
lopix | an hour ago
Except with valuations an order of magnitude or more higher. Making the collapse worse. At least there are fewer companies involved. But there doesn't look like a happy ending in the near future.
spaghettiking216 | 3 hours ago
Jfc just get it over with already. The longer this charade continues the worse the fallout when the music stops. There will be reasonable uses for AI when the dust settles but I’m so sick of the relentless hype, doom and prognostics.
imkvn | 2 hours ago
I don't think it will bust. Most of the stock market is riding on 7 companies and AI to deliver. At most of it does it'll just hurt retirees and reset most of the populations portfolios to 0.
AI is definitely too big to fail now. With commercial real estate, car manufacturers, and other countries being bailed out by Uncle Sam no difference. Rising prices for everyone.
Generally helps to print away the 40trillion debt.
I think it'll be much worse than .com if it ever came apart.
jonnno_ | 2 hours ago
It’s not too big to fail lmao. That’s what the companies WANT you to believe. A bunch of unprofitable startups, openAI and Anthropic included, will go to zero. Oracle may go to zero and have its database business sold off/acquired. Nvidia and the hyperscalers will crash a bit and eventually recover because they’re still otherwise profitable. AI tech will live on, but the fad/hype will pass like it did for VR, metaverse, cryptocurrencies and NFTs. The real losers will be venture capitalists who got rug pulled, WeWork style. Oracle bondholders too. Bailouts will be politically toxic and won’t be attempted. Unlike 2008, the world will keep turning if the tech startups go bust. Market gains will simply reset to ~2022 levels + inflation adjustment.
Virtoxnx | 2 hours ago
I would not compare NFT and AI.
NoAd4056 | 2 hours ago
Comparing AI to NFTs and VR is certainly a take
bostonlilypad | 2 hours ago
Never too big to fail, have you seen some of the debt the companies building data centers have? And how much the big ai companies are pulling in vs investment. It’s scary as hell. If it bursts it will be bad…
Several_Razzmatazz71 | 2 hours ago
Too big to fail make sense when we are talking about banks or financial institutions, because they trade have loans issued to many people, firms, and countries around the globe. AI isn't too big to fail.
Bstochastic | 2 hours ago
Too big to fail? Ffs
Background-Spot-5068 | an hour ago
There’s a bit of a difference.. anything bailed out by the gov ultimately had a path to profitability, but for now AI still doesn’t. Unless it’s ad revenue. That’s the only seeming way they can turn their massive costs into profit. No one will buy access to AI if prices go up to profitable levels.
There is hesitancy to implement ads. I’m glad that is the case but I’m not sure why. Maybe it won’t generate enough still? Probably won’t ruin the experience anymore than ads anywhere else already do. So I don’t know.
Anyway, AI is currently a black hole for money. It goes in and never comes out. A bailout doesn’t fix that problem.
No_Aesthetic | 3 hours ago
I can't wait until the bubble goes and AI no longer exists at all. It's been such a plague on the land that nobody will miss it at all.
That's exactly what I would say if I was a person who didn't understand that 1) if there is a bubble, it going will not be the end of AI and 2) a lot of people actually like and even enjoy AI, because my interests aren't universal.
It really seems like the anti-AI crowd (which is shrinking, by the way) is itching for an economic crash that will wash away all the grime from the internet. But that's never happening. If there is an economic crash, it's entirely more likely that you, the reader, get fucked by it than OpenAI and Anthropic.
This sort of thing is nothing new, the doomsayers predict crashes and bubble bursts constantly, but in this case it's mostly wishful thinking. OpenAI and Anthropic have viable pathways to profitability if they really feel the squeeze and have to go that way. They've got something essential and they know it.
AI is the future, even if this supposed bubble goes. The future doesn't stop coming because you really, really want it to.
Gloobbie | 3 hours ago
That’s never going to happen. Reddit wants AI to poof but it won’t. Look at PROFITS between the dot com bubble crash and now. Cisco was #1 making 2.7B profits at their peak. Nvidia is #1 right now at 120B PROFITS.
Reddit is retarded, there’s no way a company making 120B profits year after year with forecasted growth is going crash and take AI down with it. Reddit has no idea the financial capacity and capabilities of these mega growth companies
McOmghall | 2 hours ago
Nvidia makes useful stuff that can be used for things other than AI. If AI dies, Nvidia will take a hit and continue as always. It's the AI-only companies that are gonna blow up.
Pure_Summer9767 | 2 hours ago
Debt restructure and consolidation, they want to offload onto the stock market so the debt can be paid. Coreweave is a preview to what happens
More_Programmer8905 | 3 hours ago
What an ugly and depressing future.
No_Aesthetic | 3 hours ago
Which one? The future where doomsayers get their wish and the bubble bursts, taking potentially millions of jobs to not even kill off the companies?
More_Programmer8905 | 2 hours ago
No, a future where people stop thinking for themselves and become even more stupid as we are already seeing, where all communication is easily manipulated by a few at the top, where real human creativity is dead, truth no longer matters, and the environment is further destroyed.
No_Aesthetic | 2 hours ago
We already have that.
McOmghall | 2 hours ago
So the bubble BURSTING destroys jobs, but it not doing it also destroys jobs?
No_Aesthetic | 2 hours ago
Well, historically bubble bursts have destroyed a whole lot of jobs all at once.
Historically new technologies have done away with some less productive jobs while creating whole new classes of them.
We have no example of a technology that was introduced to increase productivity and became purely a destroyer.
So I must question how likely that is.
SpaceyCoffee | 2 hours ago
Is it though? It’s easily 10x-ing software engineering productivity and will soon be 100x-ing. Recent model releases are getting absolutely insanely good. To the point you can effectively give them large, abstract coding assignments that used to take entire teams to implement.
Sure, it’s bad for employment of brute force coders, but productivity enhancers of that level are not dissimilar from the invention of the steam engine, which as we all know completely changed economics as we know it.
AI is going to have a downturn at some point, as the bad speculative investments go bust, but the industry as a whole is not going anywhere.
johndoe1942 | 23 minutes ago
Just parroting whatever is shoved down your throat. 100x ing lmao.
btoned | 2 hours ago
Tell me you don't working in these industries without telling me.
5upertaco | 2 hours ago
NY Post. The dot-com bubble is nothing like today's stock market. Back then 4 guys and a website were trading at 500x future earnings. Aside from PLTR or TSLA, TTM PE ratios are relatively tame. NVDA is trading at something like 26x TTM earnings; Walmart is trading at 45x TTM earnings. And all of these companies have real employees, sizable fixed cost infrastructures, real customer bases, and real technology.
A_Credo | 2 hours ago
It’s a pull forward problem. The AI bubble is closer akin to the railroad bubble.
Real tech, real companies, but got out in front of their skis by building out too quickly and then margins compressed and debt crushed them.
This will be the same story with AI. Margin compression and a debt/credit bubble.
Sawyer_Anderson | 3 hours ago
Dot com took 5 years to burst were at 3.5-4 max if we base it off late 2022 if history repeast we still got 1.5 years i'm gonna keep DCAing into index
TON618 | 2 hours ago
Don't platform the ny post this is bottom tier garbage. Bubble or not, every government on earth with a GDP greater than North Korea is fully invested in AI. If it goes to zero then so does the global economy. Trying to profit from the hypothetical decline won't help if money becomes worthless.
Dangerous-Gas7175 | 2 hours ago
I think as long as we say "it's about to burst"... it will not burst - if I recall, the articles I read about the dot com bubble was that basically just about before it burst, all the nay sayers were saying "damn... I guess.... this is a new normal and I was wrong" - boom then it bursts.
So as long as there are skeptics I feel that we have not yet reached that end stage.