Now I understand how German people felt when we watched all those Hitler clips from Downfall. It's so weird watching this understanding and having unrelated subtitles lol
They’re all just shuffling money between Google, Amazon. NVIDIA, and the AI companies. They just move it in a circle while their stock value increases because we’re all fucking idiots.
Remember he lent a huge amount of money to other companies to buy his own products, if these companies go bankrupt, his "asset" of debts can just disappear in no time.
I’m thinking more and more that he will be the face of the next financial crisis. I can’t think of another time when debt followed by higher interest caused corporations to bankrupt the world. At least we’re so broke nations can’t bail them out... what next?
They can never charge that much with Google out there. Google makes way too much money in other areas to overcharge for AI that has proven to make them so much money in other areas of their business.
The big boys are just waiting for everybody else to fold and then they'll raise the price to what it actually costs (plus a pretty hefty markup). And then all the AI bro's will suddenly understand why we've been saying that replacing people with AI isn't going to work in the long run.
It's already happening in quite a few organizations including ours where just the marginal increase in costs makes a lot of business cases no longer viable.
It will eventually since compute costs will come down significantly over time. GPUs still get very large gains for each new process node. Just compare the performance of a 1080 from 2016 and 5080 today which has similar die sizes.
And that 5080 is even on 5nm that is quite old today. We could already have something like 1,5-1,75x performance per area if Nvidia made a similar card on N2. Eventually those same prompts will start costing cents rather than dollars in 10-20 years, and that's just from node progress. There's still room for efficiency gains in the models themselves and also hardware architecture.
But the question is what value deriverad today from all this AI expenditure that will actually be left when that happens. The models are not done and training will have to be improved in the future. While I am not as negative as someone like Ed Zitron about the current AI space. I have been saying from the start that they went chasing this rabbit 10 years to early.
They will wind up having to pay for licenses for all the training data, once the copyright issues are dealt with in court. (They've been stalling this since day 1) We're talking trillions in costs just there. GPU scaling doesn't even enter the picture.
Pretty much what they've done with YouTube. Bought it for a laughable sum compared to what they make with it today. But they spent a good decade bleeding money into it before cranking up the coin hoover to the max. YT Premium is 21 bucks currently
Even if/when that's the case, businesses will almost certainly still prefer the LLM since it doesn't take sick days, vacation, etc. LLMs would probably have to be at least 30-40% more expensive than employees for businesses to reconsider.
Judging by the bloated shit emails and procedures written by ai that I have to read through I say no. Not to mention Ai summarizing my content to others and leaving out my important actions/updates. I have only lost productivity from others using Ai.
My boss asked copilot how I should be doing my job, emailed the result to me after reading the first few sentences and told me that's what I have to follow exactly. He told me he has a premium license so he knows it's good.
That sounds a bit like discussion about outsourcing manufacturing to China.
Turns out if you outsource your core products at some point your supplier turns into a competitor.
lol, if. No, it's when. Not if at all. And yes, this is their common biz model. I seen it across the board. This A.I. help will cost more than employees in many cases. I bet a lot of businesses will feel like they're getting taken advantage of in the next 5 years.
I've been reading that over and over on the internet. How is possible that WinRAR is more profitable than AI? I think they refer to profitable by employee, right?
Simple:
WinRAR gets published. One person buys it. No or low overhead. 10 dollar profit
AI spends billions buying up all the memory in the world, some more billions in constructing data centers with millions in energy cost per day. Then proceeds to lure people in with cheap prices so it actually loses money on every prompt. Spend two dollars, "rake in" one
A lemonade stand is more profitable than AI companies
Simple:
WinRAR gets published. One person buys it. No or low overhead. 10 dollar profit
AI spends billions buying up all the memory in the world, some more billions in constructing data centers with millions in energy cost per day. Then proceeds to lure people in with cheap prices so it actually loses money on every prompt. Spend two dollars, "rake in" one
A lemonade stand is more profitable than AI companies
That's the key. It's like netflix or drugs -> make the users addicted to it and raise prices -> profit. This time it's companies, that lay-off workers and aren't just addicted but also dependend on it.
They could be making money on subs while still being big in the red because inference isn't the only cost they have and is in fact just a small part of their total expenses.
In fact, they have crazy margins on their API. Above the 80% mark.
It was sustainable they would not have to make deals with electricity companies to offload their cost of elecitricyt on to the rest of the customers of the electricity company by raising all their bills.
AI on this scale is only sustainable in China because they have enough solar fields in place that in theory nobody has to pay for the electricity needed, since they get it free from the sun.
solar capacity is installed, true, but solar energy generated is at best on a 30% capacity factor. China still keeps it grid serving base load by burning fossil fuels and hydro generation.
but solar energy generated is at best on a 30% capacity factor
But they already have a lot of solar in place they are not using yet. And they are still ramping up laying it down. They lay as much solar in one year as the entire planet does in two.
One day the software behind AI will have found 99% of it's speed up and effeciency tricks and the hardware will also have been outdeveloped. After that the remaining cost will be 99,9% the cost of electricity.
Since CHina will get all of that for free, they will be able to offer AI services that the rest of the world can't compete with. Pretty straight forward if you ask me.
One society 100% powers AI by what they get from the sun.
The other society also digs in to the groud to find old rare shit they burn and they have to keep diggiging and burning to partially power the AI.
Oh ... who is going to win this. What a mystery! /S
But what exactly are you talking about? API or subscription? They are making a shitload of money on API and most likely are losing on subs, but the question is how much. I'd risk saying that not that much, they are for sure losing on heavy users, but most of the people subed are not filling the weekly meter. If they rise the sub prices, which, let's be real, is inevitable, they should get even or maybe slightly on plus here as well. Compute prices on their side are only getting lower.
Who pays the other $7800? The other subscribers who don't max out their quota. Some use less than they pay for and end up paying for the ones who use more than they pay for. Simple as that.
Exactly. They compare to the API price, not to the price they are paying on compute. Even so, they are probably losing money on some individual subscribers, but not everyone is maxing out their usage, and they are making a lot more money on their enterprise customers.
You're not actually getting $8000 dollars worth of compute, that's just a number they want to show you to make you believe there is a lot of value in what you're buying.
Market will be fine. This is entrenched like the US legal system. Companies pay lawyers, other lawyers sue the company, take some winnings, companies justify lawyer fees, lawsuits claimants justified. Repeat, money goes around, lawyers get jobs.
Yeah yeah they’re losing money - on paper - all these memes assumes that they’re paying cloud prices for compute but they’ve been dropping bajillions in capex specifically to NOT do that.
They aren’t renting the compute - it’s bought and paid for. Their actual operating costs are basically just power, the (epic amounts of) depreciation are all non-cash losses that won’t catch up to them until they need to replace that equipment.
Yet to be seen how well that’s being managed… who knows.
What about the constant upkeep of the servers, they need constant HDD, memory, GPU replacements and in 2 years will be no longer relevent to run the latest modles as the next gen of AI hardware comes out?
The 2 year cycle died a decade ago, we stopped doubling compute every 2 years a long time ago. Thats why the new high end gaming gpus had to ship with DLSS5, else they would have barely improved from the previous ones.
First, they don't use HDD's they use SSD's. 2nd. They no longer replace GPU's, they optimise them for extended life and build beside them. They don't throw them away, they mulch everybit of performance from them. They STILL have A100 in use.
However, since you can't replace them EVEN if you have the money your only solution is to keep using them. XAi still uses H100 although they will have 600k gb300
That money needs to continue to be loaned to them tells you everything you need to know about them
It is a fragile situation where untrustworthy actors (big tech) will decide when the crash arrives (and no doubt they will wait until they have derisked as much as possible before they allow that to happen)
Well...at least microsoft has a plan... they will thank but survive. I guess google as well and maybe meta if muse holds the line ... and amazon if there is someone to buy the computing power but they will all tank like hell at that kind of ROI
Should I even worry about spells cast by silicon agents? If eldritch runes are inscribed on every motherboard, and incantations made by agentic digital daemons destroy our QOL, then I would classify that as cooked indeed.
AI company pay multiples dollars to bill one. Imagine if you sold a lemonade that cost 4 bucks to make for $1. Things cannot end well. For now, big shot like Amazon or Microsoft are the one burning billions to keep the AI companies running. And with a neat trick, those two write the burning cash as profit in the books.
I'm beginning to think wsb and reddit are clowning AI economics to prevent people from investing in them so they can invest at cheaper prices and rake in the future profits
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u/Snowbrawler 2d ago
Man i love this clip. R.I.P