Comment on The AI bubble is so big it's propping up the US economy (for now)

drmoose@lemmy.world ⁨3⁩ ⁨weeks⁩ ago

• SwingingTheLamp@midwest.social ⁨3⁩ ⁨weeks⁩ ago

  I get the thinking here, but past bubbles (dot com, housing) were also based on things that have real value, and the bubble still popped. A bubble, definitionally, is when something is priced far above its value, and the “pop” is when prices quickly fall. It’s the fall that hurts; the asset/technology doesn’t lose its underlying value.

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• EncryptKeeper@lemmy.world ⁨3⁩ ⁨weeks⁩ ago

  I mean we haven’t figured out how to make AI profitable yet, and though it’s a cool technology with real world use cases, nobody has proven yet that the juice is worth the squeeze. There’s an unimaginable amount of money tied up in a technology on the hope that one day they find a way to make it profitable and though AI as a technology “improves”, its journey towards providing more value than it costs to run is not.

  If I roleplayed as somebody who desperately wanted AI to succeed, my first question would be “What is the plan to have AI make money?” And so far nobody, not even the technology’s biggest sycophants have an answer.

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  • bridgeenjoyer@sh.itjust.works ⁨3⁩ ⁨weeks⁩ ago

    The profit of ai lies in this: mass surveillance and ads. Thats it.

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    • EncryptKeeper@lemmy.world ⁨3⁩ ⁨weeks⁩ ago

      The revenue of AI lies in mass surveillance and ads. But even going full dystopia, that has not been enough to make AI companies profitable.

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      • bridgeenjoyer@sh.itjust.works ⁨3⁩ ⁨weeks⁩ ago

        Millennials are killing the mass surveillance and advertising industry!

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  • drmoose@lemmy.world ⁨3⁩ ⁨weeks⁩ ago

    AI is absolutely profitable just not for everybody.

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    • EncryptKeeper@lemmy.world ⁨3⁩ ⁨weeks⁩ ago

      AI as a technology is so far not profitable for anybody. The hardware AI runs on is profitable, as might be some start ups that are heavily leveraging AI, but actually operating AI is so far not profitable, and because increasingly smaller improvements in AI use exponentially more power, there’s no real path that is visible to any of us today that suggests anyone’s yet found a path to profitability. Aside from some kind of miracle out of left field that no one today has even conceived, the long term outlook isn’t great.

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      • drmoose@lemmy.world ⁨3⁩ ⁨weeks⁩ ago

        Absolute delusion right here

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    • frezik@lemmy.blahaj.zone ⁨3⁩ ⁨weeks⁩ ago

      Who is it profitable for right now? The only ones I see are the ones selling shovels in a gold rush, like Nvidia.

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      • drmoose@lemmy.world ⁨3⁩ ⁨weeks⁩ ago

        Every AI software company? So much ignorance in this thread its almost impossible to respond to. Llm queries are super cheap already and very much profitable.

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• WhirlpoolBrewer@lemmings.world ⁨3⁩ ⁨weeks⁩ ago

  In a capitalist society, what is good or best is irrelevant. All that matters is if it makes money. AI makes no money. The $200 and $300/month plans put in rate limits because at those prices they’re losing too much money. Lets say the beak-even cost for a single request is somewhere between $1-$5 depending on the request just for the electricity, and people can barely afford food, housing, and transportation as it is. What is the business model for these LLMs going to be? A person could get a coffee today, or send a single request to an LLM? Now start thinking that they’ll need newer gpus next year. And the year after that. And after that. And the data center will need maintenance. They’re paying literally millions of dollars to individual programmers.

  Maybe there is a niche market for mega corporations like Google who can afford to spend thousands of dollars a day on LLMs, but most companies won’t be able to afford these tools. Then there is the problem where if the company can afford these tools, do they even need them?

  The only business model that makes sense to me is the one like BMW uses for their car seat warmers. BMW requires you to pay a monthly subscription to use the seat warmers in their cars. LLM makers could charge a monthly subscription to run a micro model on your own device. That free assistant in your Google phone would then be pay walled. That way businesses don’t need to carry the cost of the electricity, but the LLM is going to be fairly low functioning compared to what we get for free today. But the business model could work. As long as people don’t install a free version.

  I don’t buy the idea that “LLMs are good so they are going to be a success”. Not as long as investors want to make money on their investments.

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  • bridgeenjoyer@sh.itjust.works ⁨3⁩ ⁨weeks⁩ ago

    I imagine a dystopia where the main internet has been destroyed and watered down so you can only access it through a giant corpo llm. So you choose between watching an ai generated movie for entertainment or a coffee. Because they will destroy the internet any way they can.

    Also they’ll charge more for prompts related to things you like. Its all there for the plundering, and consumers want it.

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  • drmoose@lemmy.world ⁨3⁩ ⁨weeks⁩ ago

    people can barely afford food, housing, and transporation as it is.

    Citation needed. The doomerism in this thread is so cringe.

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    • WhirlpoolBrewer@lemmings.world ⁨3⁩ ⁨weeks⁩ ago

      62% of Americans are living paycheck to paycheck. Perhaps saying most Americans are struggling is doomerism, but what percentage living paycheck to paycheck no longer counts as doomerism and is just a harsh truth? 75%? 90%? Do you think the number of people living paycheck to paycheck is increasing or decreasing this year?

      econofact.org/…/is-there-a-consensus-that-a-major….

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      • drmoose@lemmy.world ⁨3⁩ ⁨weeks⁩ ago

        You know the world is not america right?

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    • frezik@lemmy.blahaj.zone ⁨3⁩ ⁨weeks⁩ ago

      People are increasingly taking out loans to buy groceries. Nobody does that because they have a better choice.

      You demand citations for this, something that has been extensively covered in the news, but also throw around arguments like “absolutely inflated but it’s definitely real value” and “we’re way past the point of tech bubbles popping”. Who is cringe here?

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      • drmoose@lemmy.world ⁨3⁩ ⁨weeks⁩ ago

        Americans are not all people. Its a single country that still buys out all Nintendo switches and cyrbertrucks - so maybe if americans had budgeting classes they wouldn’t take payday loans for twinkies? The conjecture here is just mind bogglingly stupid.

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  • obbeel@mander.xyz ⁨3⁩ ⁨weeks⁩ ago

    I believe that if something has enough value, people are willing to pay for it. And by people here I mean primarily executives. The problem is that AI has not enough value to sustain the hype.

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  • General_Effort@lemmy.world ⁨3⁩ ⁨weeks⁩ ago

    Lets say the beak-even cost for a single request is somewhere between $1-$5 depending on the request just for the electricity,

    Are you baiting the fine people here?

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• frezik@lemmy.blahaj.zone ⁨3⁩ ⁨weeks⁩ ago

  LLMs can absolutely disappear as a mass market technology. They will always exist in some sense as long as there are computers to run them and people who care to try, but the way our economy has incorporated them is completely unsustainable. No business model has emerged that can support them, and at this point, I’m willing to say that there is no such business model without orders of magnitude gains in efficiency that may not ever happen with LLMs.

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• GamingChairModel@lemmy.world ⁨3⁩ ⁨weeks⁩ ago

  The value a thing creates is only part of whether the investment into it is worth it.

  It’s entirely possible that all of the money that is going into the AI bubble will create value that will ultimately benefit someone else, and that those who initially invested in it will have nothing to show for it.

  In the late 90’s, U.S. regulatory reform around telecom prepared everyone for an explosion of investment in hard infrastructure assets around telecommunications: cell phones were starting to become a thing, consumer internet held a ton of promise. So telecom companies started digging trenches and laying fiber, at enormous expense to themselves. Most ended up in bankruptcy, and the actual assets eventually became owned by those who later bought those assets for pennies on the dollar, in bankruptcy auctions.

  Some companies owned fiber routes that they didn’t even bother using, and in the early 2000’s there was a shitload of dark fiber scattered throughout the United States. Eventually the bandwidth needs of near universal broadband gave that old fiber some use. But the companies that built it had already collapsed.

  If today’s AI companies can’t actually turn a profit, they’re going to be forced to sell off their expensive data at some point. Maybe someone else can make money with it. But the life cycle of this tech is much shorter than the telecom infrastructure I was describing earlier, so a stale LLM might very well become worthless within years. Or it’s only a stepping stone towards a distilled model that costs a fraction to run.

  So as an investment case, I’m not seeing a compelling case for investing in AI today. Even if you agree that it will provide value, it doesn’t make sense to invest $10 to get $1 of value.

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  • Tollana1234567@lemmy.today ⁨3⁩ ⁨weeks⁩ ago

    dint microsoft already admitted thier AI isnt profitable, i suspect thats why they have been laying off in waves.

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• chobeat@lemmy.ml ⁨3⁩ ⁨weeks⁩ ago

  there’s an argument that this is just the targeted ads bubble that keeps inflating using different technologies. That’s where the money is coming from. It’s a game of smoke and mirrors, but this time it seems like they are betting big on a single technology for a longer time, which is different from what we have seen in the past 10 years.

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• obbeel@mander.xyz ⁨3⁩ ⁨weeks⁩ ago

  Proof: Agentic AI is worthless.

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• squaresinger@lemmy.world ⁨3⁩ ⁨weeks⁩ ago

  Dotcom was a bubble too and it popped hard with huge faillout even though the internet didn’t disappear and it still was and is a revolutionary thing that changed how we live our lives.

  Overvalued doesn’t mean the thing has no value.

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• shalafi@lemmy.world ⁨3⁩ ⁨weeks⁩ ago

  Sort of agreed. I disagree with the people around here acting like AI will crash and burn, never to be seen again. It’s here to stay.

  I do think this is a bubble and will pop hard. Too many players in the game, most are going to lose, but the survivors will be rich and powerful beyond imagining.

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  • Tollana1234567@lemmy.today ⁨3⁩ ⁨weeks⁩ ago

    the fallout is they laid off to many tech workers to recover from thier companies financially.

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