#bubble

After sharing Ed Zitron’s latest piece called “OpenAI Is A Systemic Risk To The Tech Industry” I got a few responses arguing in a similar way: People agree that “AI” and especially “generative AI” is a massive bubble that does not really make much sense – if you imply rational decision making. Training the models, building the data centers, inference, inflated wages, potential licence costs and the costs of damages … economically the whole sector doesn’t make too much sense (Sequioa Capital agrees). Sure some people believe that they’ll find the machine god in old 4Chan posts but I also would not consider that to be rational in any way, shape or form. The singularity is just a weird ersatz-religion for rationalist nerds confronted with their own mortality.

But the argument goes on: There have always been bubbles but especially with technologically driven bubbles, something, usually infrastructure is left behind that the following generations can built on. The US railroad system for example or for ageing technologists such as myself maybe more present: The dotcom bubble.

The Internet we have today exists because the dotcom bubble lead to the infrastructure buildout of cables, some data centers, peering structures etc. that the next generation of Internet startups could be built upon. The death of the bubble fertilised or created the soil that all those social media platforms and UberForX things could flourish on. So while genAI might be a bubble, it will create all those models and integrations that will survive OpenAI’s (and Anthropic and whatever else those companies are called) financial shenanigans.

I think those things are not the same.

I do agree that something will be left behind: The data centers that have been built and that are still being built will still be there and I am quote sure someone will find new use cases for the NVIDIA cards everyone is buying or will replace those machines with standard server components to add to their hyperscaler infrastructure. But does that mean that the genAI stuff will survive?

Generative AI systems have a few unusual properties that make them very distinct from traditional digital services.

Digital services have a tendency to push marginal cost down: Adding another license to your database or even adding another account to your infrastructure costs you basically nothing when you’ve already got the systems running. Traditional digital goods and services scale really well: If your server maintains 1000 or 5000 accounts often doesn’t matter too much (depends a bit on the service of course), the cost does not scale up linearly, in fact the bigger you are the more of those scaling benefits you can reap for example by building caching infrastructures that save even more processing costs. This is how things work in the digital. But genAI is different.

OpenAI loses money on every user who pays them. They lose money on users with a 20$ subscription, they lose money on people with a 200$ subscription. Because genAI is inherently expensive to run. The optimizations that work for traditional services who can cluster certain kinds of processing (often by grouping users into a limited set of boxes and just treating them as the box assigned to them) do not apply to genAI. You keep having to heat up your NVIDIA cards and cool them and replace them. And people who do actually pay for your service will use it more. For for example Meta’s platforms or even Google Search more usage is good because it means more ad revenue. They make money by scaling up. OpenAI needs its users to use the service as little as possible to avoid losing even more money. For traditional digital platforms popularity is good. For OpenAI it’s poison.

So there is a structural reason why those companies probably can’t be economically valid: Digital spaces are built around winner-takes all scaling but for genAI providers that is economical suicide.

Let’s say OpenAI and Anthropic die. Let’s say the bubble bursts and the hype moves on to the next thing – whatever that will be. Will AI stick around?

Sure at first people will migrate to self-hosted stuff running on their machines. You can replace your coding assistant with some open weight model, it might be worse but still serviceable. But those models didn’t come from nowhere. Someone paid to develop them, someone had to pay electricity bills, NVIDIA’s bills, the bill of the private security firm that fought the demonstrations against your data center that took all the water people wanted to drink. So we’ll be stuck with whatever we at that point.

Which is exactly what happened with the dotcom bubble: We had the wires that were left by Pets.com exploding. But the wires had two advantages: They were agnostic to the data they carried, adding more of them or maintaining them was comparatively cheap and the marginal cost of adding more data to the wire was basically zero – until you reached capacity and needed to add another wire.

But AI models age like milk. Think of a coding assistant trained only up to right now, April 15th, 2025. Anything invented after this date, any breaking library update is not part of the training data and will lead to bad and false predictions by the model. AI models are conservative by definition, tied to the past of the moment they were trained on with no understanding of the future or even what kind of trajectories the future might take. In order to stay useful, to look “intelligent” and current AI models need to be constantly updated with new training material (and potentially removed older training material). Most AI models of the kind used today have very short shelf lives. (Smaller, specialized models often do not have that problem as much, think of models to do face detection or pose detection from video: The human body doesn’t change that much)

Something will be left by the AI crash, that is for sure. But I do not think it will be generative AI systems which – without constant expensive updates and maintenance – become useless at best and actively harmful at worst quickly. And that is the question we need to be asking: What will be left and who will that be used by?

When I see large data centers with a bunch of inference machines in them, there are clear uses but those probably won’t be the “cute” genAI some people use. The inference will shift to doing video processing and people classification because that’s where the money is: When a tech bubble bursts, the tech sector always turns to the state to either hold the bag or buy the remains. What will be left when OpenAI burns is infrastructure that players like Palantir will use because their problems fit the hardware and their business model can create the necessary money from governments all over the planet.

The AI crash won’t leave us with infrastructures that are useful to democratic and humane societies, with useful tools to do something productive with, but with infrastructures tailor-made to suppress it.

https://www.europesays.com/1988756/ What are the indicators of a recession? #bubble #business #BusinessCycle #company #confidence #Consumer #crash #decline #depression #DinaElMahdy #economic #EconomicActivity #EconomicPeak #Economy #employment #GditheNber #GDP #index #indicator #indicators #JamesAngel #market #money #month #number #period #product #purchase #rate #recession #RecessionIndicator #spending #stock #StockMarket #UnemployedPeople #unemployment #UnemploymentRate

https://www.europesays.com/1988414/ What are the indicators of a recession? #bubble #business #BusinessCycle #company #confidence #Consumer #crash #decline #depression #DinaElMahdy #economic #EconomicActivity #EconomicPeak #Economy #employment #GditheNber #GDP #index #indicator #indicators #JamesAngel #market #money #month #number #period #product #purchase #rate #recession #RecessionIndicator #spending #stock #StockMarket #UnemployedPeople #unemployment #UnemploymentRate

https://www.europesays.com/1988077/ What are the indicators of a recession? #bubble #business #BusinessCycle #company #confidence #Consumer #crash #decline #depression #DinaElMahdy #economic #EconomicActivity #EconomicPeak #Economy #employment #GditheNber #GDP #index #indicator #indicators #JamesAngel #market #money #month #number #period #product #purchase #rate #recession #RecessionIndicator #spending #stock #StockMarket #UnemployedPeople #unemployment #UnemploymentRate

The unreality bubble: is there another personal debt crisis coming?

The news on personal debt is…good? As a percentage of disposable income, household debt is down to 120%. It peaked at over 150% during the 2008 financial crisis. We’re saving more than we’re spending and things appear to be moving in the right direction. Or are they? #unreality #bubble #personal #debt #crisis #coming

https://10bmnews.com/2025/04/the-unreality-bubble-is-there-another-personal-debt-crisis-coming-2/

This is your monthly reminder that #AI #Investment such as the money borrowed by #OpenAI for it’s #ChatGPT product is part of a financial #bubble and it will burst. Anything that can’t go on forever will eventually stop

Oh sure, totally not a bubble.

#ai #openai #chevron #vc #bubble

I think I see an AI #bubble forming in my inbox

I'm getting daily daily pitches from AI startups I’ve never heard of, from PR peeps and agencies I’ve never worked with before.

I’ve even spotted a PR company that used to specialize in blockchain rebrand itself to de-emphasize all things crypto.

I’ve seen this before with the #metaverse, #blockchain, #virtualreality and several other waves of tech hype.

It seems to me that when a market heats up, many funded companies spend some of their money on hashtag#PR. Almost none of those companies survive. PR companies score some dumb money and grow, then shrink again.

Their PR isn't pretty because the startups don’t have a lot to say and their pitches tend to follow a formula of mentioning the VC that funded them, the fact their founder worked at Big Tech companies, and their intent to revolutionize/democratize something.

If I'm right, I'm in for about 2 years of this junk

#Bubble Trouble
"VC funds hv poured ~$200bil into #generativeAI. Making matters worse, e stock market’s #bullrun is deeply dependent on e growth of #BigTech cos fueling e #AI bubble. In 2023, 71% of tot gains in S&P500 were attributable to e #MagnificentSeven —Apple, Nvidia, Tesla, Alphabet, Meta, Amazon, & MS—all of which r among e biggest spenders on AI. Just 4—MS, Alphabet, Amazon & Meta—combined for $246bil of capital expenditure in 2024 to support e AI build-out" 1/2
https://prospect.org/power/2025-03-25-bubble-trouble-ai-threat/

Using LLMs does not make one an expert in ML. Ask about how does a model actually work, step by step and I can guarantee the answer is be hallucinatory.

Same devs that were laid off because “vibe coding” is here, will be rehired because of the 100x tech debt that is too great without the fundamentals of software engineering and critical thinking when thinking long term, scalability and ease of maintenance.

LLM is great for a Proof of Concept, not production code. Host your own git server, keep it away from LLM training and let’s see the shitshow and AI bubble burst into oblivion.

#llm #ml #dev #ai #bubble

Remember: we're probably 10... maybe 11 month away from it totally collapsing!

#LLM #LLMs #AI #Bubble

How can we build the right conference? Perhaps we can learn from the building industry's boom and bust cycle between 2005 and 2009.

https://www.conferencesthatwork.com/index.php/uncategorized/2010/01/building-the-right-conference

#meetings #building #SpecHomes #bubble #events #eventprofs

"... and in the end, maybe the real AI boom was the friends we laid off along the way."

#AI #LLM #boom #AIBoom #hype #pop #crash #bubble #GenAI

Wollen wir nicht alle mal einen ganzen Tag nur erfreuliche Dinge posten.

Das könnten wir wohl alle grad mal gut gebrauchen.

Wie wäre es mit einem #
Zb #nurschön ?

Was meint ihr... Morgen?
Edit
(Also heute, Donnerstag)

Ich zähle auf euch.

#Bubble
#fediverse
#allezusammen
#nurschön

Edit Bitte teilen. Wollen doch mal sehen ob wir viele werden.

You can be mad about it, but anon is right.

#ai #porn #bitcoin #bubble #linkedlist

"But Jesus, use your fucking brain!"

https://www.youtube.com/watch?v=shFUDPqVmTg

#academia #research #bubble

#Medien & #Politiker, hört auf, euch von amerikanischer #SocialMedia die #Themen vorkauen zu lassen.
Die #Trolle von #Putin, #Trump, #Musk & Co. danken für euer Echo.

-----
#Bedienungsanleitung für mein Profil :
#Meme(s) aussuchen, runterladen, bei #facebook, #X #twitter, #Instagram ... reposten. Zwecks #Bubble-hopping: nutze rechte #Hashtags.

We will, we will #faktyou !
#noAfD #gegenRechts #WirSindMehr #NieWiederIstJetzt
#afd_verbot_jetzt #afd_verbot #noCDU #noBSW #WirHabenEsNichtGewusst

@dangillmor

Ohhhhh I never thought the leopards would eat MY face!

Http://YouTube.com/watch?v=8QGy9D_c1pY

#crypto #trump #bubble #fraud #antifa #corruption

Was für ein Fest für all die linken Zecken hier ...

#Österreich #Politik #blauschwarz #Kickl #Nazis #ÖVP #FPÖ #Korruption #Bubble #Gutmenschen