They are dumping some of the risk on Saudi Arabia now. During the MBS, Musk, Huang, Trump meeting MBS had to upgrade his previous $600 billion shakedown to $1 trillion, all of which goes to oligarchs in "AI", defense etc.
As a result, for example xAI now builds a fossil fuel powered data center with a Saudi state-backed firm named Humain.
It will probably end up like the Twitter investment of the Saudis.
There is a lot of bubbliness sure but some of the rhetoric is a bit sloppy. Like "swapping money back and forth" arguments is literally was economies and specializing results in.
The debt securitization could be an issue but one thing that stands out to me is the if GPUs are really being used as the lein or collateral, these are fundamentally depreciating assets and are marked as such even if the depreciation rates are slightly wrong.
Any new tech that renders current build out could dramatically hit this loans of course.
Part of me wonders if a bubble can really pop when everyone keeps calling it a bubble that will pop any minute now. Same as with the recession talk since COVID. Usually, pesky things like lack of actual profits or value would result in a sustained decline in stock prices, but these days, there are so many gamblers involved that despite the lack of any real value, they'll "buy the dip" in such great numbers that it bounces back up. And then FOMO hits and more principlined investors jump in on the action.
So far at least. But is this supposed bubble too big for that effect to save it? It feels like a lot of predictions are being made based on historical events like the dotcom crash, the '08 recession,etc.. and maybe those predictions are right but things have changed since. retail investment is a completely different game. "mob psychology" is also a different game with the internet being adapted at a greater scale. Even the tech driving the "AI bubble" would be scifi for someone in '08.
Certainly the variables have changed. But has the formula/game also changed?
There seems a bit of a hole in the logic here. The main thesis of the article is:
>I WILL TRY TO EXPLAIN THIS as simply as I can. The build-out of computing power for AI needs about $2 trillion in annual revenue by the end of the decade...
as a source for the it links the Bain article headlined "$2 trillion in new revenue needed..." but reading that their argument is
>... AI’s compute demand grows at more than twice the rate of Moore’s Law ...
>... By 2030, technology executives will be faced with the challenge of deploying about $500 billion in capital expenditures and finding about $2 trillion in new revenue
but demand is a function of price. AI companies could just stop making dumb meme videos, using a lot of compute, for free.
It's like if a food chain gives away a free donut today and two tomorrow it doesn't automatically mean it will give away 2^365 donuts in a years time and crash the economy. They could always stop the free donuts.
Even if the wanted to, they'd run out of donut mix and even if AI companies want to give away infinite compute they'd run out of energy and chips. Energy supplies for AI are pretty maxed out already. No way those are growing at twice the rate of Moore's law.
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[ 2.4 ms ] story [ 25.4 ms ] threadAs a result, for example xAI now builds a fossil fuel powered data center with a Saudi state-backed firm named Humain.
It will probably end up like the Twitter investment of the Saudis.
The debt securitization could be an issue but one thing that stands out to me is the if GPUs are really being used as the lein or collateral, these are fundamentally depreciating assets and are marked as such even if the depreciation rates are slightly wrong.
Any new tech that renders current build out could dramatically hit this loans of course.
So far at least. But is this supposed bubble too big for that effect to save it? It feels like a lot of predictions are being made based on historical events like the dotcom crash, the '08 recession,etc.. and maybe those predictions are right but things have changed since. retail investment is a completely different game. "mob psychology" is also a different game with the internet being adapted at a greater scale. Even the tech driving the "AI bubble" would be scifi for someone in '08.
Certainly the variables have changed. But has the formula/game also changed?
>I WILL TRY TO EXPLAIN THIS as simply as I can. The build-out of computing power for AI needs about $2 trillion in annual revenue by the end of the decade...
as a source for the it links the Bain article headlined "$2 trillion in new revenue needed..." but reading that their argument is
>... AI’s compute demand grows at more than twice the rate of Moore’s Law ...
>... By 2030, technology executives will be faced with the challenge of deploying about $500 billion in capital expenditures and finding about $2 trillion in new revenue
but demand is a function of price. AI companies could just stop making dumb meme videos, using a lot of compute, for free.
It's like if a food chain gives away a free donut today and two tomorrow it doesn't automatically mean it will give away 2^365 donuts in a years time and crash the economy. They could always stop the free donuts.
Even if the wanted to, they'd run out of donut mix and even if AI companies want to give away infinite compute they'd run out of energy and chips. Energy supplies for AI are pretty maxed out already. No way those are growing at twice the rate of Moore's law.