Ask HN: What Makes AI a Bubble?
What I'm confused about though is what makes current AI evaluations a bubble.
Bubbles usually exists when future speculation outpaces productivity: eventually some realization leads the market to no longer believe in that future speculation, causing devaluation which triggers a mass sell-off.
However, AI companies currently have very high revenues and are growing extremely fast. Their valuation is backed by actual commerce. I can't imagine that there is any room for a bubble, as it is very clear where the market is at, and why demand for AI is so high.
Now, certain specific companies I can imagine losing a lot of valuation, but only contingent on the fact that they serve a middle-man role in the market that improvements in the underlying AI models will solve, which would likely only mean more revenue for the frontier labs, and thus less reason for a bubble.
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[ 2.5 ms ] story [ 63.9 ms ] threadIs it?
This is not discussed publicly and is covered up for by raises, because there is growth and the hope that at some point the economics could work out. Which remains to be seen.
It's a variant on a Ponzi scheme. Investor hope is that at some point someone invents a way to stop losing money.
If at any point investors start to lose faith that this is going to be the case, the bubble pops.
Just because of an invention is useful and world changing doesn’t mean it won’t cause a bubble.
Yet, thanks to our times, at least one major company appears to be thought-bubbling. It appears to hope (if it's not just window-dressing) that fusion will suddenly appear in the next 2 years ... to avoid driving regional electric rates sky high.
This is just like the Dot Com Bubble, where a lot of companies popped up saying they were going to "use the internet" without actually having a plan.
In most sectors, definitely not. My day job is in commercial real estate, and in this business I keep hearing from the C-suite that it's transformative, but they just have to figure out what to do with it. They're literally salivating over the hype, but cannot seem to apply it at all. Despite this going on for years now, they remain absolutely certain that it will allow them to take the business to the next level. This is the very nature of the hype around "AI" - living in the fantasy and completely ignoring the reality. That's why I think this will go down as the largest mass delusion in the history of humanity, created by crossing social internet virality with the ancient human tendency to anthropomorphize anything and everything.
All of that said, I want to be clear that I think LLMs are extremely useful for certain tasks. They just aren't nearly as useful as the hype would have us all believe. They're also about to get exponentially more expensive when investors get tired of deferring their returns, which is another problem alltogether.
2.) the speculative debt - Oracle is (was?) the most buried
In all the companies i have worked for, ai hasn’t been a productivity multiplier
The same thing applies to Chargbee, Chargify, and other such tools. These ready-made solutions have many features, and they are complex. Most companies only need a subset of those features but the ability to customise them. Making a general-purpose tool is very difficult.
The same thing I’ve noticed for Uptimerobot, PagerDuty, and others.
As a result, I suspect SaaS revenue will drop further and further.
Companies are questioning why we pay $x,xxx per month for a SaaS solution when we can roll it out for some token expense, highly customizable? And it's nothing new, Google has its software managing its internal stuff.
If a is not true, the prices will fall to their value. If b is not true, overpriced goods don't move, and the price doesn't blow up as fast as it does.
Yes, they increase productivity, but how much? Is OpenAI really contributing a trillion dollars of value to the world? A thousand billion, a million million. 50 billion months of a $20 subscription. 80 million lifetime subscriptions of $20/month. That much value?