As a bystander directly immune to the fortunes of AI going up or down, it does feel like there are a lot more people thinking this is inning 9 of the LLM story than there are people thinking it's inning 3. Which makes it tempting to believe it's probably closer to inning 3.
> AI’s insatiable need for debt has so far been matched by investors’ appetite for it, but they may turn nauseous on the belly-busting volumes coming from tech giants.
Headline doesn't really match the facts in the article. The article seems to say "hyperscalers are borrowing an enormous amount and so far people are lending to them. Other people are worried that this will stop".
Has anyone seen a definitive mathematical proof of this? I have seen countless articles and exposes about the hidden debt. These are incredibly sophisticated companies so presumably they wouldn’t let themselves get into a company ending bind. But what are the chances this is actually an MBS type situation where the system is truly overloaded and a few sacrificial lambs are needed?
what happens when you mix world wars, potential food and water shortages, and a rising unrest with the local governments? (edit: and a massive inequality in resource distribution). (edit 2: and a drop in jobs).
Any historical precedent for this all occurring together with technological hype/fast growth?
It completely unclear where this 1.65T is going to come from to pay the bill. Revenue from people buying AI doesn’t even come close to covering it, even with crazy aggressive assumptions about the cashflow that could be generated from that.
The Wall St vs Silicon Valley showdown that’s setting up here looks like it will be quite epic. If last week was any preview, get your popcorn ready.
The people who made money on fiber and railroads were the inheritors after the timeline mismatch bankrupted the original players who did the investment. Even if AI turns out to be everything it promises, you can mistime the investment and lose everything.
Genuine question: these companies had double-digit billions of free cash flow per quarter, about $0.3T a year aggregate, before the AI boom started and they began splurging on CapEx; is the $1.65T number that bad in that context?
Let's assume the extreme worst case scenario where the bubble pops so comprehensively that the entire AI business is written off, without any change to the debt owed, and these companies return to whatever they were doing before i.e. their previous levels of free cash flow. Naively, they could still repay the $1.65T, with interest, in ~6 - 8 years.
They will, of course, not do that, and will instead try to protect their plummeting stocks and get into a series of lawsuits as they try to claw out of their commitments (hey, maybe the circular investments even cancel out... it's a feature, not a bug!) and a lot of smaller companies go under, and some may angle for bailouts. But even then, the damage to the broader economy seems limited, and this debt doesn't seem that extreme?
You also need to remember that a huge portion of the 1.65 trillion isn’t actually debt, but leases the hyperscalers have committed too. This is important because there’s no interest to be paid on leases. A ton of the money is multi billion dollar payments that are owed a decade from now.
Prediction: it will last, debt will be somehow converted to "value", and everyone in US will feel that they are better off now wrt the rest of the planet, making others more and more miserable (wars, their property being taken by US capitalists, etc).
Unless someone stops finally US. And even then I am not sure that it will bring good, because before drowning, they will try to take all the others with them. After all, "it's theirs"..
>[deepmind exec] said today’s enormous AI capital expenditures are not yet supported by current revenue, but argued that betting against the long-term trajectory of the technology would be a mistake. ... he noted that “the revenues from AI don’t sustain the capital expenditures we’re making so far,” while emphasizing that the early foundations of [recursive self improvement] are already emerging.
>Sekhon compared the evolution of AI to earlier industrial breakthroughs, saying, “Steam engines were used to create the next steam engine,” suggesting that today’s AI systems will increasingly be used to develop more capable successors. https://www.citybiz.co/article/883339/google-deepminds-jasje...
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[ 0.24 ms ] story [ 17.5 ms ] threadFor those without accounts, given faded body
Headline doesn't really match the facts in the article. The article seems to say "hyperscalers are borrowing an enormous amount and so far people are lending to them. Other people are worried that this will stop".
Any historical precedent for this all occurring together with technological hype/fast growth?
The Wall St vs Silicon Valley showdown that’s setting up here looks like it will be quite epic. If last week was any preview, get your popcorn ready.
Now if the number was ?? and labeled "undisclosed"... that would present a more serious problem.
Still no credible long term solution to the so-called "UBI" for all and the abundance fantasies and the utopia that was supposedly "promised".
Let's assume the extreme worst case scenario where the bubble pops so comprehensively that the entire AI business is written off, without any change to the debt owed, and these companies return to whatever they were doing before i.e. their previous levels of free cash flow. Naively, they could still repay the $1.65T, with interest, in ~6 - 8 years.
They will, of course, not do that, and will instead try to protect their plummeting stocks and get into a series of lawsuits as they try to claw out of their commitments (hey, maybe the circular investments even cancel out... it's a feature, not a bug!) and a lot of smaller companies go under, and some may angle for bailouts. But even then, the damage to the broader economy seems limited, and this debt doesn't seem that extreme?
Unless someone stops finally US. And even then I am not sure that it will bring good, because before drowning, they will try to take all the others with them. After all, "it's theirs"..
>[deepmind exec] said today’s enormous AI capital expenditures are not yet supported by current revenue, but argued that betting against the long-term trajectory of the technology would be a mistake. ... he noted that “the revenues from AI don’t sustain the capital expenditures we’re making so far,” while emphasizing that the early foundations of [recursive self improvement] are already emerging.
>Sekhon compared the evolution of AI to earlier industrial breakthroughs, saying, “Steam engines were used to create the next steam engine,” suggesting that today’s AI systems will increasingly be used to develop more capable successors. https://www.citybiz.co/article/883339/google-deepminds-jasje...