The article asks the 25 trillion dollar question. ‘What is the near term demand for AI?’ And the answer is nobody knows; especially not these companies. I think the bubble is almost inevitable. Everyone is racing to gain market domination as they see it as winner take all, but it just doesn’t appear to be shaking out that way. There are five very competent US based models alone and then I don’t even know how many open weight models. Unless the industry coalesces around 2-3 models soon I don’t think anyone makes any money on this in the next 10 years+.
High end? Not yet. Corporate contracts are getting human only oversight with us. We have tried to compare but found that the signal vs noise generated doesn't compete with our expensive legal department.
ai seems to be generating a K shaped ROI, But symmetrical. Like the rumsfeld quote: you have known knows, unknown knowns, known unknown and unknown unknowns.
If you know your use case and know AI limits, that's known knowns. The rest follows.
They are hoping rather than assuming because if there isn't sufficient demand (sufficient paying demand, not people who wouldn't pay just using it for free because they can), there is no way back for them that isn't an amusingly catastrophic collapse, and they are scaling up as if the demand is a forgone conclusion because it just isn't worth trying to plan for the other option.
the only realistic demand is see is similar to why Azure, digitalocean etc are still breahing. There are incompetent companies that cannot live without certain services, so they'll stay dependent. A lot of companies are doing agentic engineering, and the rat race is even stronger there. You need a product that is better than a vibe-coded app, but you aren't competent enough to get there. These companies are going to die out at some point, and what will be left is the better half.
Even that won't make back the 3 trillion that is needed.
From what I am seeing about 10% of our AI spend has any ROI. You can count 90% loss of $XX but the ROI we get from that 10% is 200%-10000% of our spend.
Getting and retaining customers is 99% of profit which is why sales, marketing, advertising, and creativity is always in high demand. After that, quality.
”China’s bubble already collapsed, leading to a plunge in its AI-tech index of 40 percent” This was news to me, is there any good coverage on what happened?
Shameless self-promotion: https://artificialliabilities.com for a nice story-like AI infra overview. Based of FRED, SEC, and other publicly available data.
The author, Dean Baker an economist at a non-profit policy group, called the housing bubble. Not wealthy, he sold his condo in 2004 and bought a house in 2009.
Yes the AI bubble is real, but the good things is, it is expaning like an unverse which has enourmous posibilities. I could has said that it will burst soon but after LAYA and JEV, we all are going to witness the lots of changes.
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[ 6.1 ms ] story [ 25.4 ms ] threadMy take on "bubble" activity from HN chatter: https://www.alwaysleaveanote.com/hacker-news/bubble-talk/
I have a lawyer friend who's seen a dip in clients reaching out. Turns out, they're having Claude draw up contracts.
High end? Not yet. Corporate contracts are getting human only oversight with us. We have tried to compare but found that the signal vs noise generated doesn't compete with our expensive legal department.
If you know your use case and know AI limits, that's known knowns. The rest follows.
1. Denial: “No way these companies are worth anything. Zero profits.”
2. Anger: “Idiots! This will end like the 1999 dotcom crash!”
3. Bargaining: “Ok maybe if it goes lower I’ll… I’ll buy!”
4. Depression: “It just keeps going up…”
5. Acceptance: “I missed out, it was so obvious, now I’ll just buy in.”
Even that won't make back the 3 trillion that is needed.
Getting and retaining customers is 99% of profit which is why sales, marketing, advertising, and creativity is always in high demand. After that, quality.
https://www.reuters.com/world/china/china-ai-bubble-has-alre...
The actual makers of the actual silicon are taking a bath
https://finance.yahoo.com/markets/stocks/articles/south-kore...
Meanwhile here in the west the money keeps going round and round like some sort of "self sustaining economy"