_______ __ _______
| | |.---.-..----.| |--..-----..----. | | |.-----..--.--.--..-----.
| || _ || __|| < | -__|| _| | || -__|| | | ||__ --|
|___|___||___._||____||__|__||_____||__| |__|____||_____||________||_____|
on Gopher (inofficial)
URI Visit Hacker News on the Web
COMMENT PAGE FOR:
URI How AI conquered the US economy: A visual FAQ
cess11 wrote 5 hours 14 min ago:
On the face of it, it looks positively habsburgian.
Animats wrote 7 hours 8 min ago:
See "Spending on AI data centers is so massive that itâs taken a
bigger chunk of GDP growth than shoppingâand it could crash the
American economy"[1]
The US is having a giant AI boom and a recession in the rest of the
economy.
Historically, the classic example of this is railway mania of the mid
19th century.[2] That started in 1830, with the Liverpool and
Manchester Railway.[3] This was when the industrial revolution got out
of beta. There were earlier railroads, but with dual tracks, stations,
signals, tickets, schedules, and reasonably good steam engines, the
Liverpool and Manchester worked like a real service. It was profitable.
Then lots of others started building and over-building railroads, with
varying degrees of success. See Panic of 1847.
It was really too early for good railroads. Volume production of steel
didn't exist. Early railroads were built with wood and iron, not very
well. Around 1880-1900, everything was rebuilt in steel, and got
bigger, better, and safer.
Consider the early Internet. We had TCP/IP working across the US in the
early 1980s, but it wasn't a big deal commercially for another 10-15
years, it wasn't everywhere until the early 2000s, and it wasn't out of
bubble mode until 2010 or so. [1] [2]
URI [1]: https://fortune.com/2025/08/06/data-center-artificial-intellig...
URI [2]: https://en.wikipedia.org/wiki/Railway_Mania
URI [3]: https://youtu.be/pDEnsraYx3k?t=505
jcgrillo wrote 1 hour 42 min ago:
The really scary thing is all the value in the AI boom is predicated
on the belief that the technology is "early" and that it will improve
over time. We're seeing the opposite. Instead, all the competing
models are basically converging on the same benchmark performance
numbers, as we saw yesterday with the gpt-5 debacle. This suggests
that performance is actually topping out, which makes intuitive sense
if advancements in LLMs are proportional to their training data.
They've already used up all the data. So it very well could be what
we see right now is basically as good as it gets, or at least
approximately so. The market is not ready for that.
scotty79 wrote 7 hours 39 min ago:
Measuring such things in dollars rubs me the wrong way. Is using
inflation adjusted dollar common or do people just compare nominal
values?
throwmeaway222 wrote 9 hours 55 min ago:
AI bills are in the thousands of dollars per day for some small AI
startups, and in the 10-100k range per day for large companies.
So as many people have speculated that OpenAI has no moat - are wrong.
antonvs wrote 5 hours 57 min ago:
A moat is protection from competition. What youâve described is not
a moat.
jjtheblunt wrote 9 hours 40 min ago:
What is the moat you are implying? (affordability?)
knowaveragejoe wrote 10 hours 14 min ago:
> METR also conducted an in-depth study that asked experienced
developers to code with a popular AI assistant. After they finished
their tasks, the developers claimed that using the AI had made them 20
percent more productive. But independent evaluators in the study
actually concluded that using AI did the opposite: it increased task
completion time by about 20 percent.
This somewhat reflects my experience... I can totally see the
back-and-forth dance taking longer in some cases.
But I also think there is more than efficiency being unlocked here.
Sure, a developer might have cranked out a rough MVP in less time, but
with this they're also often continuously updating a README, tests and
other infrastructure as they go.
One could argue about whether that's its own footgun - relying on tests
that don't really test what they should, and let critical bugs through
later.
johnnienaked wrote 13 hours 2 min ago:
All I see is B-U-B-B-L-E
ThinkBeat wrote 13 hours 51 min ago:
The fact that there is massive spending in AI in the tech sector,
isn't that just a -possible- sign of a other bust coming down the road?
We have seen it before, again and again.
jameslk wrote 14 hours 14 min ago:
I found this analysis insightful: [1] > However, this pace is likely
unsustainable going forward. The sharp acceleration in capex is likely
behind us, and the recent growth rate may not be maintained. Any
sustained weakness in final demand will almost certainly affect future
investment, as AI demand ultimately depends on business revenues and
profits, which are tied to nominal GDP. Realized and forecasted capex
remain elevated, while free cash flow and cash and cash equivalents are
declining for hyperscalers.
URI [1]: https://x.com/dampedspring/status/1953070287093731685
maerF0x0 wrote 14 hours 21 min ago:
> âTheyâre generating unprecedented amounts of free cash flow,â
Cembalest told me. âThey make oodles and oodles of money, which is
why they can afford to be pouring hundreds of billions of dollars of
capital spending each year into AI-related R&D and infrastructure.â
IMO this should be a trigger for investors that they have not been
receiving their profits, and instead the profits are being dumped into
CEOs next big bets that will fuel their stockbased compensation gains.
Also to blame is the government's culpability here for creating both
tax incentives and a lack of laws that say profits must be returned as
dividends (they can always be DRIP'd back into the company as new
shares if desired, it's absurd to say its better for investors, when
the alternative actually gives more choice).
jimmydoe wrote 14 hours 28 min ago:
This matches the tech job market: if you are not in top corp or labs,
your hard work is most likely subsidizing the $ 1.5M paycheck for
OpenAI employees.
csours wrote 14 hours 34 min ago:
> Nobody can say for sure whether the AI boom is evidence of the next
Industrial Revolution or the next big bubble. All we know is that
itâs happening.
In hindsight, it will be clear, and future generations (if any exist)
will ask: "Why didn't you understand what was happening at the time"
My answer: Noise. Just because you can find someone who wrote down the
answer at the time, doesn't mean that they really understood the
answer, at least not to the extent that we will understand with
hindsight.
Future history is contingent.
GolfPopper wrote 15 hours 4 min ago:
Remember, the appropriate way to parse use of "the economy" in popular
press is to read it as "rich peoples' yatch money".
krunck wrote 22 hours 0 min ago:
Please stop using stacked bar charts where individual lines(plus a
Total) line would help the poor reader comprehend the data better.
ChrisArchitect wrote 22 hours 24 min ago:
Related:
AI is propping up the US economy
URI [1]: https://news.ycombinator.com/item?id=44802916
GoatInGrey wrote 15 hours 33 min ago:
I'm noticing how that article is myopically discussing equity
valuations rather than actual economic output and worker
productivity.
doyouevensunbro wrote 22 hours 44 min ago:
> because the oligarchs demanded it
There, summed it up for you.
voidhorse wrote 11 hours 23 min ago:
Not sure why you were down voted. It's true and it actually answers
the question in the article title, which the article doesn't even
explore, let alone answer.
biophysboy wrote 22 hours 55 min ago:
>âThe top 100 AI companies on Stripe achieved annualized revenues of
$1 million in a median period of just 11.5 monthsâfour months ahead
of the fastest-growing SaaS companies.â
This chart is extremely sparse and very confusing. Why not just plot a
random sample of firms from both industries?
I'd be curious to see the shape of the annualized revenue distribution
after a fixed time duration for SaaS and AI firms. Then I could judge
whether its fair to filter by the top 100. Maybe AI has a rapid decay
rate at low annualized revenue values but a slower decay rate at higher
values, when compared to SaaS. Considering that AI has higher marginal
costs and thus a larger price of entry, this seems plausible to me. If
this is the case, this chart is cherry picking.
hackable_sand wrote 22 hours 59 min ago:
What about food and housing? Why can't America invest in food and
housing instead?
booleandilemma wrote 51 min ago:
Having food and housing would make the population too comfortable.
They want everyone a little on edge. You don't work, you don't eat.
daedrdev wrote 15 hours 12 min ago:
the US systematically taxes and forbids new housing in many ways as
local voters desire. Setback requirements, 100K+ hookup costs,
stairway standards, density limits, parking minimums and regulations,
community input, allowing rejection of new housing despite it
following all rules, abuse of environmental regulations (which ends
up hurting the environment by blocking density), affordable housing
requirements (a tax on each new housing block to fund affordable
units on the side) all prevent new housing form being built.
GoatInGrey wrote 15 hours 37 min ago:
Because investing in housing means actually changing things. There's
a "Don't just do something, stand there!" strategy of maximizing
comfort and minimizing effort, that must be overcome.
righthand wrote 22 hours 2 min ago:
Is anyone starving in America? Why would there need to be focus on
food production? We have huge food commodities.
vdupras wrote 16 hours 2 min ago:
Let them eat cake, right?
URI [1]: https://www.ers.usda.gov/topics/food-nutrition-assistance/...
margalabargala wrote 22 hours 43 min ago:
America has spent a century investing in food. We invested in food so
hard we now have to pay farmers not to grow things, because otherwise
the price crash would cause problems. Food in America is very cheap.
jimt1234 wrote 7 hours 2 min ago:
> Food in America is very cheap.
And that's a whole different problem. Cheap != inexpensive.
hackable_sand wrote 21 hours 41 min ago:
It's reassuring to be reminded that every child in America must
justify their existence or starve to death.
rank0 wrote 9 hours 32 min ago:
Christâ¦
What does that even mean and what do you want changed?
margalabargala wrote 20 hours 8 min ago:
Okay, that's too far. That's not true at all.
Children in America do not starve to death. There is no famine,
economically manmade or otherwise.
This is America. We will happily allow and encourage your child
to go into arbitrary amounts of debt from a young age to be fed
at school.
bravetraveler wrote 23 hours 1 min ago:
They mention rate of adoption, compared to the internet. Consider the
barriers to entry. Before we all got sick of receiving AOL CDs, the
prospect of 'going online' was incredibly expensive and sometimes
laborious.
More people subscribe to/play with a $20/m service than own/admin
state-of-the-art machines?! Say it ain't so /s
thewebguyd wrote 21 hours 9 min ago:
> More people subscribe to/play with a $20/m service than own/admin
state-of-the-art machines?! Say it ain't so /s
The problem is, $20/m isn't going to be profitable without better
hardware, or more optimized models. Even the $200/month plan isn't
making money for OpenAI. These companies are still in the "sell at a
loss to capture marketshare" stage.
We don't even know if being an "AI Company" is viable in the first
place - just developing models and selling access. Models will become
a commodity, and if hardware costs ever come down, open models will
win.
What happens when OpenAI, Anthropic, etc. can't be profitable without
charging a price that consumers won't/can't afford to pay?
vannevar wrote 23 hours 12 min ago:
>Nobody can say for sure whether the AI boom is evidence of the next
Industrial Revolution or the next big bubble.
Like the Internet boom, it's both. The rosy predictions of the dotcom
era eventually came true. But they did not come true fast enough to
avoid the dotcom bust. And so it will be with AI.
GoatInGrey wrote 15 hours 48 min ago:
My suspicion is that there's a there there, but it doesn't align with
the predictions. This is supported by the tension between AI doom
articles and the leading models experiencing diminishing performance
gains while remaining error-prone. This is to speak nothing of the
apparent LLM convergence limit of a ketamine-addled junior developer.
Which is a boundary the models seem destined to approach
indefinitely without ever breaching.
The "bust" in this scenario would hit the valuations (P/E ratio) of
both the labs and their enterprise customers, and AI businesses
dependant on exponential cost/performance growth curves with the
models. The correction would shake the dummies (poorly capitalized
or scoped businesses) out of the tree, leaving only the viable
business and pricing models still standing.
That's my personal prediction as of writing.
OtherShrezzing wrote 23 hours 17 min ago:
>Without AI, US economic growth would be meager.
The assumption here is that, without AI, none of that capital would
have been deployed anywhere. That intuitively doesn't sound realistic.
The article follows on with:
>In the last two years, about 60 percent of the stock marketâs growth
has come from AI-related companies, such as Microsoft, Nvidia, and
Meta.
Which is a statement that's been broadly true since 2020, long before
ChatGPT started the current boom. We had the Magnificent Seven, and
before that the FAANG group. The US stock market has been tightly
concentrated around a few small groups for a decades now.
>You see it in the business data. According to Stripe, firms that
self-describe as âAI companiesâ are dominating revenue growth on
the platform, and theyâre far surpassing the growth rate of any other
group.
The current Venn Diagram of "startups" and "AI companies" is two mostly
concentric circles. Again, you could have written the following
statement at any time in the last four decades:
> According to [datasource], firms that self-describe as âstartupsâ
are dominating revenue growth on the platform, and theyâre far
surpassing the growth rate of any other group.
johnnyanmac wrote 6 hours 8 min ago:
>The assumption here is that, without AI, none of that capital would
have been deployed anywhere.
With this recessionary behavior, it might not be that far fetched an
assumption. I'm not sure where else it would flow outside of being
hoarded up in assets if there wasn't this big speculation everyone
wants to take advantadge of. Especially when you consider that
there's so much money flowing into AI, but AI is not as of yet
profitable.
AlecSchueler wrote 2 hours 26 min ago:
That's it, it's unusual times and the AI boom could be covering
things up. I personally completely divested from US businesses
since the start of the year but I can understand the allure of
wanting to ride that particular gravy train
golly_ned wrote 9 hours 16 min ago:
Derek Thompson is not well suited to this kind of work. He is much
better suited to his usual lame, predictable, centrist, lukewarm
commentary on tired political and social topics.
johnnienaked wrote 13 hours 0 min ago:
The capital would have, should have maybe, been deployed in stock
buybacks and dividends. Investment already doesn't happen in the US,
and that's an expected thing for a well-developed country with a
trade deficit.
camgunz wrote 15 hours 31 min ago:
I think it's more likely the assumption is you'd expect a far more
diversified market. If we're really in a situation where the
rational, good reasons move is to effectively ignore 98% of
companies, that doesn't say good things about our economy (verging on
some kind of technostate). You get into weird effects like "why
invest in other companies" leading to "why start a company that will
just get ignored" leading to even more consolidation and less
dynamism.
istjohn wrote 11 hours 3 min ago:
But startups are thriving. That doesn't suggest decreasing dynamism
to me. It suggests that there are abundant gains to be had by
exploiting technological progress, and the legacy economy is not
availing itself of these opportunities. A thriving tech startup
sector is surely key to dynamism.
camgunz wrote 4 hours 59 min ago:
This metric has obvious problems, but 120/134 of YC's S25 batch
are AI-based [0]. 90% is, I guess, better than 98%, but woof. So,
depends on what you mean by "thriving", but if diversity factors
in there at all then at least YC is proving you wrong.
[0]: [1] (search for "AI" and it gives 120)
URI [1]: https://www.ycombinator.com/companies?batch=Summer%20202...
BrenBarn wrote 5 hours 55 min ago:
If "thriving" means "moving quickly towards being bought by one
of the big companies" then that's an illusory diversity.
johnnyanmac wrote 6 hours 6 min ago:
AI startups are getting a lot of money. "Thriving" is a stretch
from there unless the acquisition of money itself is the success
bar.
Meanwhile, I hear pretty much any startup not associated with AI
is finding it harder to get funding.
UncleOxidant wrote 8 hours 38 min ago:
> But startups are thriving.
What do you base this statement on? Is there data?
Supermancho wrote 9 hours 1 min ago:
> But startups are thriving
I'm just some guy with an opinion. I worked in startups for 20
years. Startups are called exciting or thriving or good bets
because a tiny few are successful and even fewer are trying to
compete with established companies. Capital is pumped into lots
of little ones regardless of the technology de-jour or market
opportunity. They generally don't last. Statistically, if you
were an AI startup from 6 years ago, you're long gone and you
made out with what you could scrape together on the way out.
Startups are thriving by feeding off dreams of grandeur, with
very few happening upon the right combination of personality,
capability and market enough to last for a decade. Is that
thriving or thrashing? Don't confuse the velocity of gambling
with the volume of opportunity.
cman1444 wrote 9 hours 40 min ago:
I agree, except that it seems dynamism is almost restricted to
digital tech. I wish tech would spread its dynamism a little
better into legacy industries, and give some productivity
gains/disruption to those areas.
bobthepanda wrote 4 hours 8 min ago:
there's been plenty of disruption in traditional industries
like retail, automotive, media, communications, etc.
part of the problem is that the remaining set of industries is
pretty tough to make dynamic using technology simply because
the explosive market size isn't there for various reasons. if
you wanted to disrupt aviation, for example, a plane takes tens
of billions of dollars to bring to market, and an airline
requires outlaying billions in capex on planes.
Supernaut wrote 2 hours 11 min ago:
Such a shame. The passenger aircraft industry could certainly
stand to be shaken up with some of that "move fast and break
things" startup dynamism!
conductr wrote 15 hours 46 min ago:
I think the money is chasing growth in a market that is mostly
mature. Tech is really the only hope in that situation, so that's
where the dollars land.
rsanek wrote 20 hours 6 min ago:
>assumption here is that, without AI, none of that capital would have
been deployed anywhere. That intuitively doesn't sound realistic
For the longest time, capex at FAANG was quite low. These companies
are clearly responding specifically to AI. I don't think it's
realistic to expect that they would raise capex for no reason.
>a statement that's been broadly true since 2020, long before ChatGPT
started the current boom
I guess it depends on your definition of "long before," but the
ChatGPT release is about mid-way between now and 2020.
As for the startup vs. AI company point, have you read Stripe's
whitepaper on this? They go into detail on how it seems like AI
companies are indeed a different breed.
URI [1]: https://stripe.com/en-br/lp/indexingai
trod1234 wrote 19 hours 47 min ago:
The sunsetting of research tax breaks would explain why they threw
everything into this.
They also view labor as a replaceable cost, as most accountant
based companies that no longer innovate act. They forget that if
you don't hire people, and pay people, you don't have any sales
demand and this grows worse as the overall concentration or
intensity of money in few hands grows. Most AI companies are funded
on extreme leverage from banks that are money-printing and this
coincided with 2020 where the deposit requirements were set to 0%
effectively removing fractional banking as a system.
thiago_fm wrote 21 hours 49 min ago:
I agree, in any time in US history there has always been those 5-10
companies leading the economic progress.
This is very common, and this happens in literally every country.
But their CAPEX would be much smaller, as if you look at current
CAPEX from Big Tech, most of it are from NVidia GPUs.
If a Bubble is happening, when it pops, the depreciation applied to
all that NVidia hardware will absolute melt the balance sheet and
earnings of all Cloud companies, or companies building their own Data
centers like Meta and X.ai
rwmj wrote 4 hours 11 min ago:
And NVidia don't even make the GPUs! They're all made on a brave
little island off the coast of China, while 7 huge US companies
shuffle them around and exchange vast amounts of money for them.
onlyrealcuzzo wrote 22 hours 23 min ago:
1. People aren't going to take on risk and deploy capital if they
can't get a return.
2. If people think they can get an abnormally high return, they will
invest more than otherwise.
3. Whatever other money would've got invested would've gone wherever
it could've gotten the highest returns, which is unlikely to have the
same ratio as US AI investments - the big tech companies did share
repurchases for a decade because they didn't have any more R&D to
invest in (according to their shareholders).
So while it's unlikely the US would've had $0 investment if not for
AI, it's probably even less likely we would've had just as much
investment.
sgt101 wrote 4 hours 34 min ago:
A big dynamic in this is that the business models for two of the
biggest players are at stake.
Google is facing a significant danger that its search advertising
business is going to just disappear. If people are using AI to find
stuff or get recommendations then then aren't using google. Why
should a photographer continue to spend $200 a month on ads when
their clients are coming from openAI? Especially when OpenAI is
using the organic search results. Meta is facing the same sort of
issue, if the eyeballs aren't on insta then the ad $$$ go somewhere
else.
So if they have money, and can get money, they will invest it to
protect their businesses - all of it.
MS and VC's are doing the opposite, they are investing with the
idea of taking the attention that Google and Meta currently have,
but they are also following the "I'm scared" signal that Google and
Meta have put in the market.
on_meds wrote 1 hour 9 min ago:
Every major consumer facing AI player (besides Anthropic and
Apple) is incorporating advertisements into their product
currently, or exploring how to, to include OpenAI.
So Iâm not as optimistic that Googleâs business of
advertising is in danger, instead itâs just transforming.
whoknowsidont wrote 11 hours 57 min ago:
>1. People aren't going to take on risk and deploy capital if they
can't get a return.
I'm sorry, what? This has happened all the time, and in increasing
volleys, since 2008.
bayarearefugee wrote 20 hours 50 min ago:
> 1. People aren't going to take on risk and deploy capital if they
can't get a return.
> 2. If people think they can get an abnormally high return, they
will invest more than otherwise.
Sounds like a good argument for wealth taxes to limit this natural
hoarding of wealth absent unreasonably good returns.
johnnyanmac wrote 6 hours 2 min ago:
we 1000% need all kinds of wealth taxes. The money's been hoarded
for decades and I don't think that money is going to the next
generation when the boomers kick the bucket. Inheritance tax,
ultra high income tax, taxes on stocks if possible. The
government wants to defund food stamps and healthcare while
giving the robber barons trillions in tax breaks. Something's
gotta give.
metalliqaz wrote 21 hours 30 min ago:
> 1. People aren't going to take on risk and deploy capital if
they can't get a return.
This doesn't seem to align with the behavior I've observed in
modern VCs. It truly amazes me the kind of money that gets
deployed into silly things that are long shots at best.
disgruntledphd2 wrote 21 hours 28 min ago:
When you think about all of VC being like 1% of a mostly boring
portfolio it makes more sense (from the perspective of the people
putting the money in).
jlarocco wrote 21 hours 34 min ago:
> it's probably even less likely we would've had just as much
investment.
I doubt it. Investors aren't going to just sit on money and let it
lose value to inflation.
On the other hand, you could claim non-AI companies wouldn't start
a new bubble, so there'd be fewer returns to reinvest, and that
might be true, but it's kind of circular.
onlyrealcuzzo wrote 21 hours 2 min ago:
Correct - that's why you'd put it in Treasuries which have a
positive real return for the first time in ~25 years - or, as I
mentioned elsewhere - invest it somewhere else if you see a
better option.
BobbyJo wrote 14 hours 44 min ago:
Which is an even better argument when you look at how yields
have been behaving. AI is sucking the air out of the room.
monocasa wrote 16 hours 3 min ago:
From a certain macro perspective, of no one is going to beat
the Treasury, where is the Treasury going to get that money?
msgodel wrote 5 hours 9 min ago:
From people who want to lend them money? Or do you mean where
is the Treasury going to find production?
bdangubic wrote 11 hours 58 min ago:
theyâll print it of course :)
johnnyanmac wrote 6 hours 4 min ago:
Sadly, this is exactly what the administration unironically
desires. We're arguably in a recession and Trump wants to
speed it up to a depression, ransacking the US and making
off with the money.
jayd16 wrote 21 hours 45 min ago:
Why is it "unlikely" that the alternative is not US investment by
these US companies?
The big US software firms have the cash and they would invest in
whatever the market fad is, and thus, bring it into the US economy.
onlyrealcuzzo wrote 21 hours 1 min ago:
No - traditionally they return it as share buybacks, because they
don't have any good investments.
UncleOxidant wrote 8 hours 35 min ago:
Or, like Apple they just sit on the cash waiting for better
opportunities.
onlyrealcuzzo wrote 1 hour 55 min ago:
Apple had huge share buybacks.
Companies need to have a healthy pile of cash as a percentage
of their expenses.
Apple just has enormous revenues and expenses.
int_19h wrote 6 hours 26 min ago:
It's not just Apple, they all sit on huge piles of cash.
thrance wrote 22 hours 25 min ago:
> > Without AI, US economic growth would be meager.
> The assumption here is that, without AI, none of that capital would
have been deployed anywhere. That intuitively doesn't sound
realistic.
That's the really damning thing about all of this, maybe all this
capital could have been invested into actually growing the economy
instead of fueling this speculation bubble that will burst sooner or
later, bringing along any illusion of growth into its demise.
justonceokay wrote 21 hours 25 min ago:
If the economy in my life has taught me anything, itâs that there
will always be another bubble. The Innovators Dilemma mentions that
bubbles arenât even a bad thing in the sense that useful
technologies are often made during them, itâs just that the
market is messy and lots of people end up invested in the bubble.
Itâs the âthrow spaghetti at the wallâ approach to market
growth. Not too different than evolution, in which most mutations
are useless but all mutations have the potential to be
transformative.
azemetre wrote 10 hours 32 min ago:
I took their comment to mean that we could have given school
children free lunch or implement universal childcare. Like actual
useful things that would unlock tremendous economic value, but
instead I was given the lying machine and told to make it
productive.
ryandrake wrote 22 hours 19 min ago:
Or all that money might have been churning around chasing other
speculative technologies. Or it might have been sitting in US
Treasuries making 5% waiting for something promising. Who knows
what is happening in the parallel alternate universe? Right now, it
feels like everyone is just spamming dollars and hoping that AI
actually becomes a big industry, to justify all of this economic
activity. I'm reminded of Danny DeVito's character's speech in the
movie Other People's Money, after the company's president made an
impassioned speech about why its investors should keep investing:
"Amen. And amen. And amen. You have to forgive me. I'm not familiar
with the local custom. Where I come from, you always say "Amen"
after you hear a prayer. Because that's what you just heard - a
prayer."
At this point, everyone is just praying that AI ends up a net
positive, rather than bursting and plunging the world into a 5+
year recession.
pfannkuchen wrote 12 hours 50 min ago:
> Or it might have been sitting in US Treasuries making 5%
Nit: if this happened, I believe the treasury yield would
plummet.
biophysboy wrote 22 hours 36 min ago:
Its also not fair to compare AI firms with others using growth
because AI is a novel technology. Why would there be explosive growth
in rideshare apps when its a mature niche with established
incumbents?
dragontamer wrote 22 hours 25 min ago:
I think the explosive growth that people want is in manufacturing.
Ex: US screws, bolts, rivets, dies, pcbs, assembly and such.
The dollars are being diverted elsewhere.
Intel a chip maker who can directly serve the AI boom, has failed
to deploy its 2nm or 1.8nm fabs and instead written them off. The
next generation fabs are failing. So even as AI gets a lot of
dollars it doesn't seem to be going to the correct places.
trhway wrote 6 hours 22 min ago:
>I think the explosive growth that people want is in
manufacturing. Ex: US screws, bolts, rivets, dies, pcbs, assembly
and such.
And the [only] way to get that explosive growth is robotics. That
is the Post-Post-Industrial Revolution that we're stepping into -
it is when manufacturing stops being separate from the
knowledge-based economy and instead becomes a part of it aa a
form of an output, specifically a physical-world form of output
from the knowledge-based economy.
>The dollars are being diverted elsewhere.
The dollars are going in exactly right direction - AI. After LLM
the companies like NVDA and Google are making next steps -
foundational world models and robotics.
>Intel a chip maker who can directly serve the AI boom
Intel is a managers' gravy train - just like for example Sun
Microsystems was 20 years ago. Forget about it.
>Intel ... has failed to deploy its 2nm or 1.8nm fabs and instead
written them off. So even as AI gets a lot of dollars it doesn't
seem to be going to the correct places.
The dollars go to NVDA instead of Intel. Seems exactly to correct
place.
biophysboy wrote 21 hours 48 min ago:
They're not going to get it. The political economy of East Asia
is simply better suited for advanced manufacturing. The US wants
the manufacturing of East Asia without its politics. Sometimes
for good reason - being an export economy has its downsides!
geodel wrote 21 hours 0 min ago:
Indeed. Just now our kid's therapist told us they are moving
out from current school district because some chemical plant is
coming up near by. More than pollution it is the attitude that
any kind physical product factory is blight on Disney-fied
suburbia and its white collar folks.
dragontamer wrote 21 hours 40 min ago:
Taiwan isn't some backwater island making low skilled items.
USA lost mass manufacturing (screws and rivets and zippers),
but now we are losing cream of the crop world class
manufacturing (Intel vs TSMC).
If we cannot manufacture then we likely cannot win the next
war. That's the politics at play. The last major war between
industrialized nations shows that technology and manufacturing
was the key to success. Now I don't think USA has to
manufacture all by itself, but it needs a reasonable plan to
get every critical component in our supply chain.
In WW2, that pretty much all came down to ball bearings. The
future is hard to predict but maybe it's chips next time.
Maybe we give up on the cheapest of screws or nails. But we
need to hold onto elite status on some item.
dangus wrote 16 hours 5 min ago:
I think this is a gross oversimplification and an incorrect
assessment of the USâ economic manufacturing capabilities.
The US completely controls critical steps of the chip making
process as well as the production of the intellectual
property needed to produce competitive chips, and the
lithography machines are controlled by a close ally that
would abide by US sanctions.
The actual war planes and ships and missiles are of course
still built in the USA. Modern warfare with stuff that China
makes like drones and batteries only gets you so far. They
canât make a commercially competitive aviation jet engine
without US and Western European suppliers.
And the US/NAFTA has a ton of existing manufacturing
capability in a lot of the âscrews and rivetsâ
categories. For example, there are lots of automotive parts
and assembly companies in the US. The industry isnât as big
as it used to be but itâs still significant. The US is the
largest manufacturing exporter besides China.
biophysboy wrote 20 hours 39 min ago:
> Taiwan isn't some backwater island making low skilled
items.
Definitely not! Wasn't trying to imply this.
> If we cannot manufacture then we likely cannot win the next
war.
If you think a war is imminent (a big claim!), then our only
chance is to partner with specialized allies that set up shop
here (e.g. Taiwan, Japan, South Korea). Trying to resurrect
Intel's vertically integrated business model to compete with
TSMC's contractor model is a mistake, IMO.
dsign wrote 23 hours 17 min ago:
I don't think AI is having much impact on the bits of the economy that
have to do with labor and consumption. Folk who are getting displaced
by AI are, for now, probably being re-hired to fix AI mess-ups later.
But if, or when AI gets a little better, then we will start to see a
much more pronounced impact. The thing competent AIs will do is to
super-charge the rate at which profits don't go to labor nor to social
security, and this time they will have a legit reason: "you really
didn't use any humans to pave the roads that my autonomous trucks use.
Why should I pay for medical expenses for the humans, and generally for
the well-being of their pesky flesh? You want to shutdown our digital
CEO? You first need to break through our lines of (digital) lawyers and
ChatGPT-dependent bought politicians."
tehjoker wrote 16 hours 0 min ago:
Well, if you don't use humans, then you're using machine labor that
will drive prices down to at-cost in a competitive environment and
strip profits in the end. Profits come from underpaying labor.
andsoitis wrote 23 hours 20 min ago:
> Artificial intelligence has a few simple ingredients: computer chips,
racks of servers in data centers, huge amounts of electricity, and
networking and cooling systems that keep everything running without
overheating.
What about the software? What about the data? What about the models?
freetonik wrote 23 hours 38 min ago:
Interesting that the profits of those bottom 490 companies of S&P 500
do not rise with the help of AI technology, which is supposedly sold to
them at a reduced rate as AI vendors are bleeding money.
onlyrealcuzzo wrote 22 hours 16 min ago:
We'll never know what would've happened without AI.
1. There profits could otherwise be down.
2. The plan might be to invest a bunch up front in severance and AI
Integration that is supposed to pay off in the future.
3. In the future that may or may not happen, and it'll be hard to
tell, because it may pay off at the same time an otherwise recession
is hitting, which smoothes it out.
It's almost as if it's not that simple.
roncesvalles wrote 23 hours 4 min ago:
Other than NVIDIA, the profits of the S&P 10 haven't risen either.
It's just that the market is pricing them very optimistically.
IMO this is an extremely scary situation in the stock market. The AI
bubble burst is going to be more painful than the Dotcom bubble
burst. Note that an "AI bubble burst" doesn't necessitate a belief
that AI is "useless" -- the Internet wasn't useless and the Dotcom
burst still happened. The market can crash when it froths up too
early even though the optimistic hypotheses driving the froth
actually do come true eventually.
jayd16 wrote 21 hours 27 min ago:
I'm curious to see the bubble burst. I personally don't think it
will be anything like the dotcom era.
The benefits have just not been that wide ranging to the average
person. Maybe I'm wrong but, I don't AI hype as a cornerstone of
US jobs, so there's no jobs to suddenly dry up. The big companies
are still flush with cash on hand, aren't they?
If/when the fad dies I'd think it would die with a wimper.
kevinventullo wrote 7 hours 33 min ago:
The benefits have just not been that wide ranging to the average
person
I think you might be underestimating how many non-technical
people are using LLMâs daily.
felixfurtak wrote 10 hours 49 min ago:
It's definitely more like the railways of the 1880s. Lots of
companies, with more-or-less the same product, competing for a
highly extrapolated theoretical demand. Out of all that
excitement comes an eventual crash and rationalization. Railways
today are much more boring, regulated and utilitarian affairs.
Many are state owned and still often loss-making.
aDyslecticCrow wrote 19 hours 46 min ago:
I think AI has great potential to change as much as the internet.
But i dont consider LLMs to be the right type to do that.
Self driving cars and intelligent robotics is the real goldmine.
But we still don't seem to have the right architecture or
methods.
I say that because self driving cars are entirely stagnant
despite the boom AI interest and resources.
Personally i think we need a major breakthrough in reinforcement
learning, computer vision (which are still mostly stuck at feed
forward CNNs) and few shot learning. The tranformer is a major
leap, but its not enough on its own.
jayd16 wrote 13 hours 39 min ago:
I'm not saying things couldn't change. I'm only looking at the
landscape as it is now and imagining what would happen if the
funding stops because of lack of consumer interest.
In general I do not agree that the economy is overleveraged on
AI just like it is not overleveraged on cyrpto currency. If
the money dries up, I don't expect economy wide layoffs.
aDyslecticCrow wrote 1 hour 27 min ago:
If money dries up, a bunch of startups living on speculative
assets will trip, and the s&p will fall in evaluation. But
that doesn't actually affect the core economy much.
I think we're in a massive AI bubble, but its a bubble that
doesn't affect normal consumers much, so it's not too
dangerous or concerning.
As for my prediction of what is needed for truly useful AI
automation... i suspect the current bubble will pop before we
solve it.
andsoitis wrote 21 hours 51 min ago:
> Other than NVIDIA, the profits of the S&P 10 haven't risen
either.
Thatâs not correct. Did you mean something else?
Workaccount2 wrote 22 hours 45 min ago:
We are still in the "land grab" phase where companies are offering
generous AI plans to capture users.
Once users get hooked on AI and it becomes an indispensable
companion for doing whatever, these companies will start charging
the true cost of using these models.
It would not be surprising if the $20 plans of today are actually
just introductory rate $70 plans.
esafak wrote 22 hours 28 min ago:
I'd be surprised because (free) open source are continually
closing the gap, exerting downward pressure on the price.
bravesoul2 wrote 8 hours 5 min ago:
Meaning the real value is in infra. Running local is super
expensive as you need to provision 100% and there are high
table stakes. So people will tend to use a cloud offering. If
the model doesnt differentiate then its how you mix the models,
the capacity and uptime, the "GPT wrappers" etc.
pegasus wrote 21 hours 28 min ago:
They're not really free, someone still has to pay for the
compute cost.
cg5280 wrote 21 hours 37 min ago:
Hopefully we see enough efficiency gains over time that this is
true. The models I can run on my (expensive) local hardware are
pretty terrible compared to the free models provided by Big
LLM. I would hate to be chained to hardware I can't afford
forever.
aDyslecticCrow wrote 19 hours 42 min ago:
The breakthrough of diffusion for tolken generation bumped
down compute alot. But there are no local open sources
versions yet.
Distillation for specialisation can also raise the capacity
of the local models if we need it for specific things.
So its chugging along nicely.
Workaccount2 wrote 22 hours 20 min ago:
I don't think it will be much of an issue for large providers,
anymore than open source software has ever been a concern for
Microsoft. The AI market is the entirety of the population, not
just the small sliver who knows what "VRAM" means and is
willing to spend thousands on hardware.
jayd16 wrote 21 hours 33 min ago:
> anymore than open source software has ever been a concern
for Microsoft.
So a big concern then? (Although not a death sentence)
jononor wrote 19 hours 44 min ago:
The modern Microsoft with Azure, Office360, etc is not much
threatened by open source software. Especially with Azure,
open source is a fantastic compliment which they would like
the world to produce as much of as possible. The same with
AI models. They would look at charge for AI hosting and
services, at premium due to already being integrated in
businesses. They are going to bundle it with all their
existing moneymakers, and then just jack up the price. No
sale needed, just a bump in the invoices that are flowing
anyway.
jayd16 wrote 13 hours 9 min ago:
The phrasing was "has ever been" but even in the modern
era, you're only looking at their winners.
Shouldn't something like Kubernetes or Android's flavor
of open source be on the radar? Seems like there are
plenty of large players that might turn their 4th place
closed source API into a first place open ecosystem.
const_cast wrote 16 hours 26 min ago:
They're definitely very threatened by open source - a lot
of software infrastructure these days is built off of
open source software. In the 2000s, it wasn't. It was
Microsoft, MSS, COM, Windows server, etc all the way
down. Microsoft has basically been earned alive by open
source software, it's just hard to tell because they were
so huge that, even taken down a few pegs, they're still
big.
Even today, Azure and AWS are not really cheaper or
better - for most situations, they're more expensive, and
less flexible than what can be done with OS
infrastructure. For companies who are successful making
software, Azure is more of a kneecap and a regret. Many
switch away from cloud, despite that process being
deliberately painful - a shocking mirror of how it was
switching away from Microsoft infrastructure of the past.
esafak wrote 22 hours 18 min ago:
You can get open source models hosted for cheap too; e.g.,
through OpenRouter, AWS Bedrock, etc. You do not have to run
it yourself.
snitzr wrote 23 hours 41 min ago:
Billion-dollar Clippy.
PessimalDecimal wrote 23 hours 17 min ago:
Trillions, right?
hnhg wrote 23 hours 45 min ago:
I found this the most interesting part of the whole essay - "the ten
largest companies in the S&P 500 have so dominated net income growth in
the last six years that itâs becoming more useful to think about an
S&P 10 vs an S&P 490" - which then took me here: [1] Can anyone shed
light on what is going on between these two groups. I wasn't convinced
by the rest of the argument in the article, and I would like something
that didn't just rely on "AI" as an explanation.
URI [1]: https://insight-public.sgmarkets.com/quant-motion-pictures/out...
atleastoptimal wrote 12 hours 1 min ago:
People have more room to buy more digital goods. There's far less
room to buy more physical goods. People aren't going to double their
stomach size to eat more McDonalds, but there's no limit to how much
more data, software or AI tokens a person could require.
k-i-r-t-h-i wrote 19 hours 19 min ago:
power law explains the distribution, but the distribution is getting
more extreme over the years, likely due to (market structure, macro
conditions, tech economics, etc)
whitej125 wrote 22 hours 30 min ago:
That which might be of additional interest... look at how the top 10
of the S&P 500 has changed over the decades[1].
At any point in time the world thinks that those top 10 are
unstoppable. In the 90's and early 00's... GE was unstoppable and
the executive world was filled with acolytes of Jack Welch. Yet here
we are.
Five years ago I think a lot of us saw Apple and Google and Microsoft
as unstoppable. But 5-10 years from now I bet you we'll see new
logos in the top 10. NVDA is already there. Is Apple going to
continue dominance or go the way of Sony? Is the business model of
the internet changing such that Google can't react quick enough.
Will OpenAI go public (or any foundational model player).
I don't know what the future will be but I'm pretty sure it will be
different.
URI [1]: https://www.visualcapitalist.com/ranked-the-largest-sp-500-c...
onlyrealcuzzo wrote 22 hours 20 min ago:
There was always some subset of the S&P that mattered way more than
the rest, just like the S&P matters way more than the Russel.
Typically, you probably need to go down to the S&P 25 rather than
the S&P 10.
foolswisdom wrote 22 hours 36 min ago:
The primary goal of big companies is (/has become) maintaining market
dominance, but this doesn't always translate to a well run business
with great profits, it depends on internal and external factors.
Maybe profits should have actually gone down due to tarrifs and
uncertainty but the big companies have kept profit stable.
andsoitis wrote 21 hours 56 min ago:
> Maybe profits should have actually gone down due to tarrifs and
uncertainty but the big companies have kept profit stable.
If youâre referencing Trumpâs tariffs, they have only come into
effect now, so the economic effects will be felt in the months and
years ahead.
nowayno583 wrote 22 hours 41 min ago:
It is a very complex phenomenon, with no single driving force. The
usual culprit is uncertainty, which itself can have a ton of root
causes (say, tariffs changing every few weeks, or higher inflation
due to government subsidies).
In more uncertain scenarios small companies can't take risks as well
as big companies. The last 2 years have seen AI, which is a large
risk these big companies invested in, pay off. But due to uncertainty
smallish companies couldn't capitalize.
But that's only one possible explanation!
automatic6131 wrote 22 hours 37 min ago:
> The last 2 years have seen AI, which is a large risk these big
companies invested in, pay off
LOL. It's paying off right now, because There Is No Alternative.
But at some point, the companies and investors are going to want to
make back these hundreds of billions. And the only people making
money are Nvidia, and sort-of Microsoft through selling more Azure.
Once it becomes clear that there's no trillion dollar industry in
cheating-at-homework-for-schoolkids, and nvidia stop selling more
in year X than X-1, very quickly will people realize that the last
2 years have been a massive bubble.
nowayno583 wrote 22 hours 32 min ago:
That's a very out of the money view! If you are right you could
make some very good money!
automatic6131 wrote 21 hours 42 min ago:
No as you and I both know - I can't. Because it's a
qualitative view, and not a quantitative one. I would need to
know _when_, quite precisely, I will turn out to be right.
And I don't know, because I have about 60 minutes a week to
think about this, and also good quantitative market analysis is
really hard.
So whilst it may sound like a good reposte to go "wow, I bet
you make so much money shorting!" knowing that I don't and
can't, it's also facile. Because I don't mind if I'm right in
12, 24 or 60 months. Fwiw, I thought I'd be right in 12 months,
12 months ago. Oops. Good thing I didn't attempt to "make
money" in an endeavor where the upside is 100% of your wager,
and the downside theoretically infinite.
nowayno583 wrote 20 hours 39 min ago:
Your reasoning is correct if you think about negotiating
options, or going all in on a trade, but its not quite right
for stocks. The borrowing rates for MSFT and NVDA - even for
a retail investor - are less than 1% yearly. So if your view
is right you could hold a short on them for years. The market
cap for these companies has already incorporated a large
capex investment for AI DCs. As long as you use a reasonable
rebalancing strategy, and you are right that their current
investment in AI will not pay off, you will make money.
Mind you, this is a view that exists - a few large hedge
funds and sell side firms currently hold negative
positions/views on these companies.
However, the fact of the matter is, fewer people are willing
to take that bet than the opposite view. So it is reasonable
to state that view with care.
You might be right at the end of the day, but it is very much
not obvious that this bet has not (or will not) pay off.
kevinventullo wrote 7 hours 45 min ago:
Wonât you get margin called if the stock goes up in the
meantime?
moi2388 wrote 23 hours 7 min ago:
They are 40% of the S&P 500, so it makes sense that they are primary
drivers of its growth.
They are also all tech companies, which had a really amazing run
during Covid.
They also resemble companies with growth potential, whereas other
companies such as P&G or Walmart mightâve saturated their market
already
andsoitis wrote 21 hours 53 min ago:
> They are also all tech companies, which had a really amazing run
during Covid.
Only 8 out of the 10 are. Berkshire and JP Morgan are not. It is
also arguable whether Tesla is a tech company or whether it is a
car company.
ahmeneeroe-v2 wrote 21 hours 40 min ago:
Berkshire holds ~$60B+ of Apple and is also exposed to AI through
its power-utility arm, Berkshire Hathaway Energy.
andsoitis wrote 21 hours 29 min ago:
> Berkshire holds ~$60B+ of Apple and is also exposed to AI
through its power-utility arm, Berkshire Hathaway Energy.
Apple is 22% of BRKâs holdings. The next biggest of their
investments are Amex, BoA, Coke, Chevron.
They are not a tech company.
ahmeneeroe-v2 wrote 18 hours 20 min ago:
BRK has significant AI exposure through both Apple and
Berkshire Hathaway Energy. So while they are not a tech
company, they have more exposure to the AI boom than
basically any other non-tech company.
rogerkirkness wrote 23 hours 15 min ago:
Winner takes most is now true at the global economy level.
stackbutterflow wrote 23 hours 57 min ago:
Predicting the future is always hard.
But the only thing I've seen in my life that most resembles what is
happening with AI, the hype, its usefulness beyond the hype, vapid
projects, solid projects, etc, is the rise of the internet.
Based on this I would say we're in the 1999-2000 era. If it's true what
does it mean for the future?
api wrote 22 hours 48 min ago:
I too lived through the dot.com bubble and AI feels identical in so
many ways.
AI is real just like the net was real, but the current environment is
very bubbly and will probably crash.
bwfan123 wrote 11 hours 23 min ago:
I lived through dot-com, and there are so many parallels. Large
amount of money is chasing a dream which wont materialize in the
near term.
Recent deja-vus are articles like this:
"The 20-Somethings Are Swarming San Franciscoâs A.I. Boom" and
"Tech Billboards Are All Over San Francisco. Can You Decode Them?"
If I recall correctly, after the 2000 bust, folks fled silicon
valley abandoning their leased BMWs at the SFO airport. 101 had no
traffic jams. I wonder if that will repeat this time around.
thewebguyd wrote 21 hours 21 min ago:
It definitely feels identical. We had companies that never had any
hope of being profitable (or even doing anything related to the
early internet to begin with), but put .com in your name and
suddenly you are flooded with hype and cash.
Same thing now with AI. The capital is going to dry up eventually,
no one is profitable right now and its questionable whether or not
they can be at a price consumers would be willing or able to pay.
Models are going to become a commodity, just being an "AI Company"
isn't a moat and yet every one of the big names are being invested
in as if they are going to capture the entire market, or if there
even will be a market in the first place.
Investors are going to get nervous, eventually, and start expecting
a return, just like .com. Once everyone realizes AGI isn't going to
happen, and realize you aren't going to meet the expected return
running a $200/month chatbot, it'll be game over.
keiferski wrote 23 hours 17 min ago:
Well, thereâs a fundamental difference: the Internet blew up
because it enabled people to connect with each other more easily:
culturally, economically, politically.
AI is more-or-less replacing people, not connecting them. In many
cases this is economically valuable, but in others I think it just
pushes the human connection into another venue. I wouldnât be
surprised if in-person meetup groups really make a comeback, for
example.
So if a prediction about AI involves it replacing human cultural
activities (say, the idea that YouTube will just be replaced by AI
videos and real people will be left out of a job), then Iâm quite
bearish. People will find other ways to connect with each other
instead.
LinuxAmbulance wrote 21 hours 16 min ago:
Businesses are overly optimistic about AI replacing people.
For very simple jobs, like working in a call center? Sure.
But the vast majority of all jobs aren't ones that AI can replace.
Anything that requires any amount of context sensitive human
decision making, for example.
There's no way that AI can deliver on the hype we have now, and
it's going to crash. The only question is how hard - a whimper or a
bang?
prewett wrote 11 hours 19 min ago:
As a customer, nothing infurates me like an AI call center. If I
have to call, it's because I have an account problem that
requires me to speak with someone to resolve it.
I moved states and Xfinity was billing me for the month after I
cancelled. I called, pressed 5 (or whatever) for billing. "It
looks like your cable modem is disconnected. Power-cycling your
modem resolves most problems. Would you like to do that now?" No.
"Most problems can be resolved by power-cycling your modem, would
you like to try that now?" No, my problem is about billing, and
my modem is off-line because I CANCELLED MY SERVICE! They asked
three more times (for a total of five) before I could progress.
For reasons I have now forgot I had to call back several times,
going through the whole thing again.
There is a name for someone who pays no attention to what you
say, and none of them are complimentary. AI is, fundamentally, an
inhuman jerk.
(It turned out that they can only get their database to update
once a month, or something, and despite the fact that nobody
could help me, they issued me a refund in a month when their
database finally updated. The local people wanted to help, but
could not because my new state is in a different region and the
regions cannot access each other.)
SrslyJosh wrote 13 hours 24 min ago:
> For very simple jobs, like working in a call center? Sure.
Klarna would like a word.
> Anything that requires any amount of context sensitive human
decision making, for example.
That describes a significant percentage of call center work.
dfedbeef wrote 22 hours 35 min ago:
There's also the difference that the internet worked.
justonceokay wrote 21 hours 15 min ago:
In a classically disruptive way, the internet provided an
existing service (information exchange) in a way that was in many
ways far less pleasant than existing channels (newspapers,
libraries, phone). Remember that the early Internet was mostly
text, very low resolution, un credentialed, flaky, expensive, and
too technical for most people.
The only reason that we can have such nice things today like
retina display screens and live video and secure payment
processing is because the original Internet provided enough value
without these things.
In my first and maybe only ever comment on this website defending
AI, I do believe that in 30 or 40 years we might see this first
wave of generative AI in a similar way to the early Internet.
baggachipz wrote 23 hours 40 min ago:
Classic repeat of the Gartner Hype Cycle. This bubble pop will dwarf
the dot-bomb era. There's also no guarantee that the "slope of
enlightenment" phase will amount to much beyond coding assistants.
GenAI in its current form will never be reliable enough to do
so-called "Agentic" tasks in everyday lives.
This bubble also seems to combine the worst of the two huge previous
bubbles; the hype of the dot-com bubble plus the housing bubble in
the way of massive data center buildout using massive debt and
security bundling.
bspammer wrote 3 hours 19 min ago:
Last week I tested out the agent mode of chatGPT by asking it to
plan a week's meals, then add all the ingredients to an online
shopping basket for me. It worked pretty much flawlessly, the only
problem was it ran out of time before it could add the last few
ingredients, which doesn't exactly seem like an unsolvable problem.
Traubenfuchs wrote 21 hours 39 min ago:
I fully agree that there will be a pop, there must be. Current
evaluations and investments are based on monumentally society
destroying assumptions. But with every disappointing, incremental
and non evolutionary model generation the chance increases that the
world at large realizes that those assumptions are wrong.
What should I do with my ETF? Sell now, wait for the inevitable
crash? Be all modern long term investment style: "just keep
invested what you don't need in the next 10 years bro"?
This really keeps me up at night.
Dr4kn wrote 13 hours 6 min ago:
If you're sure enough that there is going to be a big crash I
would move the money into gold, bonds or other more secure
assets. After a crash you can invest again.
I don't know why buffet sold a lot of shares over the last few
years to sit on a huge pile of cash, but I could guess.
The Job market looks like shit, people have no money to buy stuff
and credit card debt is skyrocketing. When people can't buy stuff
it is bad for the economy. Even if AI is revolutionary then we
would need people spending money to keep the economy going, and
with more AI taking jobs that wouldn't happen.
If AI doesn't work out the market is going to crash and the only
companies keeping the market growing are going to wipe out all
that growth.
No matter how I look at it I don't see a thriving market.
ben_w wrote 23 hours 17 min ago:
Mm. Partial agree, partial disagree.
These things, as they are right now, are essentially at the
performance level of an intern or recent graduate in approximately
all academic topics (but not necessarily practical topics), that
can run on high-end consumer hardware. The learning curves suggest
to me limited opportunities for further quality improvements within
the foreseeable future⦠though "foreseeable future" here means
"18 months".
I definitely agree it's a bubble. Many of these companies are
priced with the assumption that they get most of the market; they
obviously can't all get most of the market, and because these
models are accessible to the upper end of consumer hardware,
there's a reasonable chance none of them will be able to capture
any of the market because open models will be zero cost and the
inference hardware is something you had anyway so it's all running
locally.
Other than that, to the extent that I agree with you that:
> GenAI in its current form will never be reliable enough to do
so-called "Agentic" tasks in everyday lives
I do so only in that not everyone wants (or would even benefit
from) a book-smart-no-practical-experience intern, and not all
economic tasks are such that book-smarts count for much anyway.
This set of AI advancements didn't suddenly cause all cars
manufacturers to suddenly agree that this was the one weird trick
holding back level 5 self driving, for example.
But for those of us who can make use of them, these models are
already useful (and, like all power tools, dangerous when used
incautiously) beyond merely being coding assistants.
brookst wrote 23 hours 23 min ago:
The Internet in its 1999 form was never going to be fast enough or
secure enough to support commerce, banking, or business operations.
falcor84 wrote 22 hours 53 min ago:
Exactly, it took an evolution, but there was no discontinuity. At
some point, things evolved enough for people like Tim O'Reilly to
say that we know have "Web 2.0", but it was all just small steps
by people like those of us here on this thread, gradually making
things better and more reliable.
thecupisblue wrote 23 hours 30 min ago:
> GenAI in its current form will never be reliable enough to do
so-called "Agentic" tasks in everyday lives
No, but GenAI in it's current form is insanely useful and is
already shifting the productivity gears into a higher level. Even
without 100% reliable "agentic" task execution and AGI, this is
already some next level stuff, especially for non-technical people.
RSHEPP wrote 9 hours 11 min ago:
I would love to figure out why I don't see this at my company.
People still shipping at the same rate as before, customers
bringing up more and more bugs, problems that require planning
for scale are not being thought about (more bugs), zero tests
still being written. All the code I am seeing generated is like
one shot garbage, with no context around our system or the
codebase as a whole.
lm28469 wrote 22 hours 49 min ago:
> especially for non-technical people.
The people who use llms to write reports for other people who use
llms to read said reports ? It may alleviate a few pain points
but it generates an insane amount of useless noise
thecupisblue wrote 22 hours 33 min ago:
Considering they were already creating useless noise, they can
create it faster now.
But once you get out of the tech circles and bullshit jobs,
there is a lot of quality usage, as much as there is shit
usage. I've met everyone from lawyers and doctors to architects
and accountants who are using some form of GenAI actively in
their work.
Yes, it makes mistakes, yes, it hallucinates, but it gets a lot
of fluff work out of the way, letting people deal with actual
problems.
bluefirebrand wrote 11 hours 13 min ago:
> I've met everyone from lawyers and doctors to architects
and accountants who are using some form of GenAI actively in
their work
I can't wait for the first massive medical mistakes from LLM
reliance
ducktective wrote 23 hours 25 min ago:
Very simple question:
How do people trust the output of LLMs? In the fields I know
about, sometimes the answers are impressive, sometimes totally
wrong (hallucinations). When the answer is correct, I always feel
like I could have simply googled the issue and some variation of
the answer lies deep in some pages of some forum or stack
exchange or reddit.
However, in the fields I'm not familiar with, I'm clueless how
much I can trust the answer.
simianwords wrote 21 hours 55 min ago:
Your internal verifier model in your head is actually good
enough and not random. It knows how the world works and
subconsciously applies a lot of sniff tests it has learned over
the years.
Sure a lot of answers from llms may be inaccurate - but you
mostly identify them as such because your ability to verify
(using various heuristics) is good too.
Do you learn from asking people advice? Do you learn from
reading comments on Reddit? You still do without trusting them
fully because you have sniff tests.
bluefirebrand wrote 16 hours 4 min ago:
> You still do without trusting them fully because you have
sniff tests
LLMs produce way too much noise and way too inconsistent
quality for a sniff test to be terribly valuable in my
opinion
simianwords wrote 6 hours 37 min ago:
that's where i disagree. the noise is not that high at all
and is vastly exaggerated. of course if you go too deep
into niche topics you will experience this.
geraldwhen wrote 12 hours 14 min ago:
The problem is that content is dead. You canât find
answers any more on Google because every website is ai
generated and littered with ads.
YouTube videos arenât much better. Minutes of fluff are
added to hit a juicy 10 minute mark so you can see more
ads.
The internet is a dead place.
bluefirebrand wrote 11 hours 13 min ago:
I have zero belief that AI won't follow this trend as
well
thecupisblue wrote 22 hours 30 min ago:
If you are a subject matter expert, as is expected to be of the
person working on the task, then you will recognise the issue.
Otherwise, common sense, quick google search or let another LLM
evaluate it.
svara wrote 22 hours 52 min ago:
This is really strange to me...
Of course you don't trust the answer.
That doesn't mean you can't work with it.
One of the key use cases for me other than coding is as a much
better search engine.
You can ask a really detailed and specific question that would
be really hard to Google, and o3 or whatever high end model
will know a lot about exactly this question.
It's up to you as a thinking human to decide what to do with
that. You can use that as a starting point for in depth
literature research, think through the arguments it makes from
first principles, follow it up with Google searches for key
terms it surfaces...
There's a whole class of searches I would never have done on
Google because they would have taken half a day to do properly
that you can do in fifteen minutes like this.
dfedbeef wrote 22 hours 34 min ago:
Such as
svara wrote 22 hours 28 min ago:
I went through my ChatGPT history to pick a few examples
that I'm both comfortable sharing and that illustrate the
use-case well:
> There are some classic supply chain challenges such as
the bullwhip effect. How come modern supply chains seem so
resilient? Such effects don't really seem to occur anymore,
at least not in big volume products.
> When the US used nuclear weapons against Japan, did Japan
know what it was? That is, did they understood the
possibility in principle of a weapon based on a nuclear
chain reaction?
> As of July 2025, equities have shown a remarkable
resilience since the great financial crisis. Even COVID was
only a temporary issue in equity prices. What are the main
macroeconomic reasons behind this strength of equities.
> If I have two consecutive legs of my air trip booked on
separate tickets, but it's the same airline (also answer
this for same alliance), will they allow me to check my
baggage to the final destination across the two tickets?
> what would be the primary naics code for the business
with website at [redacted]
I probably wouldn't have bothered to search any of these on
Google because it would just have been too tedious.
With the airline one, for example, the goal is to get a
number of relevant links directly to various airline's
official regulations, which o3 did successfully (along with
some IATA regulations).
For something like the first or second, the goal is to
surface the names of the relevant people / theories
involved, so that you know where to dig if you wish.
dsign wrote 22 hours 59 min ago:
This is true.
But I've seen some harnesses (i.e., whatever Gemini Pro uses)
do impressive things. The way I model it is like this: an LLM,
like a person, has a chance to produce wrong output. A quorum
of people and some experiments/study usually arrives to a "less
wrong" answer. The same can be done with an LLM, and to an
extent, is being done by things like Gemini Pro and o3 and
their agentic "eyes" and "arms". As the price of hardware and
compute goes down (if it does, which is a big "if"), harnesses
will become better by being able to deploy more computation,
even if the LLM models themselves remain at their current
level.
Here's an example: there is a certain kind of work we haven't
quite yet figured how to have LLMs do: creating frameworks and
sticking to them, e.g. creating and structuring a codebase in a
consistent way. But, in theory, if one could have 10 instances
of an LLM "discuss" if a function in code conforms to an agreed
convention, well, that would solve that problem.
There are also avenues of improvement that open with more
computation. Namely, today we use "one-shot" models... you
train them, then you use them many times. But the structure,
the weights of the model aren't being retrained on the output
of their actions. Doing that in a per-model-instance basis is
also a matter of having sufficient computation at some
affordable price. Doing that in a per-model basis is practical
already today, the only limitation are legal terms, NDAs, and
regulation.
I say all of this objectively. I don't like where this is
going; I think this is going to take us to a wild world where
most things are gonna be way tougher for us humans. But I don't
want to (be forced to) enter that world wearing rosy lenses.
threetonesun wrote 23 hours 7 min ago:
There's a few cases:
1. For coding, and the reason coders are so excited about GenAI
is it can often be 90% right, but it's doing all of the writing
and researching for me. If I can reduce how much I need to
actually type/write to more reviewing/editing, that's a huge
improvement day to day. And the other 10% can be covered by
tests or adding human code to verify correctness.
2. There are cases where 90% right is better than the current
state. Go look at Amazon product descriptions, especially
things sold from Asia in the United States. They're probably
closer to 50% or 70% right. An LLM being "less wrong" is
actually an improvement, and while you might argue a product
description should simply be correct, the market already
disagrees with you.
3. For something like a medical question, the magic is really
just taking plain language questions and giving concise
results. As you said, you can find this in Google / other
search engines, but they dropped the ball so badly on summaries
and aggregating content in favor of serving ads that people
immediately saw the value of AI chat interfaces. Should you
trust what it tells you? Absolutely not! But in terms of "give
me a concise answer to the question as I asked it" it is a step
above traditional searches. Is the information wrong? Maybe!
But I'd argue that if you wanted to ask your doctor about
something that quick LLM response might be better than what
you'd find on Internet forums.
jcranmer wrote 23 hours 12 min ago:
One of the most amusing things to me is the amount of AI
testimonials that basically go "once I help the AI over the
things I know that it struggles with, when it gets to the
things I don't know, wow, it's amazing at how much it knows and
can do!" It's not so much Gell-Mann amnesia as it is Gell-Mann
whiplash.
likium wrote 23 hours 12 min ago:
We place plenty of trust with strangers to do their jobs to
keep society going. Whatâs their error rate?
It all ends up with the track record, perception and experience
of the LLMs. Kinda like self-driving cars.
rwmj wrote 22 hours 33 min ago:
When it really matters, professionals have insurance that
pays out when they screw up.
likium wrote 19 hours 6 min ago:
I do believe that's where we're heading, people holding
jobs to hold accountability for AI.
morpheos137 wrote 22 hours 42 min ago:
Strangers have an economic incentive to perform. AI does not.
What AI program is currently able to modify its behavior
autonomously to increase its own profitablity? Most if not
all current public models are simply chat bots trained on old
data scraped off the web. Wow we have created an economy
based on cultivated Wikipedia and Reddit content from the
2010s linked together by bots that can make grammatical
sentences and cogent sounding paragraphs. Isn't that great? I
don't know, about 10 years ago before google broke itself, I
could find information on any topic easily and judge its
truth using my grounded human intelligence better than any AI
today.
For one thing AI can not even count. Ask google's AI to draw
a woman wearing a straw hat. More often than not the woman is
wearing a well drawn hat while holding another in her hand.
Why? Frequently she has three arms. Why? Tesla self driving
vision can't differentiate between the sky and a light
colored tractor trailer turning across traffic resulting in a
fatality in Florida.
For something to be intelligent it needs to be able to think
and evaluate the correctness of its thinking correctly. Not
just regurgitate old web scrapings.
It is pathetic realy.
Show me one application where black box LLM ai is generating
a profit that an effectively trained human or rules based
system couldn't do better.
Even if AI is able to replace a human in some tasks this is
not a good thing for a consumption based economy with an
already low labor force participation rate.
During the first industrial revolution human labor was scarce
so machines could economically replace and augnent labor and
raise standards of living. In the present time labor is not
scarce so automation is a solution in search of a problem and
a problem itself if it increasingly leads to unemployment
without universal bssic income to support consumption. If
your economy produces too much with nobody to buy it then
economic contraction follows. Already young people today
struggle to buy a house. Instead of investing in chat bots
maybe our economy should be employing more people in building
trades and production occupations where they can earn an
income to support consumption including of durable items like
a house or a car. Instead because of the fomo and hype about
AI investors are looking for greater returns by directing
money toward scifi fantasy and when that doesn't materialize
an economic contraction will result.
likium wrote 18 hours 25 min ago:
My point is humans make mistakes too, and we trust them,
not because we inspect everything they say or do, but from
how society is set up.
I'm not sure how up to date you are but most AIs with tool
calling can do math. Image generation hasn't been
generating weird stuff since last year. Waymo sees >82%
fewer injuries/crashes than human drivers[1].
RL _is_ modifying its behavior to increase its own
profitability, and companies training these models will
optimize for revenue when the wallet runs dry.
I do feel the bit about being economically replaced. As a
frontend-focused dev, nowadays LLMs can run circles around
me. I'm uncertain where we go, but I would hate for people
to have to do menial jobs just to make a living.
[1]
URI [1]: https://www.theverge.com/news/658952/waymo-injury-...
bluefirebrand wrote 16 hours 2 min ago:
> My point is humans make mistakes too, and we trust
them,
We trust them because they are intrinsically and
extrinsically motivated not to mess up
AI has no motivation
keiferski wrote 23 hours 16 min ago:
I get around this by not valuing the AI for its output, but for
its process.
Treat it like a brilliant but clumsy assistant that does tasks
for you without complaint â but whose work needs to be double
checked.
baxtr wrote 23 hours 46 min ago:
"It is difficult to make predictions, especially about the future" -
Yogi Berra (?)
But letâs assume we can for a moment.
If weâre living in a 1999 moment, then we might be on a Gartner
Hype Cycle like curve. And I assume weâre on the first peak.
Which means that the "trough of disillusionment" will follow.
This is a phase in Hype Cycle, following the initial peak of inflated
expectations, where interest in a technology wanes as it fails to
deliver on early promises.
amunozo wrote 23 hours 57 min ago:
This is going to end badly, I am afraid.
paulnpace wrote 1 hour 9 min ago:
Everywhere I use "A.I.", I am forced to use "A.I.", and the thing I
am forced to use it for has been made worse, as a result of the
"A.I."
For those comparing the "A.I." bubble to the .com bubble, they are
missing the point that even a mostly normie user such as myself,
logging on with my 14.4 kbps modem I instantly had something that was
new and useful. With "A.I.", I haven't found anything, at least for
myself, that is useful.
m_ke wrote 23 hours 50 min ago:
Could all pop today if GPT5 doesnât benchmark hack hard on some new
made up task.
falcor84 wrote 22 hours 47 min ago:
I don't see how it would "all pop" - same as with the internet
bubble, even if the massive valuations disappear, it seems clear to
me that the technology is already massively disruptive and will
continue growing its impact on the economy even if we never reach
AGI.
m_ke wrote 22 hours 19 min ago:
Exactly like the internet bubble. I've been working in Deep
Learning since 2014 and am very bullish on the technology but the
trillions of dollars required for the next round of scaling will
not be there if GPT-5 is not on the exponential growth curve that
sama has been painting for the last few years.
Just like the dot com bubble we'll need to wash out a ton of
"unicorn" companies selling $1s for $0.50 before we see the long
term gains.
falcor84 wrote 15 hours 11 min ago:
> Exactly like the internet bubble.
So is this just about a bit of investor money lost? Because the
internet obviously didn't decline at all after 2000, and even
the investors who lost a lot but stayed in the game likely
recouped their money relatively quickly. As I see it, the
lesson from the dot-com bust is that we should stay in the
game.
And as for GPT-5 being on the exponential growth curve -
according to METR, it's well above it:
URI [1]: https://metr.org/blog/2025-03-19-measuring-ai-ability-...
0xdde wrote 15 hours 1 min ago:
I wouldn't say "well above" when the curve falls well within
the error bars. I wonder how different the plot would look if
they reported the median as their point estimate rather than
mean.
mewpmewp2 wrote 23 hours 46 min ago:
I don't expect GPT-5 to be anything special, it seems OpenAI hasn't
been able to keep its lead, but even current level of LLMs to me
justifies the market valuations. Of course I might eat my words
saying that OpenAI is behind, but we'll see.
apwell23 wrote 23 hours 42 min ago:
> I don't expect GPT-5 to be anything special
because ?
Workaccount2 wrote 22 hours 38 min ago:
Well word on the street is that the OSS models released this
week were Meta-Style benchmaxxed and their real world
performance is incredibly underwhelming.
input_sh wrote 23 hours 20 min ago:
Because everything past GPT 3.5 has been pretty unremarkable?
Doubt anyone in the world would be able to tell a difference in
a blind test between 4.0, 4o, 4.5 and 4.1.
falcor84 wrote 22 hours 32 min ago:
I would absolutely take you on a blind test between 4.0 and
4.5 - the improvement is significant.
And while I do want your money, we can just look at LMArena
which does blind testing to arrive at an ELO-based score and
shows 4.0 to have a score of 1318 while 4.5 has a 1438 - it's
over twice likely to be judged better on an arbitrary prompt,
and the difference is more significant on coding and
reasoning tasks.
apwell23 wrote 22 hours 50 min ago:
> Doubt anyone in the world would be able to tell a
difference in a blind test between 4.0, 4o, 4.5 and 4.1.
But this isn't 4.6 . its 5.
I can tell difference between 3 and 4.
dwater wrote 22 hours 28 min ago:
That's a very Spinal Tap argument for why it will be more
than just an incremental improvement.
croes wrote 1 day ago:
I see hardware and AI companiesâ revenues rise.
Shouldnât the customersâ revenue also rise if AI fulfills its
productivity promises?
Seems like the only ones getting rich in this gold rush are the shovel
sellers. Business as usual.
sofixa wrote 23 hours 22 min ago:
> Shouldnât the customersâ revenue also rise if AI fulfills its
productivity promises
Not necessarily, see the Jevons paradox.
croes wrote 20 hours 11 min ago:
Jevron is about higher resource consumption and costs but the
output and therefore the revenue should rise too.
Maybe not the profit but at least the revenue.
metalliqaz wrote 20 hours 48 min ago:
Applying the Jevons paradox to this scenario should still result in
revenues going up, assuming the employee labor being optimized adds
value to the company. (they would add more)
thecupisblue wrote 23 hours 29 min ago:
The biggest problem is the inability of corporate middle management
to actually leverage GenAI.
mewpmewp2 wrote 23 hours 47 min ago:
If it's automation it could also reduce costs of the customers. But
that is a very complex question. It could be that there isn't enough
competition in AI and so the customers are getting only marginal
gains while AI company gets the most. It could also be that for
customers the revenue / profits will be delayed as implementation
will take time, and it could be upfront investment.
DIR <- back to front page