IMO the Silicon Valley startups are the miners, and companies like Nvidia, Anthropic, and OpenAI are the shovel sellers. And from that perspective there aren’t that many shovel sellers.
Goes further up the pike than that. The phrase is “in a gold rush, sell picks and shovels”. The real shovel seller is NVIDIA, with their graphics chips.
Really, this is just an extension of the graphics chip boom crypto started. A lot of “mining” server farms transitioned smoothly into renting server time for AI training. It’s always been the same bubble: overproduction of graphics cards.
I get your point, and mostly agree, but the companies developing closed models are sometimes selling data center services to the real miners - the SV startups that are building products with AI, who are burning a ton of money on tokens. The data centers are making a profit, and will mostly be fine when the bubble pops. So Nvidia is clearly a shovel seller, and SV startups are clearly miners, but the analogy starts to break down when you look at Google, MS, etc.
Almost all billboards in the Silicon Valley area are for AI and related services, it really does look like selling shovels to shovel sellers.
A look at San Francisco billboards (“past month” plus “anytime“):
IMO the Silicon Valley startups are the miners, and companies like Nvidia, Anthropic, and OpenAI are the shovel sellers. And from that perspective there aren’t that many shovel sellers.
Goes further up the pike than that. The phrase is “in a gold rush, sell picks and shovels”. The real shovel seller is NVIDIA, with their graphics chips.
Really, this is just an extension of the graphics chip boom crypto started. A lot of “mining” server farms transitioned smoothly into renting server time for AI training. It’s always been the same bubble: overproduction of graphics cards.
Ed Zitron has a recent post showing that NVIDIA is the only company making money in the AI gold rush.
I get your point, and mostly agree, but the companies developing closed models are sometimes selling data center services to the real miners - the SV startups that are building products with AI, who are burning a ton of money on tokens. The data centers are making a profit, and will mostly be fine when the bubble pops. So Nvidia is clearly a shovel seller, and SV startups are clearly miners, but the analogy starts to break down when you look at Google, MS, etc.