The entire
AmericanGlobal Economy.Happens every half decade. In my day it was outsourcing. It came and went. This will come and go. It’s just how society is.
AI hype is papering over the bullshit economy that exists underneath it all. Only a handful of companies make up most of the gains in the past few years of the stock market. If you take that away the market has been pretty flat. Which reflects the reality for most people.
And that other pillar at the bottom next to it? All the blue and white collar workers who are being forced into employment oblivion by the AI hype.
Is not about hype anymore.
Some day it will collapse though. Better make precautions now that we still have access to financial info
I’ve been working for a company that has been burning money for over 10 years, it never became profitable, and its potential is way less disruptive than AI. No problem with funds, and it’s still burning money today.
Even if AI is just hype (I doubt it) the potential is so high that investors will throw money in for decades even with no return.
Yeah but AI is burning so much that there literally won’t be any VC money by 2027. Like, at all.
When we say “burning money” just keep in mind that money is not coal: you only transfer it to someone else. People are making money with AI right now, just not AI companies.
Burning money in this context does not mean that the money disappears, but that the thing you get for your money is worthless, but you pretend it isn’t. Here, it’s GPUs.
The problem is that how it should really work is that people make a product, they sell that product for money, and since the product they sold is worth as much as the money paid for it, that value is now twice in the economy, once in the shape of cash and once in the shape of the product. This is how economic growth should work.
Now you could say that if someone paid that much for that product, it should be worth that much. But if it’s just you and your friend passing it back and forth, that would feel fraudulent, as it isn’t worth as much to most people. All the AI money and growth, which is a significant portion of the US GDP growth, is money that’s passed between like 7 companies, in a circular way.
And the main valuable product in the whole AI boom is not even AI, but GPUs, as in that’s the only thing people actually pay for. GPUs have a lifetime of months to years at most, even if the demand for them does not crash.
This wave of AI gave virtually anyone a chance to build products for a very low cost and a decent quality that was out of reach even for small teams years ago. If you think that it’s all about selling GPUs you’re missing the point.
and a decent quality
The AI GPU is the only product that actually makes money, as in a positive value chain that is not subsidized by VC money and is able to exist without being subsidized by VC money?
The point is, almost all of the AI growth and all of the profits have been AI GPUs. If I’m missing the point everyone else seems to as well, and when all your customers keep missing the point of your products, your business is not long for this world.
My point is, which product, built by AI or built on AI is going to earn a trillion to pull OpenAI out of the hole and make AI keep existing after 2027?
If I’m missing the point everyone else seems to as well, and when all your customers keep missing the point of your products, your business is not long for this world.
Whatsapp wasn’t profitable while it spread worldwide with little to no monetization. It killed the SMS, was bought for billions by Facebook (that wasn’t profitable either in the beginnings), and now it’s everywhere. There are lots of products following this path and AI is just going to be the biggest one in history, so far.
AI is becoming ubiquitous, it’s being integrated in our way of working, it’s creating new professional figures and new possibilities, and it will kill a lot of stuff in the process. It’s simply false that everyone misses the point.
My point is, which product, built by AI or built on AI is going to earn a trillion to pull OpenAI out of the hole and make AI keep existing after 2027?
It’s going to be a new industrial revolution, so the answer is more or less everything. There is that famous quote from the 70s when someone wondered who would want a computer at home. This is the same story and you will have AI at home at some point. Actually, you may be using one occasionally without even knowing.
Sooner we give it a kick, the better.
Oh, how I wish it were true AI was this thin stick that would bring the whole building down if it fails.
Can you explain? I fail to see how the American economy is dependent on AI-hype. AI-hype is here, yes, but if it ceases to exist tomorrow, nothing would change on the big scale.
Companies like Nividea, who are turning huge profits right now because of demand from AI, are the main bright spot in the stock market right now.
OpenAI, with just 3000 employees, is “worth” $300-$500 billion right now, while losing $5 billion a year and is still without profitability even on the horizon. It’s hard to say if they’ll ever figure out how to monetize it and how much it will be worth at that point.
These are big big numbers and if the AI hype died overnight, so would a lot of the stock market.
Also look at all the mass-firings in the tech industry. Many of them are argued with AI being able to replace the workers, even though this hasn’t been proven. Even non-tech companies argue that way. AI is supposed to increase efficiency and thus you need less people to do the work.
The dot-com bubble at least also came with mass-enployment. I wonder if the burst of the AI-bubble will result in the companies having to re-employ many of the workers they fired…
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I fear small to medium sized companies who fall for this will not be able to afford to rehire and they will go under. Leaving only these big monopolies left.
It’s based on a report from Deutsche Bank finical analysts that said that the enormous spending on “AI” is the only reason the US economy isn’t in recession already.
As it was seen in previous crisises (dot-com bubble being the perfect somewhat recent example) - after hype hits its peak - reality of diminishing returns kicks in, and and then it’s up to human nature to start panic, and that will just wreck valuation of companies along the board.
Economy ain’t gonna cease existing, but it will absolutely hurt, when massive amounts of money will just instantly vaporize.
“We just need beans and rice as an essential part of – ah, who am I kidding? – entirety of our diet, but we’re not going to have that either.”
