There is no AI bubble. The housing bubble was about artificially inflated housing assets.
People have been calling Bitcoin a bubble since it was introduced. Has it popped? No. Has it reached the popularity and usability crypto shills said it would? Also no.
AI on the other hand has the potential to put literally millions of individuals out of work. At a minimum, it is already augmenting the value of highly-skilled intellectual workers. This is the final capitalism cheat code. A worker who does not sleep or take time off.
There will be layoffs and there will be bankruptcies. Yes. But AI is never going to be rolled back. We are never going to see a pre-AI world ever again, just like Bitcoin never really went away.
Being a bubble does not mean there is no value in the thing, only that investment is outpacing the intrinsic value of the thing which is inherently unsustainable and will cause a collapse at some point. This also does not imply that the collapse will lead to a future value of 0.
I mean, at this point we are arguing semantics and speculating on future events. My opinion is that there's no bubble. Yours is that there is a bubble. That's fine, we will see probably sooner rather than later (I expect the bubble / no bubble scenario to materialise within the next 10 years, probably even the next 3).
Bitcoin has had the fortune of being one of the settlement methods for sanctions evasion. Its price has almost certainly profited from the Ukraine war.
Renewed interest by the Trump clan with Lutnick's Cantor & Fitzgerald handling Tether collateral in Nayib Bukele's paradise wasn't easy to predict either.
Neither was the recent selloff. It would be hilarious if it was for a slush fund for Venezuelan rebels or army generals (bribing the military was the method of choice in Syria before the fall of Assad).
I am aware of using crypto for money laundering, sanctions evasions and even buying drugs online. I wonder what would have happened without Bitcoin. There would never have been a Silk Road, and ransomware would have had to use vouchers and so, right? Everything would be so different.
crime finds a way. any means of semi anonymous and/or non recourse value storage and exchange will suit. iTunes/play store/steam prepaid cards and accounts, money orders, western union, etc.
Agree with you it would be different, crypto is global, most of the accessible alternative methods are localized to varying degrees.
But the days when every HN submission was about some blockchain thing did end -- and hopefully that'll happen for AI too. I'm sick of reading about it at this point, but it sure is most news stories (at the outlet's I'm usually interested in)
Bitcoin/crypto doesn't have earnings reports, but many crypto-adjacent companies have crashed down to earth. It would have been worse but regulation, or sometimes lack thereof, stopped them from going public so the bleeding was limited.
I would consider a "popping" event to be a dramatic one that sends unemployment to record highs, and regular people are panicking, and losing their savings or mortgages.
The Bitcoin bubble, if anything, deflated. But I'd still disagree with this characterisation because the market capitalisation of Bitcoin only seems to be going up.
Going by the logic of supply and demand, as more and more Bitcoin is mined, the price should drop because there's more availability. But what I've observed is the value has been climbing over the past few years, and remained relatively stable.
In any case, it's hard to argue that more people are using Bitcoin and crypto now compared to 5 years ago. Sure, NFTs ended up fizzling out, but, to be honest, they were a stupid idea from the beginning, anyway.
There is an AI bubble just like there was a dotcom bubble; the fact that it is a real technology with real uses we with world changing long-term impacts does not mean that the recent investment hype will not soon be recognized as excessively exuberant given the actual payoffs to investors and the timelines on which they will be realized.
(And putting masses of people out of work and and thereby radically destabilizing capitalist societies, to the extent it is a payoff, is a payoff with a bomb attached.)
The dotcom bubble was a bunch of Silicon Valley types buying fancy domain names and getting showered in money before they even released anything remotely useful.
AI companies are releasing useful things right this second, even if they still require human oversight, they are also able to significantly accelerate many tasks.
> The dotcom bubble was a bunch of Silicon Valley types buying fancy domain names and getting showered in money before they even released anything remotely useful.
The AI bubble involves a lot of that, too.
> AI companies are releasing useful things right this second, even if they still require human oversight, they are also able to significantly accelerate many tasks.
So were the Googles and other leading firms in the dotcom bubble era, and if you said the dotcom bubble wasn’t a bubble because of that, you’d obviously have been wrong.
I feel like this bubble actually has two bubbles happening:
1. The infra build out bubble: this is mostly the hypescalers and Nvidia.
2. The AI company valuation bubble: this includes the hyperscalers, pure-play AI companies like OpenAI and Anthropic, and the swarm of startups that are either vaporware or just wrappers on top of the same set of APIs.
There will probably be a pop in (2), especially the random startups that got millions in VC funding just because they have a ".ai" in their domain name. This is also why the OpenAI and Anthropic are getting into the infra game by trying to own their own datacenters, that may be the only moat they have.
However, when people talk about trillions, it's mostly (1) that they are thinking of. Given the acceleration of demand that is being reported, I think (1) will not really pop, maybe just deflate a bit when (2) pops.
OK, that is interesting. Separating infra from AI valuation. I can see what you mean though because stock prices are volatile and unpredictable but a datacenter will remain in place even if its owner goes bankrupt.
However, I think the AI datacenter craze is definitely going to experience a shift. GPU chips get obsolete really fast, especially now that we are moving into specialised neural chips. All those datacenters with thousands of GPUs will be outcompeted by datacenters with 1/4th the power demand and 1/10th the physical footprint due to improved efficiency within a few years. And if indeed the valuation collapses and investors pull out of these companies, where are these datacenters supposed to go? Would you but a datacenter chock full of obsolete chips?
Right, the obsolence rate of GPUs is one of the primary drivers of the depreciation shenanigans aspect of the bubble.
However, I've come across a number of articles that paint a very different picture. E.g. this one is from someone in the GPU farm industry and is clearly going to be biased, but by the same token seems to be more knowledgeable. They claim that the demand is so high that even 9-year old generations still get booked like hot cakes: https://www.whitefiber.com/blog/understanding-gpu-lifecycle
> They claim that the demand is so high that even 9-year old generations still get booked like hot cakes
What does this prove? Demand is inflated in a bubble. If the AI company valuation bubble pops, demand for obsolete GPUs will evaporate.
The article you're linking here doesn't say what percentage of those 9-year-old GPUs already failed, nor does it say when they were first deployed, so it's hard to draw conclusions. In fact their math doesn't seem to consider failure at all, which is highly suspicious.
In another subthread, you pointed to the top comment here about a 5-year MTBF as supposedly contradicting the original article's thesis about depreciation. 5 years is obviously less than the 9 years here, so clearly something doesn't add up. (Besides, a 5-year MTBF is rather poor to begin with, and there isn't normally a correlation between depreciation and MTBF. So this is not a smoking gun which contradicts anything in Tim Bray's original article.)
Is it? The dot-com fiber bubble for instance was famous for laying far more fiber than would be needed for the next decade even as the immediate organic demand was tiny.
In this case however, each and every hyperscaler is bemoaning / low-key boasting that they have been capacity constrained for the past multiple quarters.
The other data point is the climbing rate of AI adoption as reported by non-AI affiliated sources, which also lines up with what AI companies report, like:
That article is a little crazy. Not only are 54% of Americans using AI, that is 10 percentage points over last year... and usage at work may even be boosting national-level metrics!
> In fact their math doesn't seem to consider failure at all, which is highly suspicious.
That's a good point! If I had to guess, that may be because Burry et al don't mention failure rates either, and seem to assume a ~2 year obsolescence based on releases of new generations of GPUs.
As such, everybody is responding to those claims. The article I linked was making the point that even 9-year old generations are still in high demand, which also explains the 5 years vs 9 years difference -- two entirely different generations and models, H100 vs M4000.
And while MTBF is not directly related to depreciation, it's Bray who brings up failure rates in a discussion about depreciation. This is one reason I think he's just riffing off what he's heard rather than speaking from deep industry knowledge.
I've been trying to find any discussion that mentions concrete failure rates without luck. Which makes sense, since they're probably heavily-NDA'd numbers.
Yes, demand is absolutely inflated in a bubble. We're talking about GPUs, so look at hardware sales for the comparison, not utility infrastructure. Sun Microsystems' revenue during and after the dotcom bubble, for example. Or Cisco's, for a less extreme but still informative case.
> it's Bray who brings up failure rates in a discussion about depreciation
Yes, I understood his point to be that depreciation schedules for GPUs are overly optimistic (too long) while their MTBF is unusually low. Implying what is on the books as assets may be inflated compared to previous normal practices in tech.
In any case, at this point I agree with the other commenter who said you're just trying to confirm your existing opinion, so not really much sense in continuing this discussion.
> AI on the other hand has the potential to put literally millions of individuals out of work. At a minimum, it is already augmenting the value of highly-skilled intellectual
This has been true since, say, 1955.
> This is the final capitalism cheat code. A worker who does not sleep or take time off.
That’s the hope that is driving the current AI Bubble. It has neither ever been true nor will be true with the current state of the art in AI. This realization is what is deflating the bubble.
Even if all that were true, where is the path to profitability for OpenAI, and all the rest? If they can't pivot to making a profit, then they are going to pop, and their investors will lose all their money. That's the AI bubble... investors losing all their money.
The technology will remain, of course, just like we still have railways, and houses.
That is a valid and interesting discussion point. I do concede that OpenAI will probably not survive in the long term. Google and Microsoft on the other hand have dozens of independent verticals and revenue sources. Google can afford to be a loss leader with Gemini AI, and when every competitor goes out of business, they will jack up prices and enshittify a tool everyone depends on. Like what happened with YouTube once Google Video, DailyMotion, Vimeo, and the other sites essentially stopped being relevant.
But, and this is key, AI is not going away for as long as the potential to replace human labour remains there.
People have been calling Bitcoin a bubble since it was introduced. Has it popped? No. Has it reached the popularity and usability crypto shills said it would? Also no.
AI on the other hand has the potential to put literally millions of individuals out of work. At a minimum, it is already augmenting the value of highly-skilled intellectual workers. This is the final capitalism cheat code. A worker who does not sleep or take time off.
There will be layoffs and there will be bankruptcies. Yes. But AI is never going to be rolled back. We are never going to see a pre-AI world ever again, just like Bitcoin never really went away.