Given how much capital has already been committed to infrastructure development I find it very unlikely that even a Black Monday style market correction will do much to alter the medium and long term outlook for ai development and investment.
Too many people talk about a bubble almost wish-casting that such a thing will make this all go away. It’s probably safest to assume your political enemies won’t be hoisted on their own petard anytime soon.
> Given how much capital has already been committed to infrastructure development I find it very unlikely that even a Black Monday style market correction will do much to alter the medium and long term outlook for ai development and investment.
So let's bet on sunken cost fallacy? That didn't work out during the dotcom era.
When people talk about the bubble is mostly about ending the LLM hype, not making everything associated just disappear. The infrastructure, ideas and developments will stay and probably end up being a lot more useful without the noisy hype surrounding it right now.
The problem is it will create a broader economic problem in the markets.
The top 10 holdings for VTI, the "easy button" investment option. Are: NVIDIA, Microsoft, Apple, Amazon, Facebook, Broadcom, Google, Tesla, Berkshire Hathaway. They represent a third of US market value, and 60% of them are heavily hooked into AI. A panic will be a decimation for NVIDIA, and that splash zone will be broad.
I mean, every year or so there's a new NVIDIA GPU, making last years models obsolete and GPUs from 2 generations back essentially landfill. I don't think there's another large-scale investment that decays at this rate.
The infrastructure being there might also be a problem.
- If there's no breakthrough, and we're only going to make incremental gains, then its wasteful
- If there's a breakthrough, it might turn out a new AI architecture needs either lot less compute, or a different kind of it
> I mean, every year or so there's a new NVIDIA GPU, making last years models obsolete and GPUs from 2 generations back essentially landfill. I don't think there's another large-scale investment that decays at this rate.
Ampere generation A6000’s are still selling used for close to MSRP on eBay. I bought an A4500, used it for a year and then sold it for MORE than I bought it for.
I’ve never seen computer hardware appreciate in value like it is now, even if new cards are still significant upgrades.
Clearly, a lot of people very desperately want AI tech to fail and disappear. And if there is such a strong demand for "tell me that AI tech will fail", then there will be hacks willing to supply.
> Given how much capital has already been committed to infrastructure development
Here’s the stupid thing about that infrastructure: This isn’t railroads. This isn’t skyscrapers. This isn’t underseas fiber optic. These are, at the end of the day, data center GPUs that can and will start failing en-masse on normal hardware timelines.
When that happens, they will all need to be replaced, at whatever rate NVIDIAs selling at - or can sell at, if there’s any geopolitical incidents. If there aren’t enough customers, capacity shrinks, and the remaining customers must foot the bill for the new system and the previous round of investment, causing a death loop wherever there isn’t profitable use feeding into the system.
A clearer comparison: It’s like if airlines had to replace their entire fleet every 3-4 years while selling $20 tickets to anywhere; and the growth metrics look incredible when everyone’s flying at that rate. So much so, that investors paid for the first fleet round calling it “infrastructure.” Meanwhile the amount of ticket sales keeps growing when everyone finds amazing use cases and new business models from the $20 tickets. Surely, this can only get better from here, and justifies even more fleet investment.
Even if AGI never happens, the existing models are already incredibly useful. I’ve switched to OpenAI Plus plan and almost never use Google search anymore. I pay $10/mo for GitHub Copilot for coding. So search and coding use cases are already seeing big improvements. But this same thing needs to happen to pretty much every product. So I think in the worst case they can just divert all of the training resources to just inference and be just fine. Sure the insane valuation multiples will drop if that happens and they will be valued as any other SaaS business.
NVidia’s PE is below 60 and they have 100% year over year revenue growth. A bubble is typically based on future earnings potential Nvidia is a money printing growth creating machine.
I mean a bursting bubble is what? A C-Suite pulling the valve shut or a company going under? It seems like the bubble has burst already then when Zuckerberg and Altman started decrying it earlier in the week. Now we just wait for all the smaller companies to either fold. For the larger companies the bubble will probably deflate slowly rather than burst.
There are no market indicators if the actual burst is at the whim of a human. Being that Meta can probably bleed for a while before seeing real losses after a burst. All they have to do is be the first one to stop growing while the bubble deflates.
A traditional bubble burst is when there is a major sector-wide selloff of an overinflated asset. When there is a race to not be one of the suckers left holding the bag.
The funny thing about bubbles is that they are impossible to predict. My sense is that they always go on longer than is at all rational. (Assuming this is a bubble, who knows.)
I’m still waiting for the crypto “bubble” to burst. Seems like we are years overdue ;)
A good sign the bubble is not actually bursting: a mainstream news publication predicting it. [1]
It's still 1994. We won't be near the top until the Telegraph publishes an article overly exuberant about AI and saying AGI is here.
If every idiot commenting on Reddit, HN, X, and mainstream news publications is pessimistic and constantly shouting "bubble!," then definitionally, we have not reached irrational exuberance and we're not even remotely near the top.
Pretty telling how you dismiss what appears to be the majority opinion online just because it’s a majority opinion. Irrational exuberance is defined in the context of market participants. On a wealth adjusted basis commenters online make up a very small % of shareholders in AI related tech stocks. At least on HN many users are engineers meaning they are close to the metal so to speak whereas the people making investment decisions pride themselves on being detached from technical work even if they pretend to be technically competent in public.
Reddit/HN/X/etc are jam packed with tech workers with $hundreds of thousands of dollars in tech equity. I'm not sure what you're talking about, this board is quite literally the highest income community on the internet.
Given the tone of your comment, it doesn't sound like reasoning from first-principles logically, but instead reasoning from an emotional feeling and working backwards.
It sounds to be like you're hoping for the AI bubble to burst so you can experience the schadenfreude of the "technically incompetent dumb investors" you despise losing all their money.
Hoping for emotional validation is not a very convincing argument that it is happening right now imo.
Ah, so we are only 5 years away from he whole thing bursting? So, the papers in '94 warning about the dangers were just pessimistic idiot outlets? See ya in 5 years then.
Readit News
Too many people talk about a bubble almost wish-casting that such a thing will make this all go away. It’s probably safest to assume your political enemies won’t be hoisted on their own petard anytime soon.
So let's bet on sunken cost fallacy? That didn't work out during the dotcom era.
When people talk about the bubble is mostly about ending the LLM hype, not making everything associated just disappear. The infrastructure, ideas and developments will stay and probably end up being a lot more useful without the noisy hype surrounding it right now.
The top 10 holdings for VTI, the "easy button" investment option. Are: NVIDIA, Microsoft, Apple, Amazon, Facebook, Broadcom, Google, Tesla, Berkshire Hathaway. They represent a third of US market value, and 60% of them are heavily hooked into AI. A panic will be a decimation for NVIDIA, and that splash zone will be broad.
The infrastructure being there might also be a problem.
- If there's no breakthrough, and we're only going to make incremental gains, then its wasteful
- If there's a breakthrough, it might turn out a new AI architecture needs either lot less compute, or a different kind of it
Ampere generation A6000’s are still selling used for close to MSRP on eBay. I bought an A4500, used it for a year and then sold it for MORE than I bought it for.
I’ve never seen computer hardware appreciate in value like it is now, even if new cards are still significant upgrades.
Clearly, a lot of people very desperately want AI tech to fail and disappear. And if there is such a strong demand for "tell me that AI tech will fail", then there will be hacks willing to supply.
Here’s the stupid thing about that infrastructure: This isn’t railroads. This isn’t skyscrapers. This isn’t underseas fiber optic. These are, at the end of the day, data center GPUs that can and will start failing en-masse on normal hardware timelines.
When that happens, they will all need to be replaced, at whatever rate NVIDIAs selling at - or can sell at, if there’s any geopolitical incidents. If there aren’t enough customers, capacity shrinks, and the remaining customers must foot the bill for the new system and the previous round of investment, causing a death loop wherever there isn’t profitable use feeding into the system.
A clearer comparison: It’s like if airlines had to replace their entire fleet every 3-4 years while selling $20 tickets to anywhere; and the growth metrics look incredible when everyone’s flying at that rate. So much so, that investors paid for the first fleet round calling it “infrastructure.” Meanwhile the amount of ticket sales keeps growing when everyone finds amazing use cases and new business models from the $20 tickets. Surely, this can only get better from here, and justifies even more fleet investment.
A paid product is better than a free one! Who knew it could be!
It's good (maybe even indispensable) for some things. Please don't go "ketchup native" on my ice cream.
"The market can stay irrational longer than you can stay solvent." -- John Maynard Keynes
Predicting when a bubble is going to burst is close to impossible.
It really is hard to stay objective as predictors all seem to point one way.
EDIT: to be precise: I mean open-end turbo put, which have no expiration but a knock-out.
There are no market indicators if the actual burst is at the whim of a human. Being that Meta can probably bleed for a while before seeing real losses after a burst. All they have to do is be the first one to stop growing while the bubble deflates.
I’m still waiting for the crypto “bubble” to burst. Seems like we are years overdue ;)
It's still 1994. We won't be near the top until the Telegraph publishes an article overly exuberant about AI and saying AGI is here.
If every idiot commenting on Reddit, HN, X, and mainstream news publications is pessimistic and constantly shouting "bubble!," then definitionally, we have not reached irrational exuberance and we're not even remotely near the top.
[1] https://d.newsweek.com/en/full/566807/theinternetbah3.webp (1995)
Given the tone of your comment, it doesn't sound like reasoning from first-principles logically, but instead reasoning from an emotional feeling and working backwards.
It sounds to be like you're hoping for the AI bubble to burst so you can experience the schadenfreude of the "technically incompetent dumb investors" you despise losing all their money.
Hoping for emotional validation is not a very convincing argument that it is happening right now imo.