No matter how much you dress up whatever AI service has gaslit you into believing it’s sentient, generative AI is inherently limited, impossibly expensive and economically unviable. Its services cost too much to run, its progenitors have no path to profitability, and no amount of rigged benchmarks and anecdotal examples of theoretical engineering teams that are “10x’d” can make up for the fact that you can’t measure the cost of an LLM-driven task or its return on investment.
Anyone claiming that you have to “measure AI’s ROI differently” is attempting to con either you or themselves. While it’s tough to measure the ROI of a particular worker or project, most workers and projects don’t increase your operating expenses by anywhere from 10% to 100% under the vaguest of promises that you might be “doing the future.” AI is calamitously expensive and, despite years of promises of it getting cheaper for both those running AI services and its customers, costs have only ever increased.
I think that’s by design. AI labs want their costs to be high so that they can continue growing at ridiculous rates, all so that they can keep feeding money to their hyperscaler compute partners who then invest that money right back into them, creating further reasons to keep buying NVIDIA GPUs, so that NVIDIA can then invest that money back into either AI compute providers (who OpenAI and Anthropic pay) or the AI labs themselves.
Concepts like “efficiency” or “cost reduction” run counter to the greater narrative of AI’s voracious sprawl of data center capex and still-theoretical AI revenue. If OpenAI or Anthropic were to seek profitability or sustainability (assuming these things were possible), that would create less demand for AI compute, which would mean less demand for Azure or Google Cloud or Amazon Web Services or CoreWeave or Oracle Cloud Infrastructure, which would in turn mean less demand for NVIDIA GPUs.
The problem with this marvelous plan is that at some point there had to be an honest transaction — real, honest, sustainable demand based on a reliable product that people liked paying for because they understood its value. Right now, AI revenues are either chaotically experimental or so thoroughly-subsidized that labs are giving away hundreds of dollars a user in the hopes that at some point said user might want to pay even more money for measurably less value, the kind of proposition you make when you think your customers are fucking idiots.
this post was submitted on 08 Jun 2026
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The people inflating the bubble have to know what they’re doing, right? It’s hard to come up with an economic scenario where the market doesn’t crash and burn as a result.
I can’t shake the feeling that two key motivations for bleeding all this cash are A. For moving more wealth to the top (which, y’know, is already happening in umpteen different ways beyond AI), and B. For quickly building surveillance infrastructure, seeing as how eager the Pentagon/DHS is about AI
I suspect part of it is that every company wants to be the one to outlast the competition and become the de facto AI company everyone uses. They want to be the 90's Microsoft of AI. To this end, they're all setting fire to giant piles of money.
Maybe I'm wrong but even if one clear winner emerges, I don't see AI becoming that big of a market. They're trying the heroin dealer approach of giving away cheap or free product so they can get people hooked and then jack up the prices on a bunch of people who will lie, cheat, and steal to get their next fix. Except AI slop isn't heroin, it's just slop.
Slop that produces inaccurate results and then tells you it did no such thing.
I'll add ( C ): drive the price of general-purpose and performant hardware to the moon so everyone outside of the upper-class doesn't have a choice about whether to use cloud vs self-hosted anything, which is just another way of describing who has control over your experience and what you can do with the hardware you bought. I mean, Apple already makes it difficult to run whatever you want on your own system (and blocking certain things entirely), even before getting to the whole app store walled garden thing, so how long before Microsoft pulls the trigger on making TPM enablement mandatory for OEMs, with a very short list of allowed certificates? At that point, you'll have to choose between "good-ish hardware, but app store apps only" and "meh hardware, full control, but no access to anything useful because everything requires hardware attestation of some kind".
I think that folds pretty well into both points A (reserving personal hardware for the wealthy) and point B (the ability to mandate software installations is a valuable mass surveillance touch-point)