This is a most excellent place for technology news and articles.
“Top economist”? Sounds like that title is self given, as this is essentially how every single startup works, until long after they’re startups. Companies like Spotify and Netflix and every other big tech company worked exactly the same.
They’re all kept alive by investors until they’ve grown to a size where they can sustain themselves. Every dollar they earn from customers is re-invested back in the company until then, and they rely on investor funding.
Fancy being a top economist and therefore being privy to knowledge that is beyond the capabilities of us mortals. We thought the AI was a profitable business, and it turns out it's a giant scam, who would have thought it?
The problem with capitalism is that morons can get filthy rich and make poor decisions.
Example 1: US president.
I mean really the same problem with Monarchy. Once someone somehow gets on top very hard to remove them and their descendants from power even if the original person or their descendants are complete idiots.
Yeah, look at Zuckerberg, who recently burned billions on his crappy virtual reality project, and is now doing the same with AI.
The stupid thing is there are already profitable VR games that basically do exactly what Zuckerberg was trying to do. So despite the fact that he could just copied somebody else's homework he managed to screw it up.
There there. Give some credit to the American people. They're the ones that elected him. Twice.
Ponzi called, he wants his scheme back.
Well the jerk store called, and they're running out of you!
Relax Costanza 😂
Most things work this way lol
Heavy unprofitable investment with hope that the thing matures with time and expansion resulting in profits.
"Top Economists"
"Top Economist" states the bleeding obvious.
He forgot the: Because investors are now the only ones with money to spend.
The goal isn’t consumer level profits, the goal is to replace workers, this is the first time capitalists are looking farther than quarterly profits. They’re investing in R&D to replace us, not selling a product. We are not part of the plan.
Oh my god thank you. Somehow despite being engulfed in this stuff being an I.T person while having affection toward Ed Zitran and full agreement on almost all arguments living this weird ying yang over the topic.
This is the succinct detail I hadn't clued into until this moment of what the core motivation is for all of the crazy spending that makes zero sense. It's literally this. There is no amount of money, lying, cheating or stealing that cannot be justified by the most cynical of capitalist if they believe this is the outcome.
It's such an obvious thing when you put it like that and I'm even sure I've seen it said before but it really hit me for some reason from your comment. They would move mountains if they thought there was even the smallest chance and bet the entire farm over it.
First you have recognize there is no barriers to their cynicism I guess but this is the only root cause conclusion that could be rationalized. That or fomo and temporary wins but for those spending and not on any receiving end, I couldn't make sense of the rational until you said it so plainly.
They are paying for fantasy about rendering people redundant, the sik fuks.
It's not even capitalism anymore, assuming they expect their peers in corruption to actuallg pay each other and themselves a fair amount.
Let's not forget that they're literally stealing from anyone who ever made anything in our entire history.
I think AI could have a good tool for specific purposes and also a very lucrative business if only they had not thrown all that money at it.
The extreme investments forced them to roll it out prematurely over a much larger market that it could ever supply in a meaningful way.
They're trying to force a camel through the eye of a needle.
They have been able to use it on less powerful deceives lately. I’m waiting for something like an ebook reader to be able to run an LLM. Imagine you forget who a character is and the on device AI parses the whole book and explains what you have forgotten.
It's a giant economic bubble in plain view.
Fuck fortune, here's the link to the actual write-up: https://www.apollo.com/wealth/insights-news/insights/daily-spark/in-ai-the-41-percent-depends-on-the-59-percent
Yeah and the biggest issue is covered well here: https://www.notesfromthecircus.com/p/the-house-of-ellison-is-on-the-brink
Essentially: the profits are in the infrastructure end (AI companies paying for parts to build the data centres) not the consumer facing end (the actual models - customer paying AI companies). The money is coming from investors buying in to AI in the hope of winning the supposed arms race to be The One True AI. The whole thing depends on the revenues in the consumer facing end going up to show this is a growing market and make people believe they will eventually reach profit. But the revenues in the consumer facing end are fake and being inflated by circular movements of money including companies like Nvidia paying companies like OpenAI to buy product, or OpenAI paying for product in stock. The revenue inflation is very similar to how Enron inflated it's books its revenue appear higher than it really was.
The brutal reality is: there will not be One True AI to Rule Them All. Instead AI is looking increasingly like a commodity - people will just use the cheapest, simplest tool to do the task, rather than play inflated prices for a swiss army knife AI. And people can host those cheap, simple AIs aleady at home, or on servers in the cloud, or companies can also do the same. The whole US bubble is predicated on spending as much money as possible to stake a claim in a future Google, when it's looking more like it'll be like the fast food sector with razor thin margins. Some of these companies may end up profitable but this is going to be a hell of a lot more competitive and less profitable than the valuations assume.
Expect a very nasty correction.
Regardless, fuck AI and its speculators. Onward the Butlerian Jihad.
Funny how the "Top Economist" just parroted what Ed Zitron, also quoted on the piece, has been harping on, since... checks notes always.
Edit: Zitron, the name. Not Zitrone, The German word for lemon.
Why is it that almost all big financial situations in my lifetime are Ponzi schemes?
This has Ponzi elements, but it's closer to a multi-company Enron in its structure. They're manufacturing fake revenues through circular investments. Nvidia invests in AI companies and increases their value while AI companies use that investment to buy Nvidia cards increasing its value so, so they invest more in AI, so they buy more cards....
Enron did this by making fake companies to generate fake revenue. Right now the tech sector is all working together on this scheme, so none of the companies are fake, but the revenue is.
Together they're on the hook for over a trillion dollars in lease payments, so far, that haven't started yet. They're counting on turning a profit before they need to start paying that back. That's why they're shoving it down our throats, they either make this shit work or they go down in flames.
I'm betting they go down in flames, base on the absolute shit-show "AI" has turned out to be. They keep claiming they have fixed it, or they will fix it, and then it shits the bed again in some public, spectacular way.
I bet they get bailed one last time by the government, then people start dying fast.
I feel like everyone knows it's a bubble but that people are expecting it to be like the Dot-com bubble where a small amount of companies succeed, hoping that they invest in those companies.
That's pretty much what is driving the entire AI "boom". It's the Amazon effect.
Amazon, and Netflix to a certain extent as well as a number of other early internet startups, lost money for around 10 years before they started making shit tons. And everybody wants to be on that particular ride. So they are queueing up in every AI line they can find to hedge their bets on one of them being the one that survives and thrives. It doesn't really occur to any of them that all of them could fail. Because "AI is the future". Except there is no plan to monetize any of them. And so far every time one of them introduces a charge, people stop using it.
'Profits are currently being funded by investors rather than earned from customers'
Which profits?
Ah, now I see the actual quote is: "[...] the AI boom's profits are currently being funded by investors rather than earned from customers." he means the profits of the shovel sellers, not AI profits.
Investment shouldn't count as earnings. You're literally borrowing the money...
CEO, "It will pay off because I'm the visionary."
