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Breaking news, and how the end might begin
13 hours ago
- The AI boom may collapse if a key company, such as OpenAI, fails financially due to burning cash, losing market share, and making unsustainable commitments, triggering a tidal wave of consequences across the tech industry.
- Tokenmaxxing, the all-you-can-eat pricing model for LLMs, has died as companies shift to more expensive token-based pricing, leading to revenue loss and IPO challenges.
- Banks' refusal to accept OpenAI stock as collateral for a SoftBank loan indicates doubts about OpenAI's valuation, potentially hindering its IPO and risking a WeWork-like collapse.
- OpenAI's collapse could cascade to major companies like Oracle and NVIDIA, affecting the banking system, retirement plans, and possibly requiring bailouts.
- Core issues like reliability, factuality, and profitability remain unsolved for LLMs, suggesting the AI hype may be a bubble.
Apple Will 'Watch Everything Burn' When the AI Bubble Bursts
a day ago
- LLMs have broken economics because their token-based costs are metered and unpredictable, unlike typical software subscriptions, and users often pay for wasted tokens.
- AI companies like OpenAI and Anthropic are unprofitable; they subsidize consumer subscriptions by giving away far more tokens than the subscription cost, and enterprise token billing has led to budget overruns (e.g., Uber).
- Most AI services are not differentiated or reliably useful, leading to low adoption and revenue concentration at OpenAI and Anthropic, with many startups unprofitable.
- AI data center construction is extremely expensive and debt-financed, but demand is mostly from unprofitable AI companies, risking a collapse that could hit pension funds and private credit.
- The AI buildout has driven up hardware costs (e.g., doubled memory prices), which Apple has passed to consumers, but Apple itself has spent little on AI infrastructure and relies on renting Gemini from Google.
- Apple Intelligence was poorly received, leading Apple to slow its AI investments; if the bubble deflates, Apple will likely watch from the sidelines and may make selective acquisitions.
- Ed Zitron suggests Apple should focus on improving the Vision Pro rather than chasing AI hype, as the bubble stems from a lack of new interface ideas.
The Subprime Data Center Crisis
6 days ago
- The article draws a parallel between the AI data center bubble and the 2008 financial crisis, arguing that AI data center SPVs function like subprime mortgage CDOs.
- It claims that AI compute demand is vastly overestimated, with 70-90% coming from unprofitable companies like OpenAI and Anthropic, leaving 15 times more capacity planned than actual demand.
- Data center debt, estimated at over $500 billion, is hidden off balance sheets via SPVs and VIEs, allowing companies like Meta and Google to obscure true liabilities.
- Circular financing by NVIDIA—investing in and backstopping neoclouds like CoreWeave—artificially inflates demand for GPUs and debt.
- The collapse will be triggered when data centers come online but cannot generate revenue, leading to widespread defaults on debt held by banks, pension funds, and insurers.
- The media and analysts are criticized for failing to challenge misleading narratives about AI demand, enabling the bubble to inflate unchecked.
The AI Bubble Is No Ordinary Bubble
6 days ago
- The AI bubble is driven by hyper-rich corporations, not retail investors, and occurs despite high interest rates, making it unusual.
- It consists of two overlapping bubbles: massive capital expenditure on infrastructure (data centers, chips) and soaring company valuations.
- Tech companies are spending over $700 billion on AI infrastructure, which is propping up GDP growth, but they need huge future revenues to justify valuations.
- The bubble could burst if AI companies fail to generate profits, if communities ban data centers, or if Chinese competition reduces computing needs.
- The insularity of the bubble means ordinary people are not directly participating, but they could still be affected through retirement funds, credit access, or job displacement.
Let AI Burn
20 days ago
- The AI industry is described as a bubble inflated by manufactured consent from Silicon Valley, media, and stock markets, lacking real demand.
- Generative AI is criticized for not being truly intelligent or autonomous, with high costs and unsustainable revenue models reliant on venture capital.
- Comparisons to the Dot Com Bubble are rejected, arguing AI GPUs lack the lasting utility of fiber optic infrastructure post-bubble burst.
- OpenAI and Anthropic dominate AI compute spending, but their revenues are unsustainable without continuous funding, masking weak industry-wide demand.
- The article opposes any bailouts for the AI industry, stating it is unworthy of protection and should be allowed to fail naturally.
- SoftBank is highlighted as systemically dependent on OpenAI, risking a liquidity crisis if the AI bubble collapses.
- The AI bubble is linked to multiple simultaneous bubbles: stock market, data center speculation, AI startups, private credit, and semiconductors.
- The piece calls for accountability from tech leaders and media, urging a rejection of bailouts and a critical examination of the industry's impact.
Even banks and hyperscalers are now sounding the alarm about the AI bubble
22 days ago
- Bank for International Settlements warns of AI bubble pop risking global economy
- Oracle's stock dropped 40% in a month, exposed to AI bubble risks
- Hyperscalers like Amazon, Microsoft, Google, Meta invest billions with uncertain returns
- Risk extends to suppliers, construction firms, and small businesses
- Enterprises seek control, open-source models, and predictable pricing over frontier AI
- Oracle's SEC filing highlights dependency on OpenAI's uncertain payments and capacity risks
- Challenges include data center permitting, power sourcing, and political opposition
- AI companies may raise prices, but market tolerance is limited
- Shift towards using AI models less and optimizing costs signals bubble strain

Hasty Briefsbeta

ai bubble

Breaking news, and how the end might begin

Apple Will 'Watch Everything Burn' When the AI Bubble Bursts

The Subprime Data Center Crisis

The AI Bubble Is No Ordinary Bubble

Let AI Burn

Even banks and hyperscalers are now sounding the alarm about the AI bubble