After the Bubble
2 days ago
- #Tech Infrastructure
- #Financial Bubble
- #GenAI
- The GenAI bubble is expected to burst, raising concerns about the extent of the damage and the aftermath.
- Depreciation in accounting allows companies to spread the cost of expensive purchases over several years, but it can be manipulated for creative accounting.
- GPUs used in large model-building tasks are fragile and prone to burning out, making them expensive to maintain.
- The AI bubble's infrastructure is costly to run due to GPU burnout and high electricity demands, unlike past bubbles that left valuable, usable infrastructure.
- Big Tech companies are using Special Purpose Vehicles (SPVs) to finance data centers without officially taking on debt, raising concerns similar to the 2008 financial crisis.
- Investors in GenAI are betting on higher profits from replacing knowledge workers with AI, but this raises questions about who will consume the goods to drive these profits.
- The article criticizes the GenAI investment frenzy, predicting a crash and hoping the aftermath won't be as severe as feared.