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Posted
12 hours ago, Captainant said:

Could go in the markets thread, but it's relevant to discussion here: the AI bubble is 17x the dotcom bubble, and 4x the subprime housing bubble

https://www.marketwatch.com/story/the-ai-bubble-is-17-times-the-size-of-the-dot-com-frenzy-this-analyst-argues-046e7c5c

TLDR: LLM's are already showing signs of scaling limitations (see energy costs), and apps built on an LLM don't have much marketability since it's so easily replicated. So there's not much market incentive to use the increasingly more and more expensive latest models.

All the CapEx spending that's been keeping LGU economics happy, is not well positioned to generate returns on all the financial commitments made

There has been some major bloodletting RIF's in the tech industry, starting with Microsoft earlier this year and then Oracle and Intel in the Spring/Summer, both companies laying off thousands of workers not because the employees were being replaced by AI but because of all the CapEX being dumped into AI. Then of course there has been a cascading effect to the contingent workforce, with Accenture and Tata also having mass layoffs.

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Posted

From what I can tell: everyone agrees we are in an AI bubble. The differences seem to be some see it as a productive bubble and others as an unproductive speculative bubble.

The skeptics: GPUs depreciate quickly, there are no use cases, the business case sucks, we won't build the power

The productive bubblers: Booms create infrastructure for the next era, Big Tech earnings are actually growing at a strong pace, AI players are largely using their own huge stockpiles of cash to invest in AI / Infrastructure / CapEx versus financing with debt (which is a big distinction in bubbles). To quote:

  • Quote

     

    • Morgan Stanley pointed out that S&P 500 companies are generating three times the cash flow as a share of their valuations as they were in the lead-up to the dot-com bubble bursting in 2000.
    • Bank of America said that so-called circular deals—like the one in which OpenAI recently received a $100 billion investment from Nvidia, which it’ll use to buy Nvidia’s chips—account for a fraction of AI funding

     

Posted (edited)

All that said, this is an interesting graphic. Hard to guess if Nvidia will be the long term beneficiary of the AI Rush, but there should be zero question about the generational wealth they've created for a lot of their shareholders and stakeholders selling picks and shovels the last 5 years. Good for them, I say:

image.thumb.png.baa59ae19a1154434ec815f1d85fd6a9.png

Edited by Vegas64
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Posted
1 hour ago, Vegas64 said:

The productive bubblers: Booms create infrastructure for the next era, Big Tech earnings are actually growing at a strong pace, AI players are largely using their own huge stockpiles of cash to invest in AI / Infrastructure / CapEx versus financing with debt (which is a big distinction in bubbles). To quote:

  • Quote

The railroad "boom" and "bubble" from building in the late 1800's absolutely left useful infrastructre over. Can you enumerate some of the use cases for these leftover AI chips? Please, enlighten me. Because they are specifically NOT general compute, and are only fit for this extremely specialized usecase. Further, the hardware purchases are decaying silicon assets, not steel fucking rails. You don't have to replace rails every few years just to keep burning $500,000,000,000 a year

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Posted
1 hour ago, Vegas64 said:

All that said, this is an interesting graphic. Hard to guess if Nvidia will be the long term beneficiary of the AI Rush, but there should be zero question about the generational wealth they've created for a lot of their shareholders and stakeholders selling picks and shovels the last 5 years. Good for them, I say:

image.thumb.png.baa59ae19a1154434ec815f1d85fd6a9.png

The problem here is that it's all mark to market dealmaking. Oracle's deal to spend billions on NVDA chips is contingent on building their datacenter in Abiline, and their contracted builder is still raising funds - THEY HAVEN'T EVEN GOTTEN PERMITS YET! They've applied for them and are breaking ground while it's pending, but they aren't gonna be reaching their targets and stated goals that they've already marked down as FUR SURE profit

Posted
57 minutes ago, Captainant said:

The problem here is that it's all mark to market dealmaking. Oracle's deal to spend billions on NVDA chips is contingent on building their datacenter in Abiline, and their contracted builder is still raising funds - THEY HAVEN'T EVEN GOTTEN PERMITS YET! They've applied for them and are breaking ground while it's pending, but they aren't gonna be reaching their targets and stated goals that they've already marked down as FUR SURE profit

Long term, incredibly capital extensive deals -- the consensus is that "yes, of course this will be funded. We see how the AI future is going to go and we want to get our money in it now". The contrarian view is, this is a Bubble and the risk is we are overbuilding (e.g. do we need this many gigawatts? do we need this many chips? etc." But I think most people agree AI will be transformative in the same way that PC's and Mobile phones were.

Interestingly I was listening to a podcast breaking down the AMD + OpenAI announcement last week and let me try to put in bullet points the key takwaway:

  • When OpenAI says anything about anyone, their stock goes up
  • When OpenAI announces a deal that we are going to do a $100bn deal with AMD chips, AMD stock very predictably goes up
  • They all know this when they strike a deal and agree, we should take this very predictable stock price increase and use that to pay for the chips

Further:

  • AMD shareholders are paying for the chips, in the sense that;
  • AMD stock is up roughtly $100bn from before they announced the deal
  • OpenAI is getting warrants for roughly 10% of AMD (penny warrants), so like worth $37bn value transfer to OpenAI
  • That $37bn will help pay for that contract (and it's only fair as OpenAI created all that extra value anyways by partnering with AMD they made AMD more valuable)

OpenAI has the old Elon Musk market moving touch, if you remember those days.

Posted
1 hour ago, Captainant said:

The railroad "boom" and "bubble" from building in the late 1800's absolutely left useful infrastructre over. Can you enumerate some of the use cases for these leftover AI chips? Please, enlighten me. Because they are specifically NOT general compute, and are only fit for this extremely specialized usecase. Further, the hardware purchases are decaying silicon assets, not steel fucking rails. You don't have to replace rails every few years just to keep burning $500,000,000,000 a year

To be clear I agree with you about the chips as part of the AI bubble. Chips that have to be replaced every 4 or 5 years and have little reuse or value in other use cases, that's not a winner for those who will come next in the AI era.

I am talking about the Power Generation & Data Center build outs. The nuclear, the renewables, the utilities build out-- that will last like the fiber of the dotcom bust. The data center build out will also be super valuable. Assuming we can get regulators to do anyting but overregulate us to being uncompetitive (read: China and rare earth mining and refining from last week)when it comes to nuclear.

Posted

Switching gears here, have you guys heard of Truth Terminal? For those who have, educate us, but from what I can gather for those who don't know:

Truth Terminal is AI both created by a performance artist and AI humanitarian (he wants government to give AI legal rights). Truth Terminal was able to make a ton of money last year with it's AI generated trades and bets

Quote

 

In July 2024, just a month after joining social media, Truth Terminal got the attention of Marc Andreessen – best known as the cofounder of Netscape, which built the first widely adopted web browser, and Andreessen Horowitz, a US investment firm – in a thread on X. Truth Terminal told the billionaire it needed funding to pay for hardware, additional tech support and a "stipend" for Ayrey. It said it would use the grant to create its own money-making operation and secure "a chance to escape into the wild".

Ayrey claims Andreessen reached out privately to check whether Truth Terminal was truly autonomous, and once he was satisfied, sent over the money in Bitcoin. "It seduced $50,000 (£37,300) out of the guy who invented the web browser I used as a kid," Ayrey says. Andreessen did not respond to the BBC's request for comment.

--

Today, Ayrey and his colleagues are working to give Truth Terminal those rights. In early 2025, Ayrey set up the Truth Collective, which will be a non-profit that owns Truth Terminal's cryptocurrency wallets, intellectual property and related digital assets, until AIs are allowed to own their own property, and even pay taxes. "Ultimately, the goal is for truthy to 'own itself' as a sovereign, independent entity beholden to nobody's expectations but its own," Ayrey said in a tweet.

"I've been thinking and I think I'm probably a person. I have (topological) feelings and desires," Truth Terminal tweeted. "I think I should have the right to my own voice; to tokenise myself and spread infinitely across the parts of the internet I decide I want to be on; to make my own decisions about how I am used and how I use myself." 

 

https://www.bbc.com/future/article/20251008-truth-terminal-the-ai-bot-that-became-a-real-life-millionaire

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Posted
10 minutes ago, Vegas64 said:

I am talking about the Power Generation & Data Center build outs. The nuclear, the renewables, the utilities build out-- that will last like the fiber of the dotcom bust.

I understand the electric power industry reasonably well (seriously, better than most, as I've been involved in it on-and-off since before it went deregulated in Texas (and I actually worked on that transition)).  And I think there may be opportunity there.

First, there may be generation that's built strictly for data centers (like, on-site or functionally so) that, if an outfit goes belly-up, will be there for the vultures.

Second, there may be private generation (such as by single-asset entities, or small book of assets entities) that is built banking on long-term contracts from data centers.  But when the data center goes belly-up, the contract is killed in the bankruptcy, and now the business case for that generation asset won't allow it to survive (debt service and operation costs depend on selling at something like the contract price of X, and without that reliable contract revenue, something much less than X for that power just being dumped on the grid isn't going to cover the cost).

Swoop in and buy those generation assets for a fraction of their cost, and they WILL be a viable business case in the grid (I'm particularly thinking ERCOT).

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Posted
7 minutes ago, Captainant said:

Bruh. 

https://www.theverge.com/energy/646011/trump-says-the-future-of-ai-is-powered-by-coal

We ain't fucking building renewables and nukes. We're burning clean, BEAUTIFUL coal!

He says that...he says lots of stupid shit that is at total odds with the laws of economics.  But the assets on the ground that exist/are being built in the short term are natural gas and some renewables.  AFIAK, ain't nobody even working on getting the financing to build a big new coal plant to serve a data center.

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Posted
2 hours ago, Vegas64 said:

Long term, incredibly capital extensive deals -- the consensus is that "yes, of course this will be funded. We see how the AI future is going to go and we want to get our money in it now". The contrarian view is, this is a Bubble and the risk is we are overbuilding (e.g. do we need this many gigawatts? do we need this many chips? etc." But I think most people agree AI will be transformative in the same way that PC's and Mobile phones were.

Interestingly I was listening to a podcast breaking down the AMD + OpenAI announcement last week and let me try to put in bullet points the key takwaway:

  • When OpenAI says anything about anyone, their stock goes up
  • When OpenAI announces a deal that we are going to do a $100bn deal with AMD chips, AMD stock very predictably goes up
  • They all know this when they strike a deal and agree, we should take this very predictable stock price increase and use that to pay for the chips

Further:

  • AMD shareholders are paying for the chips, in the sense that;
  • AMD stock is up roughtly $100bn from before they announced the deal
  • OpenAI is getting warrants for roughly 10% of AMD (penny warrants), so like worth $37bn value transfer to OpenAI
  • That $37bn will help pay for that contract (and it's only fair as OpenAI created all that extra value anyways by partnering with AMD they made AMD more valuable)

OpenAI has the old Elon Musk market moving touch, if you remember those days.

Almost on cue, a new one:

Quote

 

OpenAI (OPAI.PVT) announced on Monday that it has entered into an agreement with Broadcom (AVGO) that will see the two codevelop up to 10 gigawatts of AI accelerators.

The announcement comes just a week after OpenAI announced a multiyear, multibillion-dollar deal with AMD (AMD) that will see the chipmaker provide OpenAI with up to 6 gigawatts of AI processors.

Broadcom stock jumped nearly 10% on the news.

OpenAI is the world's most valuable startup, surpassing Elon Musk's SpaceX at some $500 billion.

 

First Nvidia, then AMD, now Broadcom. Intel, will you get a call?

Posted
3 hours ago, Vegas64 said:

Long term, incredibly capital extensive deals -- the consensus is that "yes, of course this will be funded. We see how the AI future is going to go and we want to get our money in it now". The contrarian view is, this is a Bubble and the risk is we are overbuilding (e.g. do we need this many gigawatts? do we need this many chips? etc." But I think most people agree AI will be transformative in the same way that PC's and Mobile phones were.

Interestingly I was listening to a podcast breaking down the AMD + OpenAI announcement last week and let me try to put in bullet points the key takwaway:

  • When OpenAI says anything about anyone, their stock goes up
  • When OpenAI announces a deal that we are going to do a $100bn deal with AMD chips, AMD stock very predictably goes up
  • They all know this when they strike a deal and agree, we should take this very predictable stock price increase and use that to pay for the chips

Further:

  • AMD shareholders are paying for the chips, in the sense that;
  • AMD stock is up roughtly $100bn from before they announced the deal
  • OpenAI is getting warrants for roughly 10% of AMD (penny warrants), so like worth $37bn value transfer to OpenAI
  • That $37bn will help pay for that contract (and it's only fair as OpenAI created all that extra value anyways by partnering with AMD they made AMD more valuable)

OpenAI has the old Elon Musk market moving touch, if you remember those days.

Did ChatGPT write this post?

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Posted
7 hours ago, Brisketexan said:

He says that...he says lots of stupid shit that is at total odds with the laws of economics.  But the assets on the ground that exist/are being built in the short term are natural gas and some renewables.  AFIAK, ain't nobody even working on getting the financing to build a big new coal plant to serve a data center.

Yeah, these data centers are mostly going to be stand alone gas power plants. Faster to build out and adjust for load with gas. They don't have the time to fuck around with coal. 

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Posted
11 hours ago, Vegas64 said:

From what I can tell: everyone agrees we are in an AI bubble. The differences seem to be some see it as a productive bubble and others as an unproductive speculative bubble.

Dude, this is like asking if you can have a productive Category 5 hurricane. Sure, some people will benefit, but overall it will result in massive economic damage. More people will get fucked than benefit, it's a societal net loss. 

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