Mainstream News Anchors Now Talking About the AI Bubble Bursting at Any Moment: "I think the entire AI boom is investing in the wrong future."
2 days ago by eicker to c/technology
they're doing far more than just that, the way jensen has been able to structure all almost all of these deals essentially offloading all the risk. they sell essentially lease the hardware, ontop of huge chunk of premium up front, ontop of paying for compute itself, ontop of offloading any actual buildout cost onto any greedy schmuck willimg to pay the tab. nvda will be completely fine (though stock price will obviously correct as bubble-levels income drops)
At the same time, they are doing extreme price gouging with little improvement between generations since h200. Huawei actually has better $/performance ratio and accelerating faster. Others have better inference solution, with AMD doing better on $/training performance too. The fact that Nvidia is the one propping up the AI bubble, sinking their cashflow into dead ends, makes it a bad stock too. Peak NVidia BS got exposed in an Australian IPO this week. It was too absurd to get anyone to buy and got cancelled. Heavily backed by NVidia.
Yeah, they'll be fine assuming there isn't an Enron level legal motion. They are sort of not on the hook for anything financially. I'm not sure how legal it all is though. I'm pretty sure it isn't, but even if it isn't it's still a question if they'll be held accountable.
they wont be fine, they will suffer heavy lossess but will survive, likely just by laying off hordes tech people, and even downsizing thier warehouses. i think nvidia will get off mostly less harmed though, since they sold thier products years ahead. hopefully it takes down skydance with it.
I doubt it. Government would step in and bail them out.
This isn’t going to happen. They’re not the banks, and they’re pretty universally hated in the country.
But their owners didn't kiss the ring for nothing.
When the AI bubble pops it’s going to take down the banks.
There is a lot of private credit dollars loaned to data centers and the banks are heavily invested in private credit.
It’s a house of cards priced for perfection just waiting for one of the big 5 to have a slightly off quarter.
Too big to fail? I think I heard that once.
I just can't see things continuing like this, there has to be a plateau reached at some point. Higher or lower. Exponential growth isn't sustainable in anything.
Nevertheless, companies such as Google, Amazon, and Microsoft – as well as Nvidia and AMD – are a very long way from simply going under.
Not really, once you look at the startups like OpenAI they have enormous expenses that depend on constant debt and investment funding, and the cost and risk of sustaining that debt can easily reach a point where they struggle to get new investors to foot the bill.
The whole market is based on a belief in a huge pot of gold some time in the future, and it is driven by unfathomable amounts of debt to keep the machinery running towards that goal. Once the belief in the goal getting reached gets broken, the change in momentum breaks the whole system.
That includes the big players, huge amounts of their balance sheets, including claims of revenue, are circular trades between themselves. Even google claims revenue from asset price growth in their AI subsidiaries.
Once it shifts from investment to repaying bad debts the numbers will look completely different for all the big companies involved. We're talking potentially bail outs basically across the board
The term bailout needs to stop being used and normalized. This is nothing like the housing market and audio industry crash.
These rich fucks don’t need socialism for the rich yet again, they need to eat their losses.
Why do you think they are starving consumer market for computer parts?
I think we are talking about the same thing. AI companies spend billions to monopolize compute, causing consumer hardware prices to go up.
lol you’re kidding, right? Have you looked at component prices lately? Have you missed the part about how basically all consumer electronics that use LPDDR are getting price hikes, because the demand for high performance memory has skyrocketed by an order of magnitude in the last few years?
Edit: yeah I realized I was replying to a rhetorical question 🙃
He didn't mean to question the premise that the consumer market is being starved, he was highlighting the reality of that and connecting it as being motivated by a fear of local models.
Admittedly, the question was ambiguous and could be taken either way, but the comment didn't mention that consumer market was starved, his question brought it into the discussion.
Note that I don't think that it is fear of local models personally, I think it's fear of each other. I think cloud infrastructure providers already proved that even when people can locally host stuff, they mostly don't. So many consumer electronics could meet their promises all locally, but still force the users to connect to their internet services. The tech market has already proven time and time again they are suckers for subscription eshitification, no need to panic over it being different for AI.
There is this insane amount of investment in AI built around LLMs that threatens the entire world. People worry about the bubble bursting but think AI is the ant’s pants without considering that the LLM is a dead end. None of the AI companies are going to achieve Artificial Intelligence. That’s why they will actually implode, their systems aren’t intelligent.
I mean, they are artificial intelligence by pretty much any normal definition of that term. So is Battle Chess from the 1980s. So is bank fraud detection. So is Conway's Game of Life in its most basic definition.
Will they develop "super intelligence", etc? No
Yeah. I wonder if it might be difficult to identify something that reaches that point? I suppose genuine creativity might be an indication of intelligence? Or a desire to reprogram itself? I dunno, I've recently read Peter Watts blindsight and it kind of made me reconsider the relationship between consciousness and intelligence.
I think you're conflating consciousness and intelligence. I think you could theoretically have an artificial general intelligence on the same level of intelligence as a human, or even beyond, but with zero consciousness. We know that intelligence does not follow consciousness (unless you believe a fish or a cow is not conscious). Why should consciousness follow intelligence?
I fear that yes they are not good enough to actually replace labor, but good enough to cause unprecedented chaos. Under capitalism, at least.
I think that's the wrong conclusion. I agree they won't achieve actual intelligence, but I see no reason why that would make them implode. Current tech is still going to be something companies pay a lot for.
well, they are being trained my the management, and as we all know these types wan't 150% of the benefit with 25% of the work.
As a financial analyst, Klement’s take on the AI economy has been notably grim — back in May, he penned an article in Reuters arguing that institutional investors shouldn’t be asking “whether the AI boom will end, but what will happen to markets when it does.” Now, his live interview on Bloomberg‘s flagship news channel underscores the degree to which the AI bubble is becoming impossible for mainstream commentators to ignore [...]
What's interesting to me is that people who run Bloomberg have a huge advantage in manipulating the market.
In fact, the story behind the AI boom really has to be how the business press operates, always enabling the upper class to be richer.
Of course, if the Iraq war is any example, there will be a few confessions and nothing will change.
I'd suggest that the 1929 stock market crash get an entire unit in elementary school, High school, and every economics course in college. Do the same for the 89' crash and the Dot com Bubble. Really drill it into these young entrepreneurs how Speculating in the stock market NEVER EVER leads to anything good. It's a Faustian bargain. The consequences WILL arrive; not a matter of "if" but "when."
Please let it happen. Please! Hopefully datacentres gets demolished also or turned into puppy orphanages.
Some datacenters could be repurposed as traditional datacenters focused on networking and cloud storage, infrastructure.
Look, none of use should be cheering for a full on pop of the buble. It will hurt all industries. And we know the oligarchy has insulated themselves in ways that will ensure they feel very little pain. It will be all the workers who will feel it. As for data centers, I don't think we need the bubble to burst to fight that. Lots of jurisdictions are already banning them. That is what we should be cheering for.
There are lot of problems in this world that make artificial intelligence dooming humanity seems like tuesday in comparison , and those problems got similar treatment from all of humanity: protest, hearing, discussions and a bit of outlier that spark things a bit and after that moved on to another problem without solution a.k.a status quo till everything collapse.
I mean why a.i dooming entire humanity begets different treatment?
My money's on plague.
I put my stake to ongoing environment collapse like sane person here.
The fact that more people don't know just how far past the point of no return we are is still shocking sometimes.
Yes, and many of those who know think countermeasures suddenly became futile. Rather, the time when mitigation is easiest and most effective is always exactly now. So, whatever anti-collapse action (or inaction) you all put off or planned for “later”, start it today. You will never again have a chance to have this impact.
we just had that.
"more clear that the real future of AI is small language and open-weight models running on local desktop computers" So where are we with those smaller models? I haven't been following them. Are they any good?
Qwen3.8-flash-next is making waves since its near frontier or frontier (according to some i havent used it) that can be run on an ancient 8GB video card (12GB or more is recommended. 16GB is best.) with around 32GB of RAM using Strata.
It's a mixture of experts MoE model, so while it's around 66GB (depending on which quantization you decide to run) you're only really using about 6B parameters per token processed, meaning the VRAM requirements are a lot lower.
I personally don't see the value proposition in paying $4/1M tokens when i can generate around 30tok/s on 500W of power. I pay ¢13/kWh so to generate 1M output tokens takes me 9.25 hours and costs $0.60.
I'm also running an ancient video card and have a new one in the mail. If i got 200 tok/s even at higher power use i'm still a fraction of the cost of paying for API access and I want that GPU for other things regardless.
I feel lile medium and large businesses have a strong incentive to rent or buy inference using open weight models for a fraction the cost of paying OpenAI or Anthropic. Especially if you can pre load them with everything about your org to make them better suited for internal use.
The vast majority of uses can use a open weight locally run model. I think you would only want to pay for frontier models for really complex tasks with lots of steps, and even then there are usually ways to be smart about how you task agents with work to get better output and use less money.
I'm so burnt out and jaded on AI that I don't think I'll ever use it for any reason ever. I just wish we could put the cat back in the bag. I know that will never happen.
AI could be used to save our planet from catastrophic climate change, to problem solve ways to improve things, to do hard labor so that people don't have to... but nah let's use it to make assholes with too much money get more money! That's fantastic
They didn’t listen to the scientists.
Somehow I think AI would go from “Super Intelligence” to “that libtard tree hugging computer made of parts from commie Chy-na” as soon as it told them to do something legit that would inconvenience them or disagree with their narrative.
We already got solutions. What's missing is the courage and incentives to actually adopt them by political leaders and the larger public. If AI would replace our politicians maybe it could help, otherwise it's just the latest proof that there's plenty of money around to transform the economy into whatever we want it to be. I guess we prefer chat bots over carbon neutral.
its doing exactly opposite of that, i dont think it will save anything, its already catastrophic enough to have all these polluting datacenters in every country.
We've basically got to wait for Anthropic and OpenAI to actually IPO before any of this can get started properly. Once there's a public expectation for profit from the two biggest AI labs, then the market will start acting against them. We can hope, at least.
Once there's a public expectation for profit from the two biggest AI labs
I don't think that it's necessarily the order things will go.
Anthropic and OpenAI have bills to pay, including obligations to pay a ton of money to partners/vendors in the coming years. They need cash to do that. And the cash can come from 3 main places: revenue from customers, loans from lenders (usually in the form of issuing bonds), and issuing new stock/equity to raise funds.
The IPOs are basically their last chance to raise funds by issuing new equity. Even if each of them raise $100 billion, that's probably not enough to hit self sustaining profitability. As lenders start to get more skeptical, in a macroeconomic environment with high interest rates and high energy prices, they start to run into a very real possibility that they hit illiquidity issues, even if their core business model actually works by then (and I don't think it will). There's just not enough runway for them, even in the most optimistic long term projections.
The lobster is out, read the room. You're seeing articles of people stating local models are the future in tandem with hardware companies stating prices will go up for hardware and shortages will remain. This is a classic double tap from behind. It's done. There were some good applications to it, which will continue. But overall it's a toddler dropping their ice cream cone on the ground.
AI is the future. It is just that companies are rushing headlong into it, not properly planning nor preparing for it.
Sure, maybe one of them would be the next Google - but the vast majority are dinosaurs in a world to be filled with smoke and rats.
An economic bubble doesn't require that the assets suddenly disappear upon the bubble popping.
The 2008 financial crisis was caused in part by the popping of a real estate bubble in the US. Those properties didn't magically evaporate after the bubble popped, though many families couldn't afford to keep their homes.
In the same manner, nobody is really suggesting that LLMs will suddenly disappear after the AI bubble pops, only that they will probably be proven to be significantly less profitable and get scaled back.
In the same manner, nobody is really suggesting that LLMs will suddenly disappear after the AI bubble pops
There is a significant portion of AI haters who think exactly that, for some reason.
I mean, it's likely that a good chunk of these hyperscale data centers and some of these big corporate LLMs will run out of cash and close shop. We'll probably see a big pivot to much more efficient models that are local and/or purpose-built, not unlike what the Chinese are already doing.
they will literally restore slavery before they let a strategic corporation fail.
Yeah dude, there was never a housing bubble and it never burst. Sure thing.
Some of us here are old enough to remember living through it.
Yes any time now. Just like in 2022, 2023, 2024, 2025...
Nvidia is not even overpriced. If anything, it's underpriced because it's a 5 trillion dollar company and the market doesn't believe it will be able to keep growing.
I dont believe this technology will become anything actually smart. It's still just text prediction. But it's good enough for a lot of usecases.
It isn't profitable at current pricing, and it will have lower adoption at higher pricing.
The technology isn't going anywhere, when the bubble pops and hardware prices come down, local open weight models will be sufficient and the hardware to run them will be cheaper than cloud models.
In the short term, however, it'll be a shit show.
It isn't profitable at current pricing, and it will have lower adoption at higher pricing.
The subscriptions that are there to expand customer base, sure.
But that significant part of the business where large corporations pay API prices? These are designed to cover the costs.
The reasons why the companies still running losses with subscriptions is that the market devide is far from settled.
Personally, in this paragraph:
The technology isn't going anywhere, when the bubble pops and hardware prices come down, local open weight models will be sufficient and the hardware to run them will be cheaper than cloud models.
I honestly believe that the AI hype is just the justification for the price hikes on hardware, the point is removing access to capable hardware for all of us so that they can have most, if not all, control over the population.
I certainly hope you're right, but all signs say otherwise, in my opinion anyway.
Maybe, but im convinced it will work just like any other technology that has arrived before it.
Currently we are in the hype stage where so called experts are warning the technology can kill humanity and other silly things.
But this will pass. The technology will continue to be very useful to both companies and individuals and because of this, pricing will adapt. This means less price for the consumers as number of users and competition goes up.
We will have a society where Ai is used to take our orders, find our information, do a lot of office job tasks. It will become just as common everywhere as screens and phones.
And people say it's not going to be profitable? That's extreamly improbable. Every technology that is used by everyone is highly profitable, it's just a matter of which companies will win the market and which won't.
There won't be any bubble popping because it's not a bubble. It's a new technology, like phones and laptops once were too. I had one of the first smart phones actually and I watched that market explode over the coming decade, with every human buying a smart phone. That market is now stagnated, more of less. But Ai has only just begun.
The ones who don't believe this can?
Is that why someone on Thursday just spent $21 million on 100,000 puts at $180 of NVDA?
I truly can’t see the bubble bursting at this point. They’ve won their race and built a technology so impressive it cannot be ignored or dropped. AI dominance is now a matter of nations (cyber) security. As soon as they’re any real chance of these labs failing they’ll be a tax payer bailout. I just hope it also results in nationalizing the leading AI labs so the models build on public knowledge can be forced into the public domain where they belong
AI will live on but maybe as open weight models running on your laptop. There is no reason to believe that the cloud model is the only possible way for this to work. And there's only so long that any company can lose billions of dollars a year.
I know that is the case today. But hardware and software will improve and the task sets they will be capable of will grow.
Are you using Qwen? Where do you find it useful/not useful?
Yeah Qwen 3.5 122B-A10B. It’s the most capable model I’ve found that I can run on my machine. It’s useful for simple tasks but honestly it’s around the border if correcting/checking its works is comparable effort to doing it myself. So I don’t really use it in reality it’s more a novelty. I’ve also messed around with Kimi K3 since the benchmarks said it was awesome. It’s definitely a league above Qwen but must be benchmaxxed to hell cuz it’s not even close to the same league as opus (I can’t speak to OpenAI models as my team has a Claude account so those are the paid models I know)
qwen flash is great. Privacy/sovereignty and protection from others stealing your data is very valuable and equivalence to frontier 3-4 months ago is very impressive. Your point is correct, and larger models have the capacity to solve problems with more general knowledge baked in, where smaller models simply can't find critical information from search, or develop a strategy as well if they are clueless, and just repeatedly randomly guessing.
Totally agree on the privacy sovereignty front. I suspect in the long run personal tasks will be handled by local models for this reason. I guess I’m thinking more on the scale of institutional compute. Just like every large university has their own super compute cluster I expect them to want their own AI instance (I know companies like Amazon already have such a thing) and in those instances the gap in skill really matters and these institutions are willing to pay a fair amount for the best out there.
Also I can’t speak on equivalence with frontier models 3-4 months ago because I didn’t have access to paid models back then but if that’s true and not just bench maxxing then it means the moat is widening not shrinking. Which suggests these labs are in a good position to make themselves an asset the US cannot afford to lose despite their comically costly business model.
They have not. Infact the opposite.
AI isn't a race, It's a marathon. You don't sprint in marathons the way openAI and anthropic are. You get a 2 trillion dollar in debt just to run your business, then your business practice ain't sustainable.
they'll get a tax payer bailout
Under normal circumstances, yes. But geopolitically, it's anything but normal. That's the thing most people miss. USA interest rates are at an all time high. And Iran is doing it's best to push it higher. Any large bailout would mean straining the us debt at a time it's already in a bad position.
A bubble burst is not necessarily 'the end' of a tech. The internet bubble burst back in 2000, and here we are.
A lot of the financial burden is offloaded to SPVs that may well be allowed to fail, as the AI companies don't directly carry the liabilities. They certainly carry enough of them, but they have done a lot to manage to leave other entitites holding the bag. Government may happily let Anthropic fold if it came to it, because Trump is all pissy with them. SpaceX would depend on whether Trump is pissed or loving Elon in the moment of decision. Hell if Trump decided that 'TrumpAI' was a possible concept he'd probably let them all burn for the chance of his grift picking up the pieces.
Can you explain more what you mean by this? For a bubble like the internet I can understand the giants failing and new companies picking up the pieces because the technology was already available to everyone so there was no real moat for new companies entering the space which feels quite different from the AI situation no? I’ll admit I wasn’t alive in 2000 so I don’t know exactly how all that went down.
Possibilities include the current companies surviving, but after financial catastrophes, some falling completely, and getting absorbed or superseded by big players (e.g. if Anthropic ended up somehow financially vulnerable, Microsoft might slurp them up, or Microsoft decides to do their own initiatives in earnest).
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The funniest part is that the thing that could actually make AI useful at scale might be what wrecks the investment thesis: cheap, local, open weight models. Wall Street funded a trillion dollar server farm to discover that sometimes the answer is a smaller model running on your laptop. The technology might win while the investors lose. Nevertheless, companies such as Google, Amazon, and Microsoft – as well as Nvidia and AMD – are a very long way from simply going under.
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