Comment by robjeiter

7 hours ago

I feel like the whole market at this point is just AI since big tech other than Apple are all massively invested into that. Everyone owns either the S&P or the total world ETF which are both heavily skewed towards big tech and this trade - so literally everybody is in it. It might go well for a few more quarters/years but once something breaks or gets exponentially cheaper this will take down the whole market with it.

12 comments

robjeiter

Reply
netcan  4 hours ago

It's just hard to tell the difference between "real" demand and "circular." That's the concern.

PG had an essay about this during the dotcom, when he worked at yahoo. Iirc...Yahoo's share price and other big successes in the space attracted investment into startups. Startups used that money to advertise on yahoo. Yahoo bought some of these the startups.

So... a lot of the revenue used to analyze companies for investment was actually a 2nd order side effect of these investments.

Here the risk is that we have Ai investments servicing Ai investments for other Ai investments.

Google buys Nvidia chips to sell anthropic compute. Anthropic sells coding assist to Ai companies (including Google and Nvidia). They buy anthropic services with investor money that is flowing because of all this hype.

Imo the general risk factor is trying to get ahead of actual worldly use.

The Ai optimists have a sense that Ai produces things that are valuable (like software) at massive scale...that is output.

But... even if true, it will take a lot of time, and lot of software for the Econony to discover this, go through the path dependencies and actually produce value.

The most valuable, known software has already afy been written. The stuff that you could do, but haven't yet is stuff that hasn't made the cut. Value isn't linear.

  • datavirtue  3 hours ago

    I'm starting to transition how we build software at our company due to the power of AI. No more: five code monkey contractors under a lead. Two top-notch devs are all that is needed now, unrestrained by sprints and mindless ceremonies. There is going to be a giant sucking sound in India.

    I can't continue the current model. The dev that gets AI is done in five hours, the ones that don't are thrashing for the next two weeks. I have to unleash the good AI dev. I have the Product team handing us markdown files now with an overview of the project and all the details and stories built into them. I'm literally transforming how a billion dollar company works right now because of this. I have Codex, Claude and GitHub Copilot enterprise accounts on top of Office 365. Everyone is being trained right now as most devs are behind, even.

    • netcan  2 hours ago

      Ok... but extrapolating from this to "whole market" paradigms is speculative.

      The (imo) question isn't how you produce software, but what the value of this software is. Are you going to make make/better software such that customers pay more, or buy more? Are those customers getting value of this kind?

      The answer may be yes. But... it's not an automatic yes.

      Instead of programming think of accounting. Say you experience what you are experiencing, but as an accountant. 6 person team replaced by 2-3 hotshots.

      So... Maybe you can sell more/better accounting for a higher price. But... potential is probably pretty limited. Over time, maybe business practices will adjust and find uses for this newly abundant capacity.

      Maybe you lower prices. Maybe the two hotshot earn as much as the previous team.

      If you are reducing team size, and that's the primary benefit... the fired employees need to find useful emplyment elsewhere in the economy for surplus value to be realized.

      Mediating all this is the law of diminishing returns. At any given moment, new marginal resources have less productive value than the current allocation.

    • liendolucas  2 hours ago

      And the day you don't have that drug what do you do? If anything you are training people to become dependent on one or more subscription services.

    • 4ndrewl  2 hours ago

      Except the dev that gets AI done in 5 hours will have a poorer mental model of the code. Whether that's important might or might not depend on whether that bites you in the ass at some point.

      5 replies →