Comment by bwfan123
15 hours ago
I see this as a huge warning sign. If a frontier ai lab is in this position of renting their own capacity, imagine how much overcapacity there is in the system.
Outside of VC money, and circular financing, the only external money coming into ai are into open-ai, and anthropic via their subscriptions and APIs.
> a frontier ai lab
Wait, do people consider xAI a frontier AI lab?
They were briefly SOTA on some benchmarks, although there were suggestions there might have been some massaging of the results since real world usage showed lackluster performance compared to the benchmarks.
To the contrary - there’s so much demand that Dario needs Elon’s compute and is willing to pay premium month to month pricing for it.
I think any warning this provides is more about the ability to forecast demand. Obviously it was a giant leap of faith, that didn't pan out, for Must to build these data centers without having a product with a growth trajectory to more rationally justify it.
OpenAI and Anthropic (and their investors!) are obviously also out on a limb here, both with deals in place to 10x their available compute (roughly 1GW -> 10GW) over next few years. Maybe these growth estimates are a bit more grounded, but they have all sorts of assumptions baked in. I still would not be surprised to see OpenAI self-implode, and to see Google and Microsoft as the eventual winners here.
For sure. There’s also this kind of interesting meta strategy question: if you think you can float the huge capex with some internally valuable processes as a base case then you might just go really big. Dario and Elon’s temperaments come in to play here