Comment by pjdesno
4 hours ago
Jatin Malek on Twitter had perhaps the best explanation of the DRAM crunch:
"The reason why RAM has become four times more expensive is that a huge amount of RAM that has not yet been produced was purchased with non-existent money to be installed in GPUs that also have not yet been produced, in order to place them in data centers that have not yet been built, powered by infrastructure that may never appear, to satisfy demand that does not actually exist and to obtain profit that is mathematically impossible."
That's just a snarky way to describe all business investment that requires purchasing things made in the future. It's entirely normal.
You could literally rewrite the quote to be about iron and about building railroads for trains and passengers that don't exist yet. See how silly that would be?
Except the "profit that is mathematically impossible" part. That's just made up and false. It's entirely possible that we are actually underestimating demand, and there is going to be tons of profit. Nobody knows for sure, but profit is very, very, very possible.
> You could literally rewrite the quote to be about iron and about building railroads for trains and passengers that don't exist yet. See how silly that would be?
Couldn't possibly happen with railroads!
https://libertystreeteconomics.newyorkfed.org/2016/02/crisis...
>Except the "profit that is mathematically impossible" part. That's just made up and false. It's entirely possible that we are actually underestimating demand, and there is going to be tons of profit.
JP Morgan says $650 billion in annual revenue required to deliver mere 10% return on AI buildout is equivalent to $35 payment from every iPhone user, or $180 from every Netflix subscriber 'in perpetuity.'
Very, very, very unlikely it makes profit, which why AI keeps getting overhyped by CEOs.
Altman said months ago that they are expecting around $65/user/month from ad-supported ChatGPT. A strong hint about where they see account prices in the future.
When you run the numbers, $65/mo turns AI investment into a a 5-7 ROI, which is totally within normal bounds.
Considering there are over a billion unique weekly active users for the major labs, and demand has been relentless, it's a pretty easy sell to get investors on board.
"You pay internet, you pay phone, you pay AI".
2 replies →
Did they consider that profits on the build out won't be uniform, i. e. there will be some companies that go under but the rest of them will capture the profit?
2 replies →
it could replace a bunch of $100k+/year workers.
2 replies →
AI labs selling a billion subscriptions for $1000/yr is absolutely on the table.
[dead]
Uh... The history of railroads is littered with folks losing their investments for exactly this reason.
Was your point that owning the steel companies is the path to riches even when most of the railroads fail?
Where does the money for that profit come from?
Who buys anything made by AI if he could do it by AI themselves?
Who can afford AI if their customers do with AI what they do?
Who creates the next man made code needed as training data to prevent model collapse?