Comment by strangegecko
5 hours ago
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?
5 hours ago
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?
Some companies going under doesn't change anything about the market as a whole.
If the demand is real and the company just sucked, their users and infrastructure will end up at a competitor: the value for that one company is bigger, but the overall per-user bill remains about the same.
If the demand is fake the infrastructure will be sold off at a big loss, allowing new companies to enter the market with far smaller investment costs, allowing them to undercut the competition, driving down the price users expect to pay for compute, resulting in a race to the bottom between the remaining AI companies in an attempt to attract enough users that their hardware won't sit idle - which in turn makes it far less likely that they'll be able to hit those revenue figures. And a bunch of investors just lost a few billion dollars, of course.
And the rest still bought RAM, GPU and datacenters.
What a giant waste of resources that are missing elsewhere