Comment by austin-cheney
3 hours ago
That fabled line one must cross to achieve profit is ridiculously out of alignment with the current valuations on AI. Its why SPCX is falling like a meteor, currently at $111 per share.
The people who are going to end up making the most money on this are creditors and future businesses. When the AI bubble does pop there will be a massive glut of data centers and hardware available. Both Apple and Microsoft are realigning their entire businesses to brace for this. When the AI bubble pops businesses that sell hardware, like Apple and Microsoft, will face an immediate price shock because they have had to raise prices to account for more expensive hardware. That shock will be short lived and prices will fall accordingly with disruption to supply chain but otherwise minimal disruption to margins.
I look forward to the bubble popping because when retail hardware becomes cheap again all kinds of new business opportunities will open in the self-hosted service market.
I've never heard a compelling thesis for why this is a bubble that will pop. From my perspective AI adoption is just getting started, and every organization I see that starts on the journey only ramps up tokens dramatically. Even just sticking with current model capabilities we have years of business automation, personal automation, and so much more to saturate data centers. As the models improve that only makes more sense. Rather than Apple watching anything burn I think they are going to end up looking like nitwits who missed the boat.
I think people wish AI would succeed, especially in software, but this appears to be the only argument made. Numerically, AI still costs far more than it returns in value. Its a subscription service. Even if everybody is told they must adopt early and heavily eventually AI has to qualify its expenses to its customers or they aren't going to keep using it.
Think Netflix. If you believe the money spent on Netflix over the course of a year is less than the entertainment you receive back you will likely continue to pay for it. If you believe the money spent on all entertainment subscriptions exceeds the value returned you will likely start cancelling some, or all, of the subscriptions. AI is not immune from economics or human behavior. When customer company budgets get tight the money spent on AI subscriptions might be reallocated or reduced to prevent reductions in head count.