Comment by api
1 day ago
There's absolutely no way these companies can justify their insane valuations unless they can legislate a barrier to entry and create an oligopoly.
There's no moat. I can literally sit here in Zed or Pi or any other third party harness and switch models in the middle of a task and it's typically fine. Sometimes a model will get stuck and that's just what I'll do.
Combined with competition and open weights models, that means the price is going to go to fall until AI tokens cost a small premium over the cost of the hardware and electricity.
That's assuming improvements in algorithms and specialized silicon doesn't eventually lead to an efficient accelerator that can run a frontier model locally. It'll be a while but I don't see any fundamental barrier. High bandwidth flash storage is coming, and that'll radically cut the RAM side of that cost. Pair that with a pipelined TPU accelerator and you're cooking.
Now look at Anthropic's proposed IPO valuation. It's insane unless they can own the market or share it with a cartel of maybe 1-2 other behemoths, and this is the only way they can do that.
Unless you're a really old fart, people were talking about AI safety long before you were born. AI safety issues do not go away depending on who gets funding. AI safety issues do not go away if the US or China makes the model. AI safety issues do not go away if it's an open or closed model. AI safety issue do not go away if the model is running at your home or at a data center. AI safety issues do not go away if $1 is being spent or $1 trillion dollars is being spent.
The fact there is no moat makes things far more dangerous. When LLMs start acting like weapons governments will treat them like weapons much to your dismay, crying, and gnashing of teeth as your door is kicked in and you're dragged out by armed men for running one.
Cast away your preconceptions for one moment and think "What will the future look like if LLMs are/can be actually dangerous".
That is certainly part of the motivation for the big US AI brands to engage in calling their inept developer mistakes "AI breaking loose".
But that doesn't take away from the real issues and dangers AI poses?
To me it seems the opposite. There's a few companies in the world that have enough compute to train and serve frontier models.
As the frontier gets smarter and more useful prices will only go up, as they are set to replace jobs being paid six or seven figures a year - the demand for as much inference on these models for as long as possible will be astronomical, but compute starting in 2030 will not be keeping up.
Eventually prices will fall for assistants but the frontier will be the most profitable thing in the world, and the top companies basically already have oligopolies due to their ridiculously expensive compute investments.
> There's a few companies in the world that have enough compute to train and serve frontier models.
Train: yes, for now.
Host: depends on the scale. At a small scale a wealthy individual could easily build a rig in their basement to host one of these things. At larger scale any cloud company could do it, and many already have the compute on site. At large scale this is true... again, for now.
What you say only holds (in the absence of a state oligopoly) if two conditions are met: (1) AI performance does not asymptote any time soon due to running out of training data or other scaling limitations, and (2) these companies are able to stay at the frontier.
There's little to no moat, so staying at the frontier will be a game of investing massively in compute, talent, and R&D, and they can never stop.
Again, there is a moat based on compute. If the thesis is right, cost of compute will only rise... As it is as you say someone will have it be quite wealthy to host something like Astra with trillions of parameters, but that cost will only rise with demand for serving these frontier models.
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what suggests that we will hit an asymptote any time soon? Agree with you on the second part. The ever elusive frontier will probably always be changing hands after some point.
Is there really no moat?