Its not like in dot com where companies without revenue got to borrow tons of money they could never pay back.
It’s exactly that, but much worse. These companies do not make money. They lose tons of money every quarter. They have revenue but it doesn’t even cover their operations cost. But that’s not even the expensive part; training new models is hideously pricey and that will not change. And they must keep training new models lest they “fall behind” in this race to the bottom. OpenAI owes a Trillion and a half dollars to their investors. They have at least a trillion in obligations to compute providers. They keep taking more investor money, most recently with SoftBank who sold junk bonds to raise it.
Not to worry, OpenAI may lose money on every sale, but they make up for it in volume!
The AI companies are Peter paying Paul, who in turn pays Bob, and Bob pays Peter. None of them have an external income stream, and money is lost with every transaction.
It’s true that Google (just took some example to check) is spending more money on investments than they are earning back right now. But they have an enormous pile of money still.
Google spent 45 billion on infrastructure investments in Q2 and they made 41 billion in profits. So they made a loss of 4 billion that quarter.
But since they have 242 billion in available money, it really isnt a big deal. It’s pretty much the same as you or me spending more money that we earn in our monthly salary, and take it from our savings.
You’re talking about Google. I’m talking about OpenAI, Anthropic, and to a certain extent Meta. Sure, Google has plenty of money and even they managed to lose some on this deal. The AI economy collapse will ding Google but it will be existential to many of the largest companies in the US market. Several trillion dollars in value will be wiped out of existence. You seem very nonchalant about this; what do you think will happen to OpenAI and Anthropic when the truth of their grift is fully exposed and they go tits-up? What of Oracle who has spent all their money speculatively building data centers? What about Nvidia who sells the shovels in this gold rush? What about Meta who is still paying for their idiotic “Metaverse” and has now gone whole-hog into the AI race, dropping gobs of money in an attempt to “catch up”? What about SpaceXAi or whatever the fuck they’re called now, who went public in order to prop up the loser companies they had to gobble up while they were failing?
edit I’m not even getting into the circular deals and outright grift that’s happening in broad daylight.
Google may be the last man standing, but it will be atop a pile of rubble.
I guess I am a bit nonchalant yeah. Maybe I dont fully understand the impact for the world if these companies would lose 50% of their value in the stock market. It seems to me that it would affect people’s savings, sure. But unless you went all-in on those companies, it shouldn’t wipe anyone out completely. Index funds takes a hit, maybe 20% drop? And in a year it’s back where it was?
Perhaps I do actually not understand the consequences. What would happen? How would it cause something major like a depression?
Yeah, at least a major recession but I think a depression is probable. Were you around for the dot-com crash? I was, and the job loss was everywhere, not just in tech. It was a scary and shitty time. Lots of people lost everything.
I was but too young to suffer. I was still in university when it happened. Also I’m in Sweden so it was much less of an effect here compared to America. I believe you, must have been horrible.
It’s exactly that, but much worse. These companies do not make money. They lose tons of money every quarter. They have revenue but it doesn’t even cover their operations cost. But that’s not even the expensive part; training new models is hideously pricey and that will not change. And they must keep training new models lest they “fall behind” in this race to the bottom. OpenAI owes a Trillion and a half dollars to their investors. They have at least a trillion in obligations to compute providers. They keep taking more investor money, most recently with SoftBank who sold junk bonds to raise it.
Not to worry, OpenAI may lose money on every sale, but they make up for it in volume!
The AI companies are Peter paying Paul, who in turn pays Bob, and Bob pays Peter. None of them have an external income stream, and money is lost with every transaction.
It’s true that Google (just took some example to check) is spending more money on investments than they are earning back right now. But they have an enormous pile of money still.
Google spent 45 billion on infrastructure investments in Q2 and they made 41 billion in profits. So they made a loss of 4 billion that quarter.
But since they have 242 billion in available money, it really isnt a big deal. It’s pretty much the same as you or me spending more money that we earn in our monthly salary, and take it from our savings.
But sure, I can see how it makes people nervous.
You’re talking about Google. I’m talking about OpenAI, Anthropic, and to a certain extent Meta. Sure, Google has plenty of money and even they managed to lose some on this deal. The AI economy collapse will ding Google but it will be existential to many of the largest companies in the US market. Several trillion dollars in value will be wiped out of existence. You seem very nonchalant about this; what do you think will happen to OpenAI and Anthropic when the truth of their grift is fully exposed and they go tits-up? What of Oracle who has spent all their money speculatively building data centers? What about Nvidia who sells the shovels in this gold rush? What about Meta who is still paying for their idiotic “Metaverse” and has now gone whole-hog into the AI race, dropping gobs of money in an attempt to “catch up”? What about SpaceXAi or whatever the fuck they’re called now, who went public in order to prop up the loser companies they had to gobble up while they were failing?
edit I’m not even getting into the circular deals and outright grift that’s happening in broad daylight.
Google may be the last man standing, but it will be atop a pile of rubble.
I guess I am a bit nonchalant yeah. Maybe I dont fully understand the impact for the world if these companies would lose 50% of their value in the stock market. It seems to me that it would affect people’s savings, sure. But unless you went all-in on those companies, it shouldn’t wipe anyone out completely. Index funds takes a hit, maybe 20% drop? And in a year it’s back where it was?
Perhaps I do actually not understand the consequences. What would happen? How would it cause something major like a depression?
Yeah, at least a major recession but I think a depression is probable. Were you around for the dot-com crash? I was, and the job loss was everywhere, not just in tech. It was a scary and shitty time. Lots of people lost everything.
I was but too young to suffer. I was still in university when it happened. Also I’m in Sweden so it was much less of an effect here compared to America. I believe you, must have been horrible.