I don't know... 1.2% of GDP just doesn't seem that extreme to me. Certainly nowhere near "eating the economy" level compared to other transformative technologies or programs like:
- Apollo program: 4%
- Railroads: 6% (mentioned by the author)
- Covid stimulus: 27%
- WW2 defense: 40%
raincole · 1h ago
Yeah that's my first reaction to. 1.2% doesn't sound much. It's just people making headlines out of thin air. If it lists the water and energy consumption I might be more concerned.
Slightly off-topic, but ~9% of GDP is generated by "financial services" in the US. Personally I think it's a more alarming data point.
Financial services makes the unrealistic consumption of rich countries possible. That’s worth 9%.
UltraSane · 13m ago
How do they do that?
kulahan · 1h ago
As a % of GDP it doesn’t seem very large, but that’s because our GDP is so massive. This is still an entire Norway’s worth of GDP.
Like 1.2% isn’t a big percentage, but neither is 3.4% - our total military expenditures this year.
pinkmuffinere · 26m ago
You’re right that it’s large in an absolute sense, but any sector of the US economy is going to be large in an absolute sense. It’s not a very meaningful statement. Using percentages allows comparison to other items, which for some purposes gives a more useful sense of size. For instance, based on your numbers, AI expenditure is about 1/3 the total military expenditure. I tend to agree that this is less than I expected, and generally makes me feel a bit better about the (imo excessive) hype.
noosphr · 12m ago
The entire population of Norway fits in Queens and Brooklyn. If everyone there decided to whittle spoons we'd be midly concerned about just what got in their water, but it won't be an existential crisis for the rest of us.
I will never understand people who use tiny European countries as meaningful comparisons to continent sized ones.
zachlatta · 1h ago
We are only 2 years in! 1.2% of GDP is enormous! The fact that we can even make any of these comparisons is stunning.
AlotOfReading · 6m ago
1.2% is larger than either agriculture or mining (including O&G).
dude250711 · 8m ago
It's hard for me to tell what is a bigger misspending of money - LLMs or Apollo... At least I have a direct access to LLMs. Not sure I would need a direct access to moon rocks though.
ViscountPenguin · 14m ago
Covid stimulus isn't directly comparable to the other three programs you listed. It was more like tax legislation than an industry.
arthurofbabylon · 1h ago
You're looking at dots on a graph when you should be looking at lines and curves (and slopes of curves). The author makes this argument:
* Movement of capital from other fields to "AI".
* Duration of asset value (eg, AI in months/years vs railroad in decades/centuries).
* "Without AI datacenter investment, Q1 GDP contraction could have been closer to –2.1%".
dyauspitr · 3m ago
1/100th of the US economy sounds massive to me.
EA-3167 · 1h ago
- The birth of the space age, and more realistically the birth of the ICBM and satellite age. Both key to national security, and in the context of a cold war.
- 40% of long-distance ton miles travel by rail in the US. This represents a VAST part of the economic activity within the country.
- A literal plague, and the cessation of much economic activity, with the goal of avoiding a total collapse.
- ...Come on.
So we're comparing these earth-shaking changes and reactions to crisis with "AI"? Other than the people selling pickaxes and hookers to the prospectors, who is getting rich here exactly? What essential economic activity is AI crucial to? What war is it fighting? It mostly seems to be a toy that costs FAR more than it could ever hope to make, subsidized by some obscenely wealthy speculators, executives fantasizing about savings that don't materialize, and a product looking for a purpose commensurate to the resources it eats.
detourdog · 43m ago
I agree we don’t have an actual ROI on AI yet. There is a ton of activity but the progress for society is speculation at this point. I don’t think we will have an idea on societal progression for at least 10 years and maybe 30.
ToucanLoucan · 1h ago
> What essential economic activity is AI crucial to?
The continued devaluing of skilled labor and making smaller pools of workers able to produce at higher levels, if not their automation entirely.
And yeah AI generated code blows. It's verbose and inefficient. So what? The state of mainstream platform web development has been a complete shit show since roughly 2010. Websites for a decade plus just... don't load sometimes. Links don't load right, you get in a never-ending spinning loading wheel, stuff just doesn't render or it crashes the browser tab entirely. That's been status quo for Facebook, YouTube, Instagram, fuck knows how many desktop apps which are just web wrappers around websites, for just.. like I said, over a decade at this point. Nobody even bats an eye.
I don't see how ChatGPT generating all the code is going to make anything substantively worse than hundreds of junior devs educated at StackOverflow university with zero oversight already have.
oytis · 2h ago
I just hope when (if) the hype is over, we can repurpose the capacities for something useful (e.g. drug discovery etc.)
jandrewrogers · 12m ago
During the 1990s dotcom boom we massively overbuilt fiber networks. It was indiscriminate and most of the fiber was never lit.
After the dotcom crash, much of this infrastructure became distressed assets that could be picked up for peanuts. This fueled a large number of new startups in the aftermath that built business models figuring out how to effectively leverage all of this dead fiber when you don't have to pay the huge capital costs of building it out yourself. At the time, you could essentially build a nationwide fiber network for a few million dollars if you were clever, and people did.
These new data centers will find a use, even if it ends up being by some startup who picks it up for nothing after a crash. This has been a pattern in US tech for a long time. The carcass of the previous boom's whale becomes cheap fuel for the next generation of companies.
baxtr · 1h ago
Re hype: Why is it that so many people are completely obsessed with replacing all developers and any other white-collar job? They seem to be totally convinced that this will happen. 100%
To me, this all sounds like an “end-of-the-world” nihilistic wet dream, and I don’t buy the hype.
Is it’s just me?
jdietrich · 1h ago
I'm afraid that this might sound flippant, but the answer to your question comes through another question - why were early 19th century industrialists obsessed with replacing textile workers? Replacing workers with machines is not a new phenomenon and we have gone through countless waves of social upheaval as a result of it. The debate we're currently having about AI has been rehearsed many, many times and there are few truly novel points being made.
If you want to understand our current moment, I would urge you to study that history.
We could produce more cloth in safer working conditions.
blibble · 19m ago
there was nothing safe about those early machines
noncoml · 57m ago
Programers are going to be replaced by AI in the same way accountants got replaced by VisiCalc and engineers by CAD and mathematicians by calculators and software like Mathematica
phil21 · 1h ago
Same reason so many people got excited in the early Internet days of how much work and effort could be saved by interconnecting everyone. So many jobs lost to history due to such an invention. Stock trading floors no longer exist, call centers drastically minimized, retail shopping completely changing, etc.
I had the same thought you did back then. If I could build a company with 3 people pulling a couple million of revenue per year, what did that mean to society when the average before that was maybe a couple dozen folks?
Technology concentrates gains to those that can deploy it - either through knowledge, skill, or pure brute force deployment of capital.
noitpmeder · 1h ago
Because developer and other white-collar job salaries are the top expense of most companies.
kulahan · 1h ago
Oh boy I can’t wait until we get rid of the highest paying jobs!
Your response doesn’t explain why so many people are hyped about it, just why CEOs are.
fnimick · 1h ago
There's a lot of non-engineering people who are very happy to see someone else get unemployed by automation for a change. The people who formerly were automating others out of a job are getting a taste of their own medicine.
satyrun · 56m ago
I am not an engineer and I expect my white collar job to be automated.
The reason to be excited economically for this is if it happens it will be massively deflationary. Pretending CEOs are just going to pocket the money is economically stupid.
Being able to use a super intelligence has been a long time dream too.
What is depressing is the amount of tech workers who have no interest in technological advancement.
overgard · 2m ago
I'm not sure exactly what you mean by deflationary, but in general deflation in an economy is a very bad thing. The most significant period of economic deflation in the US was 1930-1933, ie, the great depression, and the most recent period was the great recession.
And since when do business executives NOT pocket the money? Pretty much the only exception is when they reinvest the savings into the business, for more growth, but that reinvestment and growth usually is only something the rest of us care about if it involves hiring..
linotype · 1h ago
Of course that would cause a tremendous drop in demand for the services the schaudenfreuden folks provide, hurting them as well.
JumpCrisscross · 1h ago
> that would cause a tremendous drop in demand for the services the schaudenfreuden folks provide, hurting them as well
You're correct. But it doesn't matter. Remember the San Francisco protests against tech? People will kill a golden goose if it's shinier than their own.
oytis · 57m ago
If this goose is also pricing others out of housing market it's not entirely unreasonable
JumpCrisscross · 54m ago
> If this goose is also pricing others out of housing market it's not entirely unreasonable
It's self-defeating but predictable. (Hence why the protests were tolerated to backed by NIMBY interests.)
My point is the same nonsense can be applied to someone not earning a tech wage celebrating tech workers getting replaced by AI. It makes them poorer, ceteris paribus. But they may not understand that. And the few that do may not care (or may have a way to profit off it, directly or indirectly, such that it's acceptable).
oytis · 34m ago
I don't quite follow. What exactly have non-tech people of San Francisco got from all the tech people working there? How did they become richer (ok, apart from landlords) or how would they become poorer if they lose their jobs?
daedrdev · 52m ago
The services will get cheaper, since most companies make much profit and the moat of high salaries will be gone.
citrin_ru · 1h ago
White collar jobs as a white - yes, but even in software companies it is not uncommon when sales and marketing cost more than engineering.
2944015603 · 1h ago
> Why is it that so many people are completely obsessed with replacing all developers and any other white-collar job?
For the same reason people are obsessed with replacing all blue-collar jobs. Every cent that a company doesn't have to spend on its employees is another cent that can enrich the company's owners.
detourdog · 33m ago
I have no problem with replacing jobs with automation. The question to ask is the investment justified by the efficiency gains?
I’m skeptical that this is a good use of resources or energy consumption.
oytis · 1h ago
The general view in my bubble was that blue collar jobs are seen as dumb, physically demanding and dangerous, so we kind of replacing them for their own good, so that they can do something intellectual (aka learn coding). Whereas intellectual labour is kind of what humans exist for, so making intellectual work redundant is truly the end of the world.
Maybe it's my post-communist background though and not relevant for the rest of the world
crop_rotation · 29m ago
> Why is it that so many people are completely obsessed with replacing all developers and any other white-collar job?
> They seem to be totally convinced that this will happen.
The two groups of people are not same. I for example belong to the 2nd but not the 1st. If you have used the current gen LLM coding tools you will realize they have gotten they are scary good.
overgard · 1h ago
I find it weird and uncomfortable too. Like, why are there a bunch of people excited about mass unemployment?
Ekaros · 1h ago
It is not about mass unemployment. It is about efficiency. Producing the same thing for cheaper. Leading to cheaper products to buy.
That is what allowed our current lifestyles. It is good thing. Now it is just coming to next area.
overgard · 32m ago
Ok, but who benefits from these efficiencies? Hint: not the people losing their jobs. The main people that stand to benefit from this don't even need to work.
Producing things cheaper sounds great, but just because its produced cheaper doesn't mean it is cheaper for people to buy.
And it doesn't matter if things are cheap if a massive number of people don't have incomes at all (or even a reasonable way to find an income - what exactly are white collar professionals supposed to do when their profession is automated away, if all the other professions are also being automated away?)
Sidenote btw, but I do think it's funny that the investor class doesn't think AI will come for their role..
To me the silver lining is that I don't think most of this comes to pass, because I don't think current approaches to AGI are good enough. But it sure shows some massive structural issues we will eventually face
LinXitoW · 41m ago
It's allowed our lifestyle for a short period of time, to small amount of people. It's not given to poor people, to people in places we've bombed, or extracted resources from, or people in the future since it's destroying the planet.
We're all far closer to poor than we are to having enough capital to live off of efficiency increases. AI is the last thing the capitalist class requires to finally throw of the shackles of humanity, of keeping around the filthy masses for their labor.
rightbyte · 1h ago
In a capitalist society?
Ekaros · 1h ago
It is the one thing I believe capitalism at some level works for. Invest capital to build something that gives competitive advantage over other capital. Buying newer bigger factory that allows producing more for cheaper to compete with others.
With AI it is white collar work.
rpdillon · 1h ago
This is exactly it. I was talking to my wife about this this morning. She's a sociologist researcher, and a lot of people that work in her organization are responsible for reading through interviews and doing something called coding, where you look for particular themes and then tag them with a particular name associated with that theme. And this is something that people spend a lot of hours on, along with interview transcription, also done by hand.
And I was explaining that I work in tech, so I live in the future to some degree, but that ultimately, even with HIPAA and other regulations, there's too much of a gain here for it not to be deployed eventually, And those people in their time are going to be used differently when that happens. I was speculating that it could be used for interviews as well, but I think I'm less confident there.
oytis · 1h ago
Nobody wants to be unemployed, but people generally love the idea of getting what they want without having to interact with not to say pay to other people.
Like you have a brilliant idea, but unfortunately don't have any hard skills. Now you don't have to pay enormous sums of money to geeks and have to suffer them to make it come true. Truly a dream!
rightbyte · 1h ago
In some sense I think it is related to how pyromaniacs like to lit and watch houses burn. Some sort of fetisch?
rightbyte · 1h ago
No it is not just you. If true it would be beyond dystopic due to current political immaturity.
jahewson · 1h ago
Because perceived existential risks capture people’s attention and imagination. If you’re a white collar worker then it’s a big deal to you.
eastbound · 1h ago
> completely obsessed with replacing all developers
I’m paid about 16x an electronics engineer. Salaries in IT are completely unrelated to the person’s effort compared to other white collar jobs. It would take an entire career to some manager to reach what I made after 5 years. I may be 140IQ but I’m also a dumbass in social terms!
bcrosby95 · 1h ago
That's cool. It sounds like most of us aren't making what you make. I don't make 16x what someone paid minimum wage makes, much less an electrical engineer.
MyOutfitIsVague · 24m ago
The median wage for programmers is about 5x the average minimum wage. You're paid significantly higher than the average programmer.
ivape · 1h ago
Jealousy is absolutely a thing.
olalonde · 1h ago
Most people prefer not having to work.
ToucanLoucan · 1h ago
> Re hype: Why is it that so many people are completely obsessed with replacing all developers and any other white-collar job? They seem to be totally convinced that this will happen. 100%
Because the only thing that gets the executive class hornier than new iPhone-tier products is getting to layoff tons of staff. It sends the stock price through the roof.
It follows from there that an iPhone-tier product that also lets them layoff tons of staff would be like fucking catnip to them.
astrange · 1h ago
The job description of a developer is to replace themselves by automating themselves so they can get promoted/find a new more relevant role. That's the point of compilers and new programming languages.
There's no such thing as taking people's jobs, nobody and nothing is going to take your job except for Jay Powell, and productivity improvements cause employment to increase not decrease.
rpcope1 · 1h ago
Notice how it wasn't and isn't a big deal when it's not in your own back yard (i.e. destroying blue collar professions); our chickens have just come home to roost. It's amazing the number of gullible, naive nerds out there that can't or won't see the forests for the trees. The number of ancap-lite libertarians precipitously drops when it's their own livelihood getting its shit kicked in.
phil21 · 1h ago
One of the more annoying parts about being in the tech community was listening to the tone-deafness of these sorts of folks. Coming from a very blue collar background and family.
It's difficult to have much empathy for the "learn to code" crowd who seemingly almost got a sense of joy out of watching those jobs and lifestyles get destroyed. Almost some form of childhood high school revenge fantasy style stuff - the nerd finally gets one up on the prom king. Otherwise I'm not sure where the vitriol came from. Way too many private conversations and overheard discussion in the office to make me think these were isolated opinions.
That said, it's not everyone in tech. Just a much larger percentage than I ever thought, which is depressing to think about.
It's certainly been interesting to watch some folks who a decade ago were all about "only skills matter, if you can be outcompeted by a robot you deserve to lose your job" make a 180 on the whole topic.
ModernMech · 1h ago
The dream of many business owners is running their business with no products, no employees, and no customers, where they can just collect money. AI promises to fulfil this dream. AIs selling NFTs to other AIs paying in crypto is the final boss of capitalism.
ivape · 1h ago
People really hate late stage capitalism.
alphazard · 1h ago
The rest of the world has not caught up to current LLM capabilities. If it all stopped tomorrow and we couldn't build anything more intelligent than what we have now: there would be years of work automating away toil across various industries.
sterlind · 1h ago
my experience using LLM-powered tools (e.g. copilot in agent mode) has been underwhelming. like, shockingly so. like not cd-ing to the wrong dir where a script is located, and getting lost, disregarding my instructions to run ./tests.ps1 and running `dotnet test`, writing syntactically incorrect scripts and failing to correct them, particularly being overwhelmed by verbose logs. sometimes it even fails to understand the semantic meaning of my prompts.
whereas my experience describing my problem and actually asking the AI is much, much smoother.
I'm not convinced the "LLM+scaffolding" paradigm will work all that well. sanity degrades with context length, and even the models with huge context windows don't seem to use it all that effectively. RAG searches often give lackluster results. the models fundamentally seem to do poorly with using commands to accomplish tasks.
I think fundamental model advances are needed to make most things more than superficially automatable: better planning/goal-directed behavior, a more organic connection to RAG context, automatic gym synthesis, and RL-based fine tuning (that holds up to distribution shift.)
I think that will come, but I think if LLMs plateau here they won't have much more impact than Google Search did in the '90s.
break_the_bank · 1h ago
I’m curious which was the model you used when you ran into the cd-ing bug?
I’d give building with sonnet 4 a fair shot. It’s really good, not accurate all the time but pretty good.
Terr_ · 1h ago
Creating oodles of new jobs in internally QAing LLM results, or finding and suing companies for reckless outcomes. :p
alphazard · 1h ago
As long as liability is clearly assigned, it doesn't have an economic impact. The ambiguity of liability is what creates negative economic impact. Once it's assigned initially through law, then it can be reassigned via contract in exchange for cash to ensure the most productive outcome.
e.g. if OpenAI is responsible for any damages caused by ChatGPT then the service shuts down until you waive liability and then it's back up. Similarly if companies are responsible for the chat bots they deploy then they can buy insurance or put up guard rails around the chat bot, or not use it.
Terr_ · 24m ago
> As long as liability is clearly assigned, it doesn't have an economic impact
In a reality with perfect knowledge, complete laws always applied, and populated by un-bankrupt-able immortals with infinite lines of credit, yes. :P
ch33zer · 2h ago
We won't. Well lay off engineers to balance the books and destroy unneeded capacity.
toomuchtodo · 1h ago
Very Grapes of Wrath.
charleshn · 56m ago
I'm always surprised by the number of people posting here that are dismissive of AI and the obvious unstoppable progress.
Just looking at what happened with chess, go, strategy games, protein folding etc, it's obvious that pretty much any field/problem that can be formalised and cheaply verified - e.g. mathematics, algorithms etc - will be solved, and that it's only a matter of time before we have domain-specific ASI.
I strongly encourage everyone to read about the bitter lesson [0] and verifier's law [1].
It's very different from chess etc. If we could formalise and "solve" software engineering precisely, it would be really cool, and probably indeed just lift programming to a new level of abstraction.
I don't mind if software jobs move from writing software to verifying software either if it makes the whole process more efficient and the software becomes better as a result. Again, not what is happening here.
What is happening, at least in AI optimist CEO minds is "disruption". Drop the quality while cutting costs dramatically.
charleshn · 45m ago
I mentioned algorithms, not software engineering, precisely for that reason.
But the next step is obviously increased formalism via formal methods, deterministic simulators etc, basically so that one could define an environment for a RL agent.
bigyabai · 33m ago
I'll bet you $1,000*10^32 that AI never formalizes a novel FFT algorithm worth more than a dime.
overgard · 36m ago
We need to stop calling what we have AI. LLMs can't reliably reason. Until they can the progress is far from unstoppable.
bigyabai · 47m ago
People assume (rightly so) that the progress in AI should be self-evident. If the whole thing is really working that great, we should expect to see real advances in these fields. Protein-folding AI should lower the prices of drugs and create competitive new treatments at an unprecedented rate. Photo and video AI should be enabling film directors and game directors to release higher-quality content faster than ever before. Text AI should be spitting out Shakespeare-toppling opuses on a monthly basis.
So... where's the kaboom? Where's the giant, earth-shattering kaboom? There are solid applications for AI in computer vision and sentiment analysis right now, but even these are fallible and have limited effectiveness when you do deploy them. The grander ambitions, even for pared-back "ASI" definitions, is just kicking the can further down the road.
TheBicPen · 25m ago
The kaboom already happened on user-generated media platforms. YouTube, Facebook, tiktok, and so on are flooded with AI-generated videos, photos, sounds, and so on. The sheer volume of this low-quality slop is because AI lowered the barrier of entry for creating content. In this space the progress is not happening through pushing the upper bound of quality higher but by reducing the cost for minimal quality to down to near-0.
tootie · 15m ago
Cloud gaming 2.0
barbazoo · 2h ago
On the other hand, drug discovery sounds like it's a candidate for really benefitting from AI. To fuel AI model development, there maybe has to be all the garbage that comes with AI.
lm28469 · 2h ago
What drugs? The leading causes of death are routine induced, 80% of cancers are caused by your environment, &c.
We have much better things to do with these billions
ribosometronome · 1h ago
Drugs to cure the diseases caused by your environment. It's not as if people are suddenly going to be making perfect decisions (e.g. never getting a sunburn, not eating meat, avoiding sugary foods).
logicchains · 1h ago
>Drugs to cure the diseases caused by your environment
Humans have so far completely failed to develop any drug with minimal side effects to cure lifestyle diseases; it's magical to think AI can definitely do it.
astrange · 1h ago
Everything has side effects. In this case we have three pretty good interventions, Ozempic, FMT, and telling people to drink Coke Zero. The worst "side effect" is just that the first two are expensive.
Oh, in this case GP seems to be including sunscreen as a treatment for lifestyle diseases. Pretty sure those don't have side effects, but Americans don't get the good ones.
nerevarthelame · 57m ago
Is your objection just over the word "cure"? Because hypertension, depression, arthritis, asthma are a few in an absurdly long list of lifestyle diseases that use drugs as a primary method of treatment.
lm28469 · 1h ago
So all these things that skyrocketed in the span of 75 years are immutable facts of life, but magic drugs are somehow in the realm of possibilities?
What's easier, educate your people and feed them well to build a strong and healthy nation OR let them rot and shovel billions to pharma corps in the hope of finding a magic cure?
ribosometronome · 47m ago
>skyrocketed in the span of 75 years are immutable facts of life
A number of them seem to have skyrocketed with quality of life and personal wealth. I suspect my ancestors were skinny not because they were educated on eating well but because they lacked the same access to food we have in modern society, especially super caloric ones. I don't super want to go back to an ice cream scarce world. Things like meat consumption are linked to colon cancer and most folk are unwilling to give that up or practice meat-light diets. People generally like smoking! Education campaigns got that down briefly but it was generally not because people didn't want to smoke, it's because they didn't want cancer. Vaping is clearly popular nowadays. Alcohol, too! The WHO says there is no safe amount of alcohol consumption and attributes lots of cancer to even light drinking. I suspect people would enjoy being able to regularly have a glass of wine or beer and not have it cost them their life.
astrange · 1h ago
Second one's easier. Technological improvements are always easier than social change.
> shovel billions to pharma corps in the hope of finding a magic cure?
What do you mean finding? We already found it (GLP-1 inhibitors). Ozempic is even owned by a nonprofit (Novo Nordisk). See, everything's fine.
conception · 37m ago
Yes. Let’s ignore 20% of people with cancer. That’s cool.
schmidtleonard · 1h ago
Bullshit. Heart disease and cancer (and a long tail of medical problems) cook up with age and kill ~everyone inside ~100 years. If you think that environment and exercise can fix this, show me the person who is 200 years old.
We would have to 100x medical research spending before it was clearly overdone.
lm28469 · 1h ago
You can 1000x the research if you want, a 50kg overweight person who doesn't exercise, drink alcohol and lives next to a highway is statistically fucked no matter what. You'd need straight up magic to undo the damages
You're not going to fix lifestyle diseases with drugs, and lifestyle diseases are the leading cause of death
armchairhacker · 2h ago
Very cheap game consoles and VR headsets. Unironically that could really help world peace and QOL: less news and doomscrolling, and people would have an outlet for stress, anger, and boredom.
amelius · 1h ago
This is one of the more hopeful explanations of the Fermi paradox.
"Alien species may isolate themselves in virtual worlds"
lm28469 · 1h ago
Is this the technosolutionist version of "just one more lane and we'll fix traffic jams for good"?
lenerdenator · 2h ago
I've never seen a group more easily angered than gamers.
"What do you mean the women in this game have proportions roughly equivalent to what's actually possible in nature?!?!"
drdaeman · 1h ago
That's a subset of gamers, specifically gamers who actively want a hypersexualized characters and still haven't figured out how to ignore the irrelevant products and still chose to be angered if some product doesn't fit their requirements (despite no shortage of games that would fit the bill).
intended · 32m ago
The most trust and safety research I’ve seen - on things like recidivism, ban success, pro social behavior - comes from gaming.
Dota, league, he’ll - Roblox, twitch, discord - have some of the most data on how angry humans are when they play vidya.
smokel · 1h ago
You may be interested in alternative approaches such as playing chess, running, singing, dancing, or reading literature.
etherlord · 1h ago
Have you read Ready Player 1 or watched the Matrix?
jahewson · 1h ago
This implies that a human life is valuable but what they spend it doing is not.
whydoyoucare · 1h ago
Aren't advancements in AI actually helping drug discovery?
te_chris · 2h ago
As the author says: this capex isn’t a railroad, it’s a very expensive immediately depreciating asset.
We should be so lucky
midnightclubbed · 1h ago
Maybe there will be a benefit from the additional power generation and infrastructure that will still be available if the data centers don’t need it.
Can’t believe I have to state the obvious and say that is only a potential gain if the power/cooling is from renewable sources. But I do
intended · 31m ago
That’s a mighty big if.
apwell23 · 2h ago
yearly AI capex is more than NASA and NIH combined
esseph · 2h ago
That would be $75 billion combined for 2025. A drop in the bucket.
--
> From 2013 to 2020, cloud infrastructure capex rose methodically—from $32 billion to $119 billion. That's significant, but manageable. Post-2020? The curve steepens. By 2024, we hit $285 billion. And in 2025 alone, the top 11 cloud providers are forecasted to deploy a staggering $392 billion—MORE than the entire previous two years combined.
If you have a GPU which you've used for AI training, but that's no longer valuable, you could sell that GPU; but then you'd incur taxable revenue.
If you destroy the GPU, you can write it off as a loss, which reduces your taxable income.
Its possible you could come out ahead by selling everything off, but then you'd have to pay expensive people to manage the sell off, logistics, etc. What a mess. Easier to just destroy everything and take the write-off.
phil21 · 1h ago
Capital equipment is depreciated over time. By the time you're selling it off, it's pennies on the dollar and a small recoupment of cost. Paying 30% (or whatever) taxes on that small amount of income and having 70% remaining is still better than zero dollars and zero taxes.
It is a giant pain to sell off this gear if you are using in-house folks to do so. Usually not worth it, and why things end up trashed as you state. If I have a dozen 10 year old servers to get rid of - it's usually not worth anyone's time or energy to list them for $200 on ebay and figure out shipping logistics.
However, at scale the situation and numbers change - you can call in an equipment liquidator who can wheel out 500 racks full of gear at a time and you get paid for their disposal on top of it. Usually a win/win situation since you no longer have expensive people trying to figure out who to call to get rid of it, how to do data destruction properly, etc. This usually is a help to the bottom line in almost all cases I've seen, on top of it saving internal man-hours.
If you're in "failed startup being liquidated for asset value" territory, then the receiver/those in charge typically have a fiduciary duty to find the best reasonable outcome for the investors. It's rarely throwing gear with residual value in the trash. See: used Aeron chair market.
triceratops · 44m ago
> that's no longer valuable, you could sell that GPU; but then you'd incur taxable revenue
Unless GPUs are like post-Covid used cars you're going to sell them at a loss which can be written off. Write-offs don't have to involve destroying the asset. I don't know where you got that idea.
teaearlgraycold · 2h ago
A competent government might rent these company’s GPUs to cure major diseases once they’re sitting idle.
Bluestein · 2h ago
(or they'll end up mining crypto as the only viable alternative, crashing the whole tent )
dgfitz · 2h ago
Bitcoin still needs a-minin’.
Retr0id · 2h ago
GPUs haven't been useful for bitcoin mining for a long time.
jsnell · 2h ago
I don't see how you can make the argument that a large portion of funds used for AI capex were diverted from other investments (and starving other industries), while simultaneously applying the economic multiplier to the whole sum when going from the investments to the GDP impact.
Surely you only get one of the two, because for diverted investments the multiplier applies equally on both sides of the equation.
arthurofbabylon · 57m ago
Hence the title, "Honey, AI Capex is Eating the Economy."
jsnell · 47m ago
That seems like a non sequitur.
He is making two arguments. One is that AI capex is starving other industries. And the other that AI capex is causing major GDP growth, attributed to both the direct investments themselves, as well as the multiplier effects.
One of those could be true. But I assert that both cannot be true at the same time. If these direct investments were going to happen elsewhere if they weren't happening for AI infrastructure then that counterfactual spending would show up in the GDP instead, as would the multiplier effect from that spending.
gazpacho · 2h ago
I just wish we forced every new data center to be built with renewables or something. The marginal cost over a conventional data center can’t be that big compared to the total cost, and these companies can afford it. Maybe it can help advance the next generation of small modular nuclear reactors or something.
phil21 · 1h ago
Many of these companies are very interested in small nuclear tech as a means to power these facilities. The major bottleneck now for most of them is finding sites where grid capacity exists to power them.
Talking to anyone in the space for more than 30 minutes and nuclear with come up.
I very much hope the hype cycle lasts long enough for some of this capital raining down from the sky to get these reactors deployed in the field, because those will be a lasting positive from this hype cycle - much like laying railroad infrastructure and fiber optic cables came from other hype cycles.
I've often said that the robber barons sucked, but at least they left massive amounts of physical infrastructure for the average person to benefit from. The hype cycles of late leave very little in comparison.
Voloskaya · 1h ago
> I just wish we forced every new data center to be built with renewables or something.
Already the case in Europe. And in the US, most of the biggest player are doing this: Google, Microsoft, Meta, AWS. By now those 4 are the largest buyers of renewable purchase agreement in the entire world. MS alone invested something like 20B in renewable purchase.
But the issue is that installation of renewable in the US is not bottlenecked by lack of demand, it's bottlenecked by permitting, zoning issue etc. The queue for power deployment right now is something like 100GW (i.e. how much production is paid to be built, but not yet built), that is around 10% of the current total US power capacity. So it's not really clear to me if buying more renewables helps making it's deployment faster through economies of scale, or if the purchase order is just sitting in a queue for years and years.
One notable exception is xAI/Grok, who has one of the biggest cluster, is powering it 100% with gas and afaik did not offset it by buying the equivalent in renewable. Having built the cluster in a what was a washing machine factory that does not have adequate power supply or cooling tech, they have been rolling in 35 mobile gas turbines (large trailer trucks that you connect to gas pipes) and 50+ refrigeration trucks. IMHO, it should be illegal to build such an energy consuming system with such a poor efficiency, but well.
jjk166 · 1h ago
At least in the US, it doesn't need to be forced. In 2024 94% of new US powerplant capacity in the US were renewables or battery storage, we're on track for 93% for 2025, and based on announced plans the next few years will see very similar numbers. What few fossil fuel power plants are being built are exclusively natural gas, and a decent number of them are conversions of former coal plants to natural gas. Planned additional natural gas plant capacity is lower than at any point since the shale revolution started. Renewables have won.
loeg · 1h ago
Data centers want firm power to avoid underutilizing expensive assets. Solar and wind are intermittent. New gas has a years-long lead out. 12+ hours of batteries (solar in winter) are, in fact, not free or de minimis.
nocsi · 1h ago
Why renewables? These guys don't have an energy problem. The states have made sure give them energy credits and other assurances on that. The problem they do have though is siphoning the water from everyone around them.
Microsoft actually has a design for mini datacenters that stay cool in the ocean and collect tidal energy. But it's way more fun to have states trying to court you into building datacenters cause it'll bring some jobs.
jraph · 2h ago
I wish the hardware itself were renewable too.
bpodgursky · 1h ago
These companies would all LOVE to use small modular nuclear reactors in their datacenters... if the NRC ever got around to approving a license for one.
lucbocahut · 1h ago
The main argument builds on the assumption that the economy is a zero sum game when it clearly is not. Just because we invest these ressources in AI does not mean we could mobilize the same capital for other pursuits.
Precisely AI is being built out today because the value returned is expected to be massive. I would argue this value will be far bigger than railroads ever could be.
Overspending will happen, for sure, in certain geographies or for specialty hardware, maybe even capacity will outpace demand for a while, but I don’t think the author makes a good case that we are there yet.
schimmy_changa · 56m ago
In addition, the massive investment may be overbuilt, but then likely will end up being useful long-term. This is just as the initial buildout of the internet to power pets.com was a bust at the time, but then led to Amazon, YouTube, Zoom, etc and in fact led to us being able to weather Covid better than you'd have expected.
The modern internet came from folks getting connected over-exuberantly based on near-term returns (with a lot of investors losing their shirts) but then humans figured out what the actual best use of the technology.
> "... builds on the assumption that the economy is a zero sum game when it clearly is not"
Be cautious making assessments as to compounding effects; while it remains the critical attribute, the compounding nature of a system is not always obvious. For example, the author is correct that financing for AI CapEx is starving other fields of investment at least in the short term.
mikewarot · 1h ago
I'm waiting for the shoe to drop when someone comes out with an FPGA optimized for reconfigurable computing and lowers the cost of llm compute by 90% or better.
crystal_revenge · 1h ago
This is where I do wish we had more people working on the theoretical CS side of things in this space.
Once you recognize that all ML techniques, including LLMs, are fundamentally compression techniques you should be able to come up with some estimates of the minimum feasible size of an LLM based on: information that can be encoded in a given parameter size, relationship between loss of information and model performance, and information contained in the original data set.
I simultaneously believe LLMs are bigger than the need to be, but suspect they need to be larger than most people think given that you are trying to store a fantastically large amount of information. Even given lossy compression (which ironically is what makes LLMs "generalize"), we're still talking about an enormous corpus of data we're trying to represent.
sfpotter · 1h ago
Getting theoretical results along these lines that can be operationalized meaningfully is... really hard.
d-moon · 42m ago
I wouldn't wait. fpgas weren't design to serve this model architecture. yes they are very power efficient but the layout/p+r overhead, the memory requirement (very few on-the-market fpgas have hbm), slower clock speed, and just an unpleasant developer experience makes it a hard sell.
pdhborges · 1h ago
Where is that improvement coming from? Hardware is already here to compute gemm as fast as possible.
leakyfilter · 1h ago
Raw gemm computation was never the real bottleneck, especially on the newer GPUs. Feeding the matmuls i.e memory bandwidth is where it’s at, especially in the newer GPUs.
wagwang · 34m ago
My chip friends constantly complain about Qualcomm owning a bunch of FPGA related patents that stifle any meaningful FPGA progress.
charleshn · 1h ago
We do already have ASICs, see Google's TPU to get some cost estimates.
HBM is also very expensive.
trhway · 1h ago
We're already seeing it with DeepSeek's and other optimizations - like that law with highways - the wider the highway the even more usage of it. Dropping by 90% would open even more use cases.
For white-collar jobs replacement - we can always evolve up the knowledge/skills/value chain. It is the blue-collar jobs where bloodbath with all the robotics is coming.
tptacek · 1h ago
Can you annualize Nvidia's Q1 results simply by multiplying them by 4?
jsnell · 1h ago
For a first approximation, yes? Their earnings have been growing steadily for years ($4-5B growth in each of the last 8 quarters), with no seasonal effects.
Q1*4 is highly likely to be a better estimate of their eventual 2025 calendar revenue than their current trailing 12 months revenue would be. Probably still a bit conservative, but easier to justify than projecting that growth continues at exactly the same pace.
siavosh · 1h ago
What if anything would it take to actually change the markets perception that expectations may not be met in a significant way?
asdev · 2h ago
how many signs of a bubble do we need?
noman-land · 16m ago
The only sign you'll ever get is the pop, no?
datadrivenangel · 2h ago
Now is this AI CapEx or data and IT CapEx? Because everyone and their mother are labeling regular data centers as AI data centers.
hatthew · 2h ago
It seems like it's specifically based on nvidia's sales, which I assume almost entirely for deep learning. "Regular" data centers don't need many GPUs.
constantcrying · 1h ago
The premise of AI and certainly what a large subset of executives and investors believe is that AI will provide a significant productivity increase to a significant part of the work force.
Of 30% of the work is done 10% faster that leaves a 3% gain for other economic activities. If that is true the CapEx is justified.
stefan_ · 2h ago
Apparently the telecom boost was 2020? What am I missing?
Using sus statistics to draw weird conclusions.
betaby · 1h ago
There were some major network upgrades during COVID times dueto traffic growth induced by work from home.
padjo · 1h ago
> the scale and pace of capital deployment into a rapidly depreciating technology is remarkable
That’s an interesting perspective. It does feel a bit like we’re setting money on fire.
The 1880s 6% on railroads is an interesting number, I didn't know it was that much.
x86x87 · 2h ago
I hear AI data centers are consuming more power than the entire country of Argentina /s
But I don't hear anyone worried about the massive power consumption without a clear indication if this is a net positive for our society.
zegax · 2h ago
Roughly 5% of energy in the US is dedicated towards AI datacenters. The current usage will double to 70–90 TWh/year by 2026-2027. For software heavy tech businesses it makes sense to host your own AI data center so that you could train it on your codebase and have developers build faster. Not sure if this benefits humanity that much..
mattmanser · 1h ago
Will it? Google originally started trying to sell search servers you'd install on site. And on prem (even on your cloud) is not a model any of the big boys will want to follow.
We're yet to see if it's going to be a winner takes all market or whether there will end up a Linux equivalent pop up that destroys all the investment from the big players because programmers are too tight to pay for software.
criddell · 2h ago
> if this is a net positive for our society
Maybe that's something that can only be determined looking back. There are so many unknown unknowns.
woah · 1h ago
Is Argentina a net positive for our society? There's the grilled beef, but every country has some kind of barbecue. There's a few soccer players I guess? Is Argentina worth the energy expenditure though?
- Apollo program: 4%
- Railroads: 6% (mentioned by the author)
- Covid stimulus: 27%
- WW2 defense: 40%
Slightly off-topic, but ~9% of GDP is generated by "financial services" in the US. Personally I think it's a more alarming data point.
Financial services makes the unrealistic consumption of rich countries possible. That’s worth 9%.
Like 1.2% isn’t a big percentage, but neither is 3.4% - our total military expenditures this year.
I will never understand people who use tiny European countries as meaningful comparisons to continent sized ones.
* Movement of capital from other fields to "AI". * Duration of asset value (eg, AI in months/years vs railroad in decades/centuries). * "Without AI datacenter investment, Q1 GDP contraction could have been closer to –2.1%".
- 40% of long-distance ton miles travel by rail in the US. This represents a VAST part of the economic activity within the country.
- A literal plague, and the cessation of much economic activity, with the goal of avoiding a total collapse.
- ...Come on.
So we're comparing these earth-shaking changes and reactions to crisis with "AI"? Other than the people selling pickaxes and hookers to the prospectors, who is getting rich here exactly? What essential economic activity is AI crucial to? What war is it fighting? It mostly seems to be a toy that costs FAR more than it could ever hope to make, subsidized by some obscenely wealthy speculators, executives fantasizing about savings that don't materialize, and a product looking for a purpose commensurate to the resources it eats.
The continued devaluing of skilled labor and making smaller pools of workers able to produce at higher levels, if not their automation entirely.
And yeah AI generated code blows. It's verbose and inefficient. So what? The state of mainstream platform web development has been a complete shit show since roughly 2010. Websites for a decade plus just... don't load sometimes. Links don't load right, you get in a never-ending spinning loading wheel, stuff just doesn't render or it crashes the browser tab entirely. That's been status quo for Facebook, YouTube, Instagram, fuck knows how many desktop apps which are just web wrappers around websites, for just.. like I said, over a decade at this point. Nobody even bats an eye.
I don't see how ChatGPT generating all the code is going to make anything substantively worse than hundreds of junior devs educated at StackOverflow university with zero oversight already have.
After the dotcom crash, much of this infrastructure became distressed assets that could be picked up for peanuts. This fueled a large number of new startups in the aftermath that built business models figuring out how to effectively leverage all of this dead fiber when you don't have to pay the huge capital costs of building it out yourself. At the time, you could essentially build a nationwide fiber network for a few million dollars if you were clever, and people did.
These new data centers will find a use, even if it ends up being by some startup who picks it up for nothing after a crash. This has been a pattern in US tech for a long time. The carcass of the previous boom's whale becomes cheap fuel for the next generation of companies.
To me, this all sounds like an “end-of-the-world” nihilistic wet dream, and I don’t buy the hype.
Is it’s just me?
If you want to understand our current moment, I would urge you to study that history.
https://en.wikipedia.org/wiki/Swing_Riots
I had the same thought you did back then. If I could build a company with 3 people pulling a couple million of revenue per year, what did that mean to society when the average before that was maybe a couple dozen folks?
Technology concentrates gains to those that can deploy it - either through knowledge, skill, or pure brute force deployment of capital.
Your response doesn’t explain why so many people are hyped about it, just why CEOs are.
The reason to be excited economically for this is if it happens it will be massively deflationary. Pretending CEOs are just going to pocket the money is economically stupid.
Being able to use a super intelligence has been a long time dream too.
What is depressing is the amount of tech workers who have no interest in technological advancement.
And since when do business executives NOT pocket the money? Pretty much the only exception is when they reinvest the savings into the business, for more growth, but that reinvestment and growth usually is only something the rest of us care about if it involves hiring..
You're correct. But it doesn't matter. Remember the San Francisco protests against tech? People will kill a golden goose if it's shinier than their own.
It's self-defeating but predictable. (Hence why the protests were tolerated to backed by NIMBY interests.)
My point is the same nonsense can be applied to someone not earning a tech wage celebrating tech workers getting replaced by AI. It makes them poorer, ceteris paribus. But they may not understand that. And the few that do may not care (or may have a way to profit off it, directly or indirectly, such that it's acceptable).
For the same reason people are obsessed with replacing all blue-collar jobs. Every cent that a company doesn't have to spend on its employees is another cent that can enrich the company's owners.
I’m skeptical that this is a good use of resources or energy consumption.
Maybe it's my post-communist background though and not relevant for the rest of the world
> They seem to be totally convinced that this will happen.
The two groups of people are not same. I for example belong to the 2nd but not the 1st. If you have used the current gen LLM coding tools you will realize they have gotten they are scary good.
That is what allowed our current lifestyles. It is good thing. Now it is just coming to next area.
Producing things cheaper sounds great, but just because its produced cheaper doesn't mean it is cheaper for people to buy.
And it doesn't matter if things are cheap if a massive number of people don't have incomes at all (or even a reasonable way to find an income - what exactly are white collar professionals supposed to do when their profession is automated away, if all the other professions are also being automated away?)
Sidenote btw, but I do think it's funny that the investor class doesn't think AI will come for their role..
To me the silver lining is that I don't think most of this comes to pass, because I don't think current approaches to AGI are good enough. But it sure shows some massive structural issues we will eventually face
We're all far closer to poor than we are to having enough capital to live off of efficiency increases. AI is the last thing the capitalist class requires to finally throw of the shackles of humanity, of keeping around the filthy masses for their labor.
With AI it is white collar work.
And I was explaining that I work in tech, so I live in the future to some degree, but that ultimately, even with HIPAA and other regulations, there's too much of a gain here for it not to be deployed eventually, And those people in their time are going to be used differently when that happens. I was speculating that it could be used for interviews as well, but I think I'm less confident there.
Like you have a brilliant idea, but unfortunately don't have any hard skills. Now you don't have to pay enormous sums of money to geeks and have to suffer them to make it come true. Truly a dream!
I’m paid about 16x an electronics engineer. Salaries in IT are completely unrelated to the person’s effort compared to other white collar jobs. It would take an entire career to some manager to reach what I made after 5 years. I may be 140IQ but I’m also a dumbass in social terms!
Because the only thing that gets the executive class hornier than new iPhone-tier products is getting to layoff tons of staff. It sends the stock price through the roof.
It follows from there that an iPhone-tier product that also lets them layoff tons of staff would be like fucking catnip to them.
There's no such thing as taking people's jobs, nobody and nothing is going to take your job except for Jay Powell, and productivity improvements cause employment to increase not decrease.
It's difficult to have much empathy for the "learn to code" crowd who seemingly almost got a sense of joy out of watching those jobs and lifestyles get destroyed. Almost some form of childhood high school revenge fantasy style stuff - the nerd finally gets one up on the prom king. Otherwise I'm not sure where the vitriol came from. Way too many private conversations and overheard discussion in the office to make me think these were isolated opinions.
That said, it's not everyone in tech. Just a much larger percentage than I ever thought, which is depressing to think about.
It's certainly been interesting to watch some folks who a decade ago were all about "only skills matter, if you can be outcompeted by a robot you deserve to lose your job" make a 180 on the whole topic.
whereas my experience describing my problem and actually asking the AI is much, much smoother.
I'm not convinced the "LLM+scaffolding" paradigm will work all that well. sanity degrades with context length, and even the models with huge context windows don't seem to use it all that effectively. RAG searches often give lackluster results. the models fundamentally seem to do poorly with using commands to accomplish tasks.
I think fundamental model advances are needed to make most things more than superficially automatable: better planning/goal-directed behavior, a more organic connection to RAG context, automatic gym synthesis, and RL-based fine tuning (that holds up to distribution shift.)
I think that will come, but I think if LLMs plateau here they won't have much more impact than Google Search did in the '90s.
I’d give building with sonnet 4 a fair shot. It’s really good, not accurate all the time but pretty good.
e.g. if OpenAI is responsible for any damages caused by ChatGPT then the service shuts down until you waive liability and then it's back up. Similarly if companies are responsible for the chat bots they deploy then they can buy insurance or put up guard rails around the chat bot, or not use it.
In a reality with perfect knowledge, complete laws always applied, and populated by un-bankrupt-able immortals with infinite lines of credit, yes. :P
Just looking at what happened with chess, go, strategy games, protein folding etc, it's obvious that pretty much any field/problem that can be formalised and cheaply verified - e.g. mathematics, algorithms etc - will be solved, and that it's only a matter of time before we have domain-specific ASI.
I strongly encourage everyone to read about the bitter lesson [0] and verifier's law [1].
[0] http://www.incompleteideas.net/IncIdeas/BitterLesson.html
[1] https://www.jasonwei.net/blog/asymmetry-of-verification-and-...
I don't mind if software jobs move from writing software to verifying software either if it makes the whole process more efficient and the software becomes better as a result. Again, not what is happening here.
What is happening, at least in AI optimist CEO minds is "disruption". Drop the quality while cutting costs dramatically.
But the next step is obviously increased formalism via formal methods, deterministic simulators etc, basically so that one could define an environment for a RL agent.
So... where's the kaboom? Where's the giant, earth-shattering kaboom? There are solid applications for AI in computer vision and sentiment analysis right now, but even these are fallible and have limited effectiveness when you do deploy them. The grander ambitions, even for pared-back "ASI" definitions, is just kicking the can further down the road.
We have much better things to do with these billions
Humans have so far completely failed to develop any drug with minimal side effects to cure lifestyle diseases; it's magical to think AI can definitely do it.
Oh, in this case GP seems to be including sunscreen as a treatment for lifestyle diseases. Pretty sure those don't have side effects, but Americans don't get the good ones.
What's easier, educate your people and feed them well to build a strong and healthy nation OR let them rot and shovel billions to pharma corps in the hope of finding a magic cure?
A number of them seem to have skyrocketed with quality of life and personal wealth. I suspect my ancestors were skinny not because they were educated on eating well but because they lacked the same access to food we have in modern society, especially super caloric ones. I don't super want to go back to an ice cream scarce world. Things like meat consumption are linked to colon cancer and most folk are unwilling to give that up or practice meat-light diets. People generally like smoking! Education campaigns got that down briefly but it was generally not because people didn't want to smoke, it's because they didn't want cancer. Vaping is clearly popular nowadays. Alcohol, too! The WHO says there is no safe amount of alcohol consumption and attributes lots of cancer to even light drinking. I suspect people would enjoy being able to regularly have a glass of wine or beer and not have it cost them their life.
> shovel billions to pharma corps in the hope of finding a magic cure?
What do you mean finding? We already found it (GLP-1 inhibitors). Ozempic is even owned by a nonprofit (Novo Nordisk). See, everything's fine.
We would have to 100x medical research spending before it was clearly overdone.
You're not going to fix lifestyle diseases with drugs, and lifestyle diseases are the leading cause of death
https://en.wikipedia.org/wiki/Fermi_paradox#Hypothetical_exp...
"Alien species may isolate themselves in virtual worlds"
"What do you mean the women in this game have proportions roughly equivalent to what's actually possible in nature?!?!"
Dota, league, he’ll - Roblox, twitch, discord - have some of the most data on how angry humans are when they play vidya.
We should be so lucky
Can’t believe I have to state the obvious and say that is only a potential gain if the power/cooling is from renewable sources. But I do
-- > From 2013 to 2020, cloud infrastructure capex rose methodically—from $32 billion to $119 billion. That's significant, but manageable. Post-2020? The curve steepens. By 2024, we hit $285 billion. And in 2025 alone, the top 11 cloud providers are forecasted to deploy a staggering $392 billion—MORE than the entire previous two years combined.
https://www.wisdomtree.com/investments/blog/2025/05/21/this-...
If you destroy the GPU, you can write it off as a loss, which reduces your taxable income.
Its possible you could come out ahead by selling everything off, but then you'd have to pay expensive people to manage the sell off, logistics, etc. What a mess. Easier to just destroy everything and take the write-off.
It is a giant pain to sell off this gear if you are using in-house folks to do so. Usually not worth it, and why things end up trashed as you state. If I have a dozen 10 year old servers to get rid of - it's usually not worth anyone's time or energy to list them for $200 on ebay and figure out shipping logistics.
However, at scale the situation and numbers change - you can call in an equipment liquidator who can wheel out 500 racks full of gear at a time and you get paid for their disposal on top of it. Usually a win/win situation since you no longer have expensive people trying to figure out who to call to get rid of it, how to do data destruction properly, etc. This usually is a help to the bottom line in almost all cases I've seen, on top of it saving internal man-hours.
If you're in "failed startup being liquidated for asset value" territory, then the receiver/those in charge typically have a fiduciary duty to find the best reasonable outcome for the investors. It's rarely throwing gear with residual value in the trash. See: used Aeron chair market.
Unless GPUs are like post-Covid used cars you're going to sell them at a loss which can be written off. Write-offs don't have to involve destroying the asset. I don't know where you got that idea.
Surely you only get one of the two, because for diverted investments the multiplier applies equally on both sides of the equation.
He is making two arguments. One is that AI capex is starving other industries. And the other that AI capex is causing major GDP growth, attributed to both the direct investments themselves, as well as the multiplier effects.
One of those could be true. But I assert that both cannot be true at the same time. If these direct investments were going to happen elsewhere if they weren't happening for AI infrastructure then that counterfactual spending would show up in the GDP instead, as would the multiplier effect from that spending.
Talking to anyone in the space for more than 30 minutes and nuclear with come up.
I very much hope the hype cycle lasts long enough for some of this capital raining down from the sky to get these reactors deployed in the field, because those will be a lasting positive from this hype cycle - much like laying railroad infrastructure and fiber optic cables came from other hype cycles.
I've often said that the robber barons sucked, but at least they left massive amounts of physical infrastructure for the average person to benefit from. The hype cycles of late leave very little in comparison.
Already the case in Europe. And in the US, most of the biggest player are doing this: Google, Microsoft, Meta, AWS. By now those 4 are the largest buyers of renewable purchase agreement in the entire world. MS alone invested something like 20B in renewable purchase.
But the issue is that installation of renewable in the US is not bottlenecked by lack of demand, it's bottlenecked by permitting, zoning issue etc. The queue for power deployment right now is something like 100GW (i.e. how much production is paid to be built, but not yet built), that is around 10% of the current total US power capacity. So it's not really clear to me if buying more renewables helps making it's deployment faster through economies of scale, or if the purchase order is just sitting in a queue for years and years.
One notable exception is xAI/Grok, who has one of the biggest cluster, is powering it 100% with gas and afaik did not offset it by buying the equivalent in renewable. Having built the cluster in a what was a washing machine factory that does not have adequate power supply or cooling tech, they have been rolling in 35 mobile gas turbines (large trailer trucks that you connect to gas pipes) and 50+ refrigeration trucks. IMHO, it should be illegal to build such an energy consuming system with such a poor efficiency, but well.
Microsoft actually has a design for mini datacenters that stay cool in the ocean and collect tidal energy. But it's way more fun to have states trying to court you into building datacenters cause it'll bring some jobs.
Precisely AI is being built out today because the value returned is expected to be massive. I would argue this value will be far bigger than railroads ever could be.
Overspending will happen, for sure, in certain geographies or for specialty hardware, maybe even capacity will outpace demand for a while, but I don’t think the author makes a good case that we are there yet.
The modern internet came from folks getting connected over-exuberantly based on near-term returns (with a lot of investors losing their shirts) but then humans figured out what the actual best use of the technology.
Highly recommend this book for more, Carlota Perez is very insightful: https://en.wikipedia.org/wiki/Technological_Revolutions_and_...
Be cautious making assessments as to compounding effects; while it remains the critical attribute, the compounding nature of a system is not always obvious. For example, the author is correct that financing for AI CapEx is starving other fields of investment at least in the short term.
Once you recognize that all ML techniques, including LLMs, are fundamentally compression techniques you should be able to come up with some estimates of the minimum feasible size of an LLM based on: information that can be encoded in a given parameter size, relationship between loss of information and model performance, and information contained in the original data set.
I simultaneously believe LLMs are bigger than the need to be, but suspect they need to be larger than most people think given that you are trying to store a fantastically large amount of information. Even given lossy compression (which ironically is what makes LLMs "generalize"), we're still talking about an enormous corpus of data we're trying to represent.
HBM is also very expensive.
For white-collar jobs replacement - we can always evolve up the knowledge/skills/value chain. It is the blue-collar jobs where bloodbath with all the robotics is coming.
Q1*4 is highly likely to be a better estimate of their eventual 2025 calendar revenue than their current trailing 12 months revenue would be. Probably still a bit conservative, but easier to justify than projecting that growth continues at exactly the same pace.
Of 30% of the work is done 10% faster that leaves a 3% gain for other economic activities. If that is true the CapEx is justified.
Using sus statistics to draw weird conclusions.
That’s an interesting perspective. It does feel a bit like we’re setting money on fire.
The 1880s 6% on railroads is an interesting number, I didn't know it was that much.
But I don't hear anyone worried about the massive power consumption without a clear indication if this is a net positive for our society.
We're yet to see if it's going to be a winner takes all market or whether there will end up a Linux equivalent pop up that destroys all the investment from the big players because programmers are too tight to pay for software.
Maybe that's something that can only be determined looking back. There are so many unknown unknowns.