> Here’s what’s never happened before: everyone knows the script.
I'm don't think this is unique, most bubbles historically as far back as the South Sea bubble have had a lot of people aware of the irrationality, but investing in an attempt to profit from it.
I'd even go so far as to say, this is exactly what makes bubbles so volatile as opposed to normal "market corrections". If the dotcom boom had been all people who really believed they were sensibly evaluating the internet's financial potential, I don't think we'd have seen them jump ship quite so quickly.
I won't predict the future, but another point about historic bubbles: they almost all go on much further than people think they will before collapse.
Oh, they know its a bubble. FOMO is kind of rational I guess. Seeing others profit wildly while you fall behind can be pretty motivational to enter the trade.
I had the same thoughts as much as 2 years ago on how this will play out. Unlike with railroads and fiber optic cable however, the core infrastructural asset of GPUs tends to become rapidly obsolete after about 5 years.
Commoditization of this scale of compute is definitely going to be a boon for many fields of research. Unfortunately fundamental public research is exactly what is being cut right now in the US.
Long term, I think the real winners are going to be in robotics. Still an unsolved field, but Waymo proves that even a nearly 20 year slog to the finish line is viable. And robotics infrastructure may be more robust to obsolescence than the underlying compute. I find it odd so many companies are making humanoid robots though... Over engineering that reeks of bubble economics and possible fraud.
I think the allure of humanoid robots is that they are drop in replacements for agents in a world desgined for humans.
If you want your robot to be a helper around the general populations houses for example, you would aim to make a general purpose bot capable of stairs, ladders, lying down, reaching high, stepping over things, holding awkward weights and loads while doing all of the above. Pinch, twist, push, pull, in all degrees of motion a human has etc.
Completely off-topic: I find it odd that we easily use this argument for humanoid robots (and also self-driving cars), but handicapped people are still bound to wheelchairs and have to constantly fight to change the environment and make it wheelchair-accessible.
If we applied the same logic, there should be a massive effort to ditch wheelchairs and build exoskeletons instead.
For disabled people who can use their arms and propel themselves, a wheelchair is low-maintenance, dependable, repairable, self-powered, and generic enough for there to be a healthy market and not too much vendor lock-in. Wheelchairs are not necessarily low-tech, but they are fully understandable. If the user of a wheelchair is unable to move themself for whatever reason, any able bodied person can step in and push. These things matter in any situation I think, but they matter even more in an emergency or a war zone.
Furthermore, mobile robots currently in home use--vacuum and mop robots--are all wheeled, of course. We've shown we can accommodate wheeled robots in the home if we feel like the payoff is worth it.
Well I think wheels match the use case there, a small bot close to the ground with just the one job. I think there will be many wheeled bots to begin with. But long term I don't see that form factor scaling to "able to do all tasks around the house".
It's super easy to come up with scenarios that a wheeled bot can't cope with, but again "good enough, cheap enough" will probably see lots of wheeled bots on the market. I am just trying to show why the pioneering companies would be interested in bipedal bots, it's a long term play.
Lastly, the elephant in the room is that basically all general purpose bots are a euphemism for military bots that will need to operate in unknowable conditions.
Exactly, we need legs when they are specifically needed, and we already have wheeled robots so building legged robots that can move like a human will cover so many cases we currently cannot cover.
And even more important are arms and hands, and legs is a precursor to that, they are much simpler so its smart to start with legs to then try to make good arms and hands.
Give me the option of a humanoid looking across that takes care of all in house chores and one that's that utility based with wheels and arms, I will likely choose the humanoid one even with a 100% premium price.
I mean I wouldn't buy either unless I could be certain it's not uploading all data to the cloud and be fully controlled by a user hostile company, but if we're talking fantasy tech ala Detroit: become human... Yeah, it'd be willing to spend a lot of money to have all chores taken care of by a humanoid robot.
And in before someone talks nonsense again wrt "you already can, just pay someone to do it for you"... I do not want to have strangers in my home. This is also essentially why I wouldn't want any cloud connected bot anywhere innit.
The cloud situation is where it's probably going to fall down at first (haha). I don't see companies choosing to offer local model integration over the possibility of using the robot as a loss leader to a long term subscription model for access to the compute/inference.
But that's going to be hilarious. Imagine your internet goes down while the bot is half way down your stairs, or the in the middle of pouring a drink. Very fun.
Much like wheelchairs vs exo skeletons, the simpler (and cheaper) tech tends to win. I'd imagine in a future where robots are everywhere, they'll use whatever cheap locomotion is appropriate for their tasks, probably predominantly wheels. It's a fun vision to imagine bipedal robots everywhere like in old sci movies, but I'm not convinced that's how it'll play out, the economics don't make that much sense.
Bipedal robots are more expensive to develop, build and maintain, more limited in their payloads, and because of the additional complexity, less reliable.
Cost will be the reason why these over engineered robots fail. Cost is the reason why indoor vertical farms fail, even though in their case, the environment is controlled and the tech is relatively simple compared to omnipotent field robots.
The most viable use case of AI is bullshiting humans, which is still a multi-billion market. Infrastructure hooray!
I look at this a bit more generously: We're pushing the boundaries of what's technically possible. At least for niche use cases, I'm convinced bipedal robots and GenAI will have lasting value. Are they the next automobile / electricity / smartphone? I'm sceptical.
Reminds me of some of the early designs imagined for automatic dishwashers which had articulated arms and hands. The dishwashers we have are nothing like what was envisioned by those early designs. It just takes some time to break out of the pattern of thinking that the recent past imposed due to the technology of that time.
> If we applied the same logic, there should be a massive effort to ditch wheelchairs and build exoskeletons instead.
Knowing the kind of markup on wheelchairs that means a YouTuber wheel chair look like a bargain (see Jerry rig everything wheelchair), I can't imagine how much the US healthcare "industry" would charge for a "medical grade" exoskeleton.
I hear you, I think there's some obvious points you've already considered on price and serviceability. But maybe we do see that coming soon? Exoskeletons currently require some mobility from the legs from the user in the products available today, but as automatic bipedal motion gets more reliable maybe that changes.
I have seen how robots currently behave when they lose their footing though, and I'd be bloody terrified to be strapped into one.
Maybe wheelchair users and robot manufacturers can share a force for getting wheeled locomotion into more spaces, but I think homes will always be a challenge as stairs are a requirement for denser living, and elevators are expensive.
I love how most people can't even afford a car without taking loans but we're talking about personal robot assistants as if it was right around the corner and the natural evolution of things
With the wealth gap increasing ever further, I think we will see technology in lock step with that divide.
I doubt robots will actually end up in every household, but a niche luxury product and utility for businesses makes some sense. Even if you think about it from that perspective, robot makers would still want them to be a universal robot not dozens of unique use case bots.
If a business can pay 30k for a general purpose extra set of hands I think that would be a no brainer, and I think the wealthy would see it similarly.
>I doubt robots will actually end up in every household, but a niche luxury product and utility for businesses makes some sense.
Sounds like a limited market/growth potential, hard to amortize the huge R&D etc. Could happen but will never justify the current levels of investment required.
Such robots aren't more expensive than cars though, you can buy a humanoid robot today for a fraction of the cost of a car. They lack intelligence but they can move around.
The allure of humanoid robots is they don't have human rights while being able to replace humans. If it turns out that they end up being conscious, their lack of humanity will be all humans need to justify enslaving them. See: animals.
The half-life of iron is pretty low too, the advantage of the rail system is what it allowed us to do when it was cheap enough.
All the investment in AI should help bring infrastructure up to a higher level, power distribution and cooling for example are at a much higher level than would have otherwise been.
Who knows what use that might have if it suddenly becomes incredibly cheap.
The lasting infrastructure of railways was the rights of way and the stations, and I think you're hinting that building them in the 1840s allowed us to do that when no one cared very much about NIMBYs or bulldozing through the countryside.
What's the corresponding infrastructure of AI? The major cost - the GPUs - are effectively obsolete after 3-5 years. The physical location of the datacenters, power, cooling and fibre that connects them might be the lasting infrastructure. Is datacenter location important? Are we actually building up new power sources (apart from endless announcements about FANGs opening nuclear power stations, which as far as I'm aware have not happened yet)?
I’d look to the lasting infrastructure improvement from the dotcom era. Such as laying fiber.
A big ones here may also be increased technological literacy, the rise of a new UI paradigm (chat with a non-human) and the structuring so much data in the world that while it previously existed was hard to meaningfully leverage because it was unstructured.
And, last but not least, lowering the barrier to entry to starting tech companies by eliminating and launching a new generation of SMB-like tech startups that don’t need to take VC-money and scale to survive. And as a result can can solve problems facing niche industries (not to be confused with things like Wix or Etsy that lowered the barriers business selling real world products to create an online presence)
If nothing else, mainstreaming AI will have the same impact mainstreaming spreadsheets did.
For some radioactive isotope probably. Uranium 235 half life is, what, > 500 million years? That would make iron significantly hotter. Normal Fe is effectively around forever.
On long enough timescales, the most stable thing in the universe is the iron isotope 56Fe. All heavier atoms will decay to 56Fe, and all lighter atoms will eventually combine to form 56Fe via quantum processes, even at zero temperature. 10^15000 years from now, there'll be iron stars comprised almost entirely of 56Fe.
It's not the tracks itself that need to be maintained first. When they are the issue the easiest fix is to swap the rails.
What need to be done first is the gravel and then also the ties. Expensive are also trackout/switches with motors, and of course the signal boxes. What is now the big deal is adoption to newer technologies like ETCS.
What needs the fastest maintenance nowadays, though, is software :-).
> however, the core infrastructural asset of GPUs tends to become rapidly obsolete after about 5 years.
Is it all about the actual GPUs though, is that the only "infrastructure" being built? A list from the top of my head of things that I'd say do last:
1. Data center buildings (take a while to build, contents completely aside).
2. Organisations and processes for running operations and procurement in said data centers - doesn't take decades to build for sure, but it's something worthwhile to already have.
3. Advances in the actual chips, i.e. more powerful processing units.
4. Advances in chip fabrication.
5. Chip fabrication facilities and organisations (similar to #1 and #2).
So sure, GPUs are highly temporary. But a lot of the things being developed and built around them much less so.
I do think one possible bubble burst scenario is that we'll have cheap compute available for decades but not a lot of great ideas of what to do with it. That is not unlike the 2000s I suppose.
Consider the second order effects of building all those data centers.
The GPU hardware rots and becomes obsolete in a matter of years, but the national infrastructure required to support the physical sites isn't going away. Things such as...
- improved power distribution networks
- logistics arrangements to build and support the DC sites
- lots and lots of new fibre interconnects to support the massive bandwidth needs
- hopefully: better power delivery planning laws
- plumbing infrastructure, because all that hardware requires cooling
Some of the DC sites will be decommissioned from their initial use, but given the physical security requirements, might morph into handy higher-security industrial facilities with only small repurposing. Such reuse cases would especially benefit from improved logistics (see above).
I'll be honest: this list sounds like grasping at straws to find something positive in this fiasco and doesn't come close to building something lasting and valuable for USA.
I suspect that if AI doesn't use the compute then something else will happily fill the gap - like building more lanes on a highway. It will be interesting to see what fills the GPU compute glut though.
Regards robot form factor; I'd rather R2D2 than C3PO. I don't want anything approaching the Uncanny Valley; I want a machine that does handy things!
Yes the thing that might be missed in the point about how the big buildout of GPU compute is going to be the backbone of the future etc is that, unlike railroads and dark fibre, the GPU compute gets obsolete really really quickly. So it's not the same.
I had a friend who got a Sun cluster for basically free when the 2000 dot com bubble burst. And when we were doing recreational math contests a couple of years later it was slower than our laptops.
So it is very likely that a load of today's GPU compute is very competitive next year or the year after?
The AI bubble bursting will kill investment in the next gen hardware in the west.
But china will come to market with its first gen that it is currently building to replace its dependency on the west and will leapfrog the west etc. China isn't really completely dependent on competing in our AI bubble, its using AI for its own things and will plough on even when the west bubble bursts. Seems obvious?
Still, there has been so much talk about the AI bubble bursting last week and this is the the best writeup.
I do agree with you, but I think there a non-zero chance the situation might be different now.
We are not getting the same insane gains from node shrinks anymore.
Imagine the bubble pops tomorrow. You would have an excess of compute using current gen tech, and the insane investments required to get to the next node shrink using our current path might no longer be economically justifiable while such an excess of compute exists.
It might be that you need to have a much bigger gap than what we are currently seeing in order to actually get enough of a boost to make it worthwhile.
Not saying that is what would happen, I'm just saying it's not impossible either.
> The speculation democratized investing in a way never seen before. Clerks, shopkeepers, and domestic servants, people who had never owned stocks before, mortgaged their homes and borrowed money to buy railway shares.
I like the term "democratize investing" here. "We're granting the masses the privilege of dumping their lifesavings into this overhyped project, so we can make a clean exit".
Several paragraphs later, the article argues this time is different:
> Yes, retail can buy Nvidia, but they can’t access pre-IPO rounds where the real speculation happens. This concentration among professional investors won’t prevent a bubble, but it might prevent the kind of widespread financial devastation that followed previous crashes.
> Creative destruction is brutal math. The capital? Gone. Completely vaporized. But infrastructure isn’t stock certificates. Those fiber optic cables didn’t vanish when Pets.com did. The data centers kept humming after Webvan went dark. All that ‘wasted’ investment had already transformed into something physical. The pipes, servers, and networks that would become the foundation for Google, Facebook, Amazon Web Services, and the digital transformation that actually did change everything. The bubble’s victims unknowingly funded the future. They just paid a decade too early.
The flow of money to spur innovation is exactly like "Cambrian Explosion". We should do this more often, with biotech and future fields to come.
> Those fiber optic cables didn’t vanish when Pets.com did.
OTOH all the VR headsets gathering dust now didn't turn out to be quite as useful as those fiber optic cables. And I'm not sure what will remain after the AI bubble pops except for a massive matrix multiplication overcapacity ;)
I also wouldn't call all the money being funneled into a single technology a "Cambrian Explosion", it's the opposite of that, an organism being propped up that wouldn't survive on its own in a competitive environment.
Paradoxically, I think Cambrian Explosion happened because of innovation of eyes. Maybe the tech that currently was developed for VR headsets could find home in smart glasses (i.e. google glass)
The Cambrian Explosion happened because of the environmental changes, such as the amount of free oxygen available, while innovations such as eyes were the result of the Cambrian Explosion with life becoming more diversified and complex. So I guess its more accurate to think of stuff that empowers AI, such as cheaper and better GPUs and machine learning, as cyanobacteria that produced the oxygen for organisms to feed and grow upon.
We should just sacrifice more people's savings[0] to fund innovation. This is truly an efficient way of doing things.
[0] "millions of ordinary investors watched their retirement accounts and college funds evaporate. The same middle-class Americans who had been told they were foolish not to participate in the ‘new economy’ now faced financial ruin. Teachers’ pension funds were halved. Family savings meant for homes and education vanished"
And pray we don't enter a "lost decade" (which is closer to 30 years, now) like Japan.
What is their gross margins? Is the loss just because they have to keep competing at an ultra competitive race?
On a software focused forum like HN, I’m surprised people still don’t understand the grow at all cost until you are the top 2 or 3 left model. There has been dozens of examples of tech companies losing money for years just to become highly profitable after.
People are still not getting that big tech is investing like their lives depend on it is because they are. GenAI can render the core businesses of big tech obsolete.
> There has been dozens of examples of tech companies losing money for years just to become highly profitable after.
Sure, but there have been thousands of tech companies that lost money year over year and went bust. Odds are that any given AI company will end up losing a lot of money. Maybe the asymmetric potential payoff is worth the risk in certain cases, but it's not crazy to be skeptical about Anthropic or any other hot company.
Sure, but there have been thousands of tech companies that lost money year over year and went bust. Odds are that any given AI company will end up losing a lot of money. Maybe the asymmetric potential payoff is worth the risk in certain cases, but it's not crazy to be skeptical about Anthropic or any other hot company.
That's the game. It's called the power law in VC investing. It's worked.
That depends on the regulators being asleep on the wheel again and letting monopolies happen. At the minimum here in Europe they'd automatically fall under Digital Services Act. According to OpenAI they have 41.3 million average monthly active recipients in the European Union. Only a few million more and they fall under DSA.
He’s saying it’s bubbly because he can’t get good prices to buy out startups. He’s a buyer, first and foremost. No one wants to have to pay $20bn for some of these companies. They don’t believe it’s a bubble on any level, and I do think anyone in involved sees it as an infinite investment until the very end of the world (not kidding). It’s the end-game for software tech, especially if you are willing to be humbled by what stuff like Genie3 will become.
There is absolutely nothing else left to invest in when it comes to software development, this is it.
There is hubris, but calling it a bubble simply does not check out, for one reason alone: If AI did absolutely nothing from here on out but give maybe a somewhat better version of current claude code (and it confuses me to no end that some people still refuse to see what is going on there, which admittedly are increasingly few of those who try, which makes sense because stuff gets better) that leads to, say, a ~2x dev speed up it, given the size of the market and how much software is missing still, AI as a whole would still be undervalued.
Of course, assuming that this would be the only thing where economic gains come from is already such a laughably bearish vision. It's just that that's all you need for the bubble-thesis to fall flat.
This raises the question: hasn't the market already priced in a ubiquitous AI future? The current valuations seem to reflect the assumption that AI won't just 2x developer productivity but will also automate a huge portion of the workforce/boot productivity across the board. And I believe it has, and it's the only way to explain the sky-high valuations for companies that are 1) still losing money and, more importantly, 2) have no moat.
If that's true, then we are in a bubble by definition. When AI development eventually stagnates, failing to deliver on these promises, valuations will correct fast (and painfully). What happens then to Nvidia and other hardware companies? And what about the massive AI investments currently propping up the economy [1]? These would also be slashed, messing up the entire supply chain that's gearing up to meet this demand.
While I agree the technology is great and useful, I believe we are in bubble territory. I believe it's unlikely to be as transformative as the CEOs and VCs funding these companies claim.
A 100% increase in software development velocity is a wild claim to assert at this stage. The industry as a whole is not seeing anything like that and the handful of people making claims to that end are executives with a vested interest in boosting the hype. LLMs probably increase prototype or ad-hoc script development by that amount, but that only accounts for a minuscule amount of actual work being done in the industry.
Also whatever LLM productivity gains are currently happening are being massively subsidized. Once companies switch out of lighting money on fire mode most of these products will get dramatically worse and more expensive. Maintaining a cutting edge LLM isn't a railroad that you build once and can run and manage for centuries at a fraction of the initial price, they require constant expensive investment.
> Creative destruction is brutal math. The capital? Gone. Completely vaporized. But infrastructure isn’t stock certificates. Those fiber optic cables didn’t vanish when Pets.com did.
I read quotes like this and reminded that it is common that people forget money is just a competitive resource we use to outbid each other for _real_ things. Money moves around, it isn't lost or "Completely vaporized", someone receives it at the other side of the transaction. It is still in circulation, it can still be used to outbid people for real things, just by different people.
Also, pets.com still exists, it just forwards to petsmart.com.
Money can be "lost", and "created". In fact, it regularly is by commercial banks; this is the cornerstone of the modern economy. The bank of England wrote a pretty accessible document on money being created and destroyed [1]. For a slightly deeper dive (but equally accessible) check out "Can’t We Just Print More Money?" by Rupal Patel, et al. [2] which describes the different kinds of money.
The 2014 doc was a pretty wild read for me when it came out - it changed my perspective quite a bit.
> money is just a competitive resource we use to outbid each other for _real_ things
That's true, but the thing that's lost is the economic/productive capacity that the money was spent on, that could have been used for other (better) purposes.
For example, if I raise $100mn in a frothy market, and spend it on employing 100 Engineers on $1mn/yr salaries for 1 year before ultimately going bankrupt, it's true that the money doesn't disappear, as it was simply transferred from the VCs to the Engineers, but what's spent/consumed is the Engineers' time. Society can never get those 100 person-years back, and the VCs have to write their capital investment to 0.
The other comments are separately true - money is created by bank borrowing and destroyed by loans being repaid or going bad. Periods of speculation often result in increasing leverage (e.g. borrowing to buy stocks/houses), which does result in the destruction of money when it unwinds (as well as damage to bank's balance sheets, which can become problematic when it happens at a large enough scale - see 2008).
What I find so weird always is that well value "vaporized" when prices went down. But what is the term when prices went up? As surely that wealth also respectively came from same place it went when it went down...
"capital" in the economic sense isn't money at all - it's tools, infrastructure, knowledge; from this point of view, you're correct. A bubble bursting on the stock market doesn't destroy capital.
On the other hand, the monetary value of the stock market (and other assets) going up and down does create or destroy "money". From a financial point of view, it's not a zero sum game.
This is incorrect. https://en.wikipedia.org/wiki/Money_creation . A bubble bursting is the inverse process of money creation. Money isn't paper bills or metal coins. It is mostly numbers in a computer.
My thoughts: I'm expecting the LLM-driven bubble to burst. Not AI in general, but it seems LLM has been soaking up all the investment dollars and LLM will eventually hit a wall in critical fields where an expert can poke holes at the results. The data centers go poof!
Now, the contracted land rights, water rights, and electricity rights, highly discounted will be of value. Kind of like the defunct railroad rights in your community that can't easily be repurposed into a bike path as the city does not have the rights.
So, I wonder if there will be companies formed to buy up the infrastructure rights (the contracted cheap power and water) and re-sell them to the city and counties that originally generated the contracts. Its too easy to see the naïve city and county officials succumbing to the hookers and other marketing techniques when these contracts were issued. Now they can be sold back at a profit.
Is AI a bubble? Probably.
Does that make it meaningless? Not at all.
Carlota Perez’s Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages (2003) is strikingly prescient--and worth revisiting
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The thing is, this is a financial bubble, not a capabilities bubble.
If you're worried about money, this is horrible news. If you just want to get shit done, it's great news, only if you can avoid losing personal agency long enough to survive the crash.
We're headed towards the hockey stick in terms of what people using AI can do. I'm rapidly learning that even ChatGPT5 can get confused, and lose sight of goals, but not in the hallucination variety, just the bog standard way people end up trapped in rabbit holes. I'm learning how to talk to it and get it back on track.
AI really can be productive, but it still needs guidance to be really useful.
The thing is the infrastructure that is being built now is owned by a small number of already large companies. Is it really that likely that Microsoft, Amazon, Meta/Facebook, Alphabet/Google, Oracle, Nvidia and all the companies Elon Musk is involved with are going to go bankrupt?
I recently gave an unprompted tirade about bubbles creating pockets of fake economic activity with no “real” economic output or value creation tied to them, and how sometimes, the circulatory systems in those bubbles feed into themselves.
E.g. someone borrowing against their higher property value(s) to put a down payment on another property.
Leverage is the amplifier. And I don’t see many self-circulating capital flows. I expect contractions to be reasonable for this bubble, or more realistically industry stagflation.
When US manufacturing jobs moved to China in the 2000s, American workers saw their incomes drop dramatically - like a factory worker going from $30/hour at Ford to $12/hour at Walmart. Instead of accepting lower living standards, the system created an alternative solution through housing and credit.
As home prices rose rapidly (often 10-15% annually), workers could borrow against their home's appreciation through equity loans and refinancing. A worker whose house went from $150,000 to $300,000 could borrow $50,000 to maintain their lifestyle - buying trucks, boats, and continuing to consume as if their income hadn't dropped.
This created a win-win illusion: China got manufacturing jobs, US companies got higher profits from cheap labor, Americans got cheaper goods at stores like Walmart, and workers felt wealthy despite earning less. Nobody complained because everyone seemed to benefit in the short term.
The system worked as long as home prices kept rising, allowing people to keep borrowing against appreciation. But when housing prices stopped climbing around 2005, the illusion collapsed - workers were left with lower wages, massive debt, and no way to keep borrowing.
This mechanism essentially allowed America to maintain consumption by borrowing against future wealth rather than addressing the fundamental problem of job losses. The 2008 financial crisis was the inevitable result when this unsustainable system finally broke down.
The Nikkei 225 index is at all-time-highs in August 2025. Highest pay hikes in 30 years, BoJ raised interest rates etc. (sure, both because of inflation, but still).
I think this is directionally correct. But we tend to remember the technologies which became mainstream after the bubble burst and forget those that fizzled or found a much less world-changing niche.
Blockchain, NFTs and 3D printing are still around and have vacuumed up billions and billions without the average person being able to tell an impact on their lives.
3d printing has gone somewhat mainstream unlike the others. Manufacturers use it and it's somewhat common to see stuff that's been 3d printed being sold or created as small run prototypes.
Yeah and that’s exactly what I mean. It’s found its place and is a useful technology. But it has not revolutionized entire industries like the internet, smartphone etc
VR is good example of money being burned and middling adoption to a not that big population. For average person it has ended up something cool, but in the end not common and forgettable. And I am not sure if it even was a bubble, but selected players just investing in it.
I would argue it disrupted engineering. So many videos on YouTube can be found of people cutting out expensive molds (for example) and getting a product to market faster and cheaper. And this is happening in companies as well (Prusa released an enterprise grade printer not long ago).
At the same time, Printables and MakerWorld are flooded with…toys. They gamified their platforms and a ton of “thingy” models, ex. generic planter pots (some of them just renders, never even printed!) is the result.
This certainly hides the benefit but I very much think it’s there.
There is places and things that work for 3d printing. Very small scale manufacturing. Prototypes. But actually selling those is somewhat hard and not scalable market. And home printing... Yeah that sounds like hobbyist to me with corresponding market.
On other side you get to complex topologies and very specialised parts. Again pretty hard to scale and limited demand.
In the end it is manufacturing and manufacturing is huge. But also generally does not have great margins. It has lot of competition. So 3D printing would end up there with others say makers of CNC machines, various presses and so on. Multi-billion dollar industry, but not tech.
This is precisely what I mean though. It's a technology that has found its place and is definitely useful and a value-add to society.
But if we look at the types of predictions made in the early days (print a house in a day for under $5k, print any food you want at home, obviating factories you can make anything at home...), almost none of that has come through.
And that doesn't mean it's a bad technology. Most technologies don't revolutionize the average person's life, but can still change corners of civilization.
But compare that to the internet, which has literally changed how we do basically everything in our daily lives.
I think the point is that most technologies are like 3D printing while the current narrative is that AI will be more like the internet.
Nothing was a bubble. Dotcom was into a new paradigm shift with mobile in less then a decade. These aren’t even significant timelines when you think about it.
So you pull out of the AI hype today, fine. These past recent bubbles show that everything ramps back up within five years.
AI-is-hype people are delusional. The computer has never been able to do what it’s doing today. We could only dream of it.
Precisely the article's point. AOL may not have been the successful company it could've been, but it did get millions of households online, which became infrastructure for the successful companies we all know today.
> AI-is-hype people are delusional. The computer has never been able to do what it’s doing today. We could only dream of it.
Sure, but do the math. It doesn’t work out yet. This stuff burns money and energy. Either revenue has to go up A LOT or costs do have to come down A LOT (or quality has to suffer by using smaller models).
Also nothing says that same thing can't be a bubble over and over again. Especially something as fundamental and old as housing. Those in power might even want it to be boom and bust cycle.
I think there's a big difference between things that have always been bought and sold (housing, oil, food, minerals, etc.) and actual net-new technology that may or may not pay off on its promise.
The former can be overvalued (see housing pre-2008), but we'll never come to the conclusion that it's useless or only needed in niche use cases. In that case, the item itself isn't really the bubble. The bubble is in what enables the irrational prices (e.g. subprime mortgages).
The latter can definitely be a bubble where the technology just isn't useful for a given use case (or at all).
Now that is the most interesting question anyone here asked.
It looks likely it could take all the big software companies with it, and all the big cloud providers. It may well kill most GPU vendors, most datacentre and hosting companies. Industrial-scale LLMs are propping up the entire cloud business, and that itself was bloated and overgrown. SaaS was a mistake. Anything -aaS was a mistake.
I'd _like_ to see this kill off MS, Oracle etc.
Intel is teetering. NVidia is probably screwed. AMD may follow.
There's geopolitics here too. China wants Taiwan and has actively been divesting from Western hardware and software. So has Russia. Lots of Linux growth there: it's free, it works, they can just take it.
And there's rapid climate change too, which is starting to become visible.
Everyone who manufuctures in Taiwan may well be doomed. But ditto everyone in the tropics, in the newer tech centres: Malaysia, Thailand, etc.
Everyone who gets chips from Taiwan is probably screwed. Everyone who assembles in PacRim and SE Asia too.
That will take down most Western companies.
Apple might weather it: it sells hardware, and it has its own unique OS family. But others make its hardware for it -- in those areas.
Chinese tech may bloom.
Small scale individual FOSS will be OK.
Stuff reusing legacy tech, that can run on old kit.
Everyone's deprecating x86-32. That may bite them hard.
Everything dependent on virtual stuff and public cloud, everything dependent on K8s and remote datacentres, everything you can't run locally on kit you own that sits in premises you own.
That includes a lot of the games industry.
Non-commercial OSes will be OK.
Bad times for RHEL and the clones. Bad times for SUSE and maybe Canonical.
Maybe OK for Debian. Good for Arch & Alpine & Slackware.
Stuff that needs GPUs, bad. Stuff that works fine in standard def on CPU graphics, good.
But I am just indulging my own biases and skepticism here, I freely admit.
I don't think for example MS will be doomed so fast. Even when they loose all their investments and a lot of money. They still have their software, and contracts with nearly every company.
I'm not so sure I want MS to go away though. While I'm not a fan of MS and I've never even really used a Windows computer beside it being mandated in school and university, I don't want Windows to go away.
When the masses come to Linux, it will simply become worse and locked down. There are already enough companies invested who will want to do so as soon as it becomes feasible and enough influencable users are on Linux.
Windows is better then mac OS in terms of user control, so I also don't want the masses to go to mac OS.
What I would welcome is, Desktop Linux to not be a rounding error and the OS market to become more competitive, so that MS needs to improve Windows and can't ship whatever crap of the day they want.
A golden rule that has been very decent in the last decades - When my mom starts asking me "What's up with this tech" - it's most usually is a bubble ;)
Mostly agree with the author. But I also believe that this is very emergent tech and we’re still figuring out the best way to actually make use of it
The clearest example is in AI generated visual content. If you dig through what people are doing, its clear that only a very small % of users are actually getting truly high-quality, ready-for-production content, while the rest are just prompting in pure slop. There is a skill level to this that hasn’t really permeated the mainstream
Once that happens, we might see some of that 95% waste figure change to, maybe, 50% waste
I think we should be weary of the fact that Sam Altman having an interest in cutting VC funding for new AI products and competitors in order to condensate most AI funding into OpenAI and kill any new competitors, doesn't make him exactly a neutral player in all of this.
The "fearmongering" he is trying to create, can be seen as self-serving, so his opinions should be taken with a very big grain of salt.
> Here’s what’s never happened before: everyone knows the script.
I'm don't think this is unique, most bubbles historically as far back as the South Sea bubble have had a lot of people aware of the irrationality, but investing in an attempt to profit from it.
I'd even go so far as to say, this is exactly what makes bubbles so volatile as opposed to normal "market corrections". If the dotcom boom had been all people who really believed they were sensibly evaluating the internet's financial potential, I don't think we'd have seen them jump ship quite so quickly.
I won't predict the future, but another point about historic bubbles: they almost all go on much further than people think they will before collapse.
I agree with that. This one may be unique in possibly living up to the hype.
Oh, they know its a bubble. FOMO is kind of rational I guess. Seeing others profit wildly while you fall behind can be pretty motivational to enter the trade.
Greater fool theory: https://en.wikipedia.org/wiki/Greater_fool_theory
I had the same thoughts as much as 2 years ago on how this will play out. Unlike with railroads and fiber optic cable however, the core infrastructural asset of GPUs tends to become rapidly obsolete after about 5 years.
Commoditization of this scale of compute is definitely going to be a boon for many fields of research. Unfortunately fundamental public research is exactly what is being cut right now in the US.
Long term, I think the real winners are going to be in robotics. Still an unsolved field, but Waymo proves that even a nearly 20 year slog to the finish line is viable. And robotics infrastructure may be more robust to obsolescence than the underlying compute. I find it odd so many companies are making humanoid robots though... Over engineering that reeks of bubble economics and possible fraud.
I think the allure of humanoid robots is that they are drop in replacements for agents in a world desgined for humans.
If you want your robot to be a helper around the general populations houses for example, you would aim to make a general purpose bot capable of stairs, ladders, lying down, reaching high, stepping over things, holding awkward weights and loads while doing all of the above. Pinch, twist, push, pull, in all degrees of motion a human has etc.
Completely off-topic: I find it odd that we easily use this argument for humanoid robots (and also self-driving cars), but handicapped people are still bound to wheelchairs and have to constantly fight to change the environment and make it wheelchair-accessible.
If we applied the same logic, there should be a massive effort to ditch wheelchairs and build exoskeletons instead.
For disabled people who can use their arms and propel themselves, a wheelchair is low-maintenance, dependable, repairable, self-powered, and generic enough for there to be a healthy market and not too much vendor lock-in. Wheelchairs are not necessarily low-tech, but they are fully understandable. If the user of a wheelchair is unable to move themself for whatever reason, any able bodied person can step in and push. These things matter in any situation I think, but they matter even more in an emergency or a war zone.
Exoskeletons can't match that.
All of those are arguments for why robots should generally have wheels rather than legs, except for when legs are specifically needed.
Furthermore, mobile robots currently in home use--vacuum and mop robots--are all wheeled, of course. We've shown we can accommodate wheeled robots in the home if we feel like the payoff is worth it.
Well I think wheels match the use case there, a small bot close to the ground with just the one job. I think there will be many wheeled bots to begin with. But long term I don't see that form factor scaling to "able to do all tasks around the house".
It's super easy to come up with scenarios that a wheeled bot can't cope with, but again "good enough, cheap enough" will probably see lots of wheeled bots on the market. I am just trying to show why the pioneering companies would be interested in bipedal bots, it's a long term play.
Lastly, the elephant in the room is that basically all general purpose bots are a euphemism for military bots that will need to operate in unknowable conditions.
> except for when legs are specifically needed.
Exactly, we need legs when they are specifically needed, and we already have wheeled robots so building legged robots that can move like a human will cover so many cases we currently cannot cover.
And even more important are arms and hands, and legs is a precursor to that, they are much simpler so its smart to start with legs to then try to make good arms and hands.
Give me the option of a humanoid looking across that takes care of all in house chores and one that's that utility based with wheels and arms, I will likely choose the humanoid one even with a 100% premium price.
I mean I wouldn't buy either unless I could be certain it's not uploading all data to the cloud and be fully controlled by a user hostile company, but if we're talking fantasy tech ala Detroit: become human... Yeah, it'd be willing to spend a lot of money to have all chores taken care of by a humanoid robot.
And in before someone talks nonsense again wrt "you already can, just pay someone to do it for you"... I do not want to have strangers in my home. This is also essentially why I wouldn't want any cloud connected bot anywhere innit.
The cloud situation is where it's probably going to fall down at first (haha). I don't see companies choosing to offer local model integration over the possibility of using the robot as a loss leader to a long term subscription model for access to the compute/inference.
But that's going to be hilarious. Imagine your internet goes down while the bot is half way down your stairs, or the in the middle of pouring a drink. Very fun.
I'd say the same thing about mobile robots, especially since ADA means most of the public environment should be relatively accessible.
Much like wheelchairs vs exo skeletons, the simpler (and cheaper) tech tends to win. I'd imagine in a future where robots are everywhere, they'll use whatever cheap locomotion is appropriate for their tasks, probably predominantly wheels. It's a fun vision to imagine bipedal robots everywhere like in old sci movies, but I'm not convinced that's how it'll play out, the economics don't make that much sense.
Bipedal robots are more expensive to develop, build and maintain, more limited in their payloads, and because of the additional complexity, less reliable.
Cost will be the reason why these over engineered robots fail. Cost is the reason why indoor vertical farms fail, even though in their case, the environment is controlled and the tech is relatively simple compared to omnipotent field robots.
The most viable use case of AI is bullshiting humans, which is still a multi-billion market. Infrastructure hooray!
I look at this a bit more generously: We're pushing the boundaries of what's technically possible. At least for niche use cases, I'm convinced bipedal robots and GenAI will have lasting value. Are they the next automobile / electricity / smartphone? I'm sceptical.
Reminds me of some of the early designs imagined for automatic dishwashers which had articulated arms and hands. The dishwashers we have are nothing like what was envisioned by those early designs. It just takes some time to break out of the pattern of thinking that the recent past imposed due to the technology of that time.
> If we applied the same logic, there should be a massive effort to ditch wheelchairs and build exoskeletons instead.
Knowing the kind of markup on wheelchairs that means a YouTuber wheel chair look like a bargain (see Jerry rig everything wheelchair), I can't imagine how much the US healthcare "industry" would charge for a "medical grade" exoskeleton.
There just aren't that many people in wheelchairs. There's not a lot of TAM in trying to build a better wheelchair that involves a huge capex.
So instead the government gets involved and demands a change to built environment instead of a speculative bet on the idea of a new technology.
I hear you, I think there's some obvious points you've already considered on price and serviceability. But maybe we do see that coming soon? Exoskeletons currently require some mobility from the legs from the user in the products available today, but as automatic bipedal motion gets more reliable maybe that changes.
I have seen how robots currently behave when they lose their footing though, and I'd be bloody terrified to be strapped into one.
Maybe wheelchair users and robot manufacturers can share a force for getting wheeled locomotion into more spaces, but I think homes will always be a challenge as stairs are a requirement for denser living, and elevators are expensive.
I love how most people can't even afford a car without taking loans but we're talking about personal robot assistants as if it was right around the corner and the natural evolution of things
With the wealth gap increasing ever further, I think we will see technology in lock step with that divide.
I doubt robots will actually end up in every household, but a niche luxury product and utility for businesses makes some sense. Even if you think about it from that perspective, robot makers would still want them to be a universal robot not dozens of unique use case bots.
If a business can pay 30k for a general purpose extra set of hands I think that would be a no brainer, and I think the wealthy would see it similarly.
>I doubt robots will actually end up in every household, but a niche luxury product and utility for businesses makes some sense.
Sounds like a limited market/growth potential, hard to amortize the huge R&D etc. Could happen but will never justify the current levels of investment required.
Increasing wealth inequality will increase this type of thing. William Gibson novels explain it.
Such robots aren't more expensive than cars though, you can buy a humanoid robot today for a fraction of the cost of a car. They lack intelligence but they can move around.
The allure of humanoid robots is they don't have human rights while being able to replace humans. If it turns out that they end up being conscious, their lack of humanity will be all humans need to justify enslaving them. See: animals.
The half-life of iron is pretty low too, the advantage of the rail system is what it allowed us to do when it was cheap enough.
All the investment in AI should help bring infrastructure up to a higher level, power distribution and cooling for example are at a much higher level than would have otherwise been.
Who knows what use that might have if it suddenly becomes incredibly cheap.
(this is my silver lining thinking)
The lasting infrastructure of railways was the rights of way and the stations, and I think you're hinting that building them in the 1840s allowed us to do that when no one cared very much about NIMBYs or bulldozing through the countryside.
What's the corresponding infrastructure of AI? The major cost - the GPUs - are effectively obsolete after 3-5 years. The physical location of the datacenters, power, cooling and fibre that connects them might be the lasting infrastructure. Is datacenter location important? Are we actually building up new power sources (apart from endless announcements about FANGs opening nuclear power stations, which as far as I'm aware have not happened yet)?
I’d look to the lasting infrastructure improvement from the dotcom era. Such as laying fiber.
A big ones here may also be increased technological literacy, the rise of a new UI paradigm (chat with a non-human) and the structuring so much data in the world that while it previously existed was hard to meaningfully leverage because it was unstructured.
And, last but not least, lowering the barrier to entry to starting tech companies by eliminating and launching a new generation of SMB-like tech startups that don’t need to take VC-money and scale to survive. And as a result can can solve problems facing niche industries (not to be confused with things like Wix or Etsy that lowered the barriers business selling real world products to create an online presence)
If nothing else, mainstreaming AI will have the same impact mainstreaming spreadsheets did.
The half-life of metallic iron is apparently 2.6 million years, so I'm not sure what you mean there.
For some radioactive isotope probably. Uranium 235 half life is, what, > 500 million years? That would make iron significantly hotter. Normal Fe is effectively around forever.
On long enough timescales, the most stable thing in the universe is the iron isotope 56Fe. All heavier atoms will decay to 56Fe, and all lighter atoms will eventually combine to form 56Fe via quantum processes, even at zero temperature. 10^15000 years from now, there'll be iron stars comprised almost entirely of 56Fe.
Hahahah,
fair point, maybe you could show me a 50 year old rail that is still worthy of being ridden. ;)
Even a 20 year old rail is problematic from what I understand (from a UK perspective).
It's not the tracks itself that need to be maintained first. When they are the issue the easiest fix is to swap the rails.
What need to be done first is the gravel and then also the ties. Expensive are also trackout/switches with motors, and of course the signal boxes. What is now the big deal is adoption to newer technologies like ETCS.
What needs the fastest maintenance nowadays, though, is software :-).
Maybe some isotopes of iron have a half-life, stable isotopes don't decay (iron is the element where all decay chains end)
Rust.
> however, the core infrastructural asset of GPUs tends to become rapidly obsolete after about 5 years.
Is it all about the actual GPUs though, is that the only "infrastructure" being built? A list from the top of my head of things that I'd say do last:
1. Data center buildings (take a while to build, contents completely aside).
2. Organisations and processes for running operations and procurement in said data centers - doesn't take decades to build for sure, but it's something worthwhile to already have.
3. Advances in the actual chips, i.e. more powerful processing units.
4. Advances in chip fabrication.
5. Chip fabrication facilities and organisations (similar to #1 and #2).
So sure, GPUs are highly temporary. But a lot of the things being developed and built around them much less so.
I do think one possible bubble burst scenario is that we'll have cheap compute available for decades but not a lot of great ideas of what to do with it. That is not unlike the 2000s I suppose.
Consider the second order effects of building all those data centers.
The GPU hardware rots and becomes obsolete in a matter of years, but the national infrastructure required to support the physical sites isn't going away. Things such as...
- improved power distribution networks
- logistics arrangements to build and support the DC sites
- lots and lots of new fibre interconnects to support the massive bandwidth needs
- hopefully: better power delivery planning laws
- plumbing infrastructure, because all that hardware requires cooling
Some of the DC sites will be decommissioned from their initial use, but given the physical security requirements, might morph into handy higher-security industrial facilities with only small repurposing. Such reuse cases would especially benefit from improved logistics (see above).
I'll be honest: this list sounds like grasping at straws to find something positive in this fiasco and doesn't come close to building something lasting and valuable for USA.
I suspect that if AI doesn't use the compute then something else will happily fill the gap - like building more lanes on a highway. It will be interesting to see what fills the GPU compute glut though.
Regards robot form factor; I'd rather R2D2 than C3PO. I don't want anything approaching the Uncanny Valley; I want a machine that does handy things!
Yes the thing that might be missed in the point about how the big buildout of GPU compute is going to be the backbone of the future etc is that, unlike railroads and dark fibre, the GPU compute gets obsolete really really quickly. So it's not the same.
I had a friend who got a Sun cluster for basically free when the 2000 dot com bubble burst. And when we were doing recreational math contests a couple of years later it was slower than our laptops.
So it is very likely that a load of today's GPU compute is very competitive next year or the year after?
The AI bubble bursting will kill investment in the next gen hardware in the west.
But china will come to market with its first gen that it is currently building to replace its dependency on the west and will leapfrog the west etc. China isn't really completely dependent on competing in our AI bubble, its using AI for its own things and will plough on even when the west bubble bursts. Seems obvious?
Still, there has been so much talk about the AI bubble bursting last week and this is the the best writeup.
I do agree with you, but I think there a non-zero chance the situation might be different now.
We are not getting the same insane gains from node shrinks anymore.
Imagine the bubble pops tomorrow. You would have an excess of compute using current gen tech, and the insane investments required to get to the next node shrink using our current path might no longer be economically justifiable while such an excess of compute exists.
It might be that you need to have a much bigger gap than what we are currently seeing in order to actually get enough of a boost to make it worthwhile.
Not saying that is what would happen, I'm just saying it's not impossible either.
What’s the intersection between the current LLM driven bubble and robotics? Apart from Tesla’s PR?
On the other hand, since Moore's Law has flattened a lot in general, does this apply anymore?
I think at least with CPU:s the depreciation has slowed down a lot compared to 15 years ago.
> The speculation democratized investing in a way never seen before. Clerks, shopkeepers, and domestic servants, people who had never owned stocks before, mortgaged their homes and borrowed money to buy railway shares.
I like the term "democratize investing" here. "We're granting the masses the privilege of dumping their lifesavings into this overhyped project, so we can make a clean exit".
Several paragraphs later, the article argues this time is different:
> Yes, retail can buy Nvidia, but they can’t access pre-IPO rounds where the real speculation happens. This concentration among professional investors won’t prevent a bubble, but it might prevent the kind of widespread financial devastation that followed previous crashes.
> Creative destruction is brutal math. The capital? Gone. Completely vaporized. But infrastructure isn’t stock certificates. Those fiber optic cables didn’t vanish when Pets.com did. The data centers kept humming after Webvan went dark. All that ‘wasted’ investment had already transformed into something physical. The pipes, servers, and networks that would become the foundation for Google, Facebook, Amazon Web Services, and the digital transformation that actually did change everything. The bubble’s victims unknowingly funded the future. They just paid a decade too early.
The flow of money to spur innovation is exactly like "Cambrian Explosion". We should do this more often, with biotech and future fields to come.
> Those fiber optic cables didn’t vanish when Pets.com did.
OTOH all the VR headsets gathering dust now didn't turn out to be quite as useful as those fiber optic cables. And I'm not sure what will remain after the AI bubble pops except for a massive matrix multiplication overcapacity ;)
I also wouldn't call all the money being funneled into a single technology a "Cambrian Explosion", it's the opposite of that, an organism being propped up that wouldn't survive on its own in a competitive environment.
Paradoxically, I think Cambrian Explosion happened because of innovation of eyes. Maybe the tech that currently was developed for VR headsets could find home in smart glasses (i.e. google glass)
The Cambrian Explosion happened because of the environmental changes, such as the amount of free oxygen available, while innovations such as eyes were the result of the Cambrian Explosion with life becoming more diversified and complex. So I guess its more accurate to think of stuff that empowers AI, such as cheaper and better GPUs and machine learning, as cyanobacteria that produced the oxygen for organisms to feed and grow upon.
We should just sacrifice more people's savings[0] to fund innovation. This is truly an efficient way of doing things.
[0] "millions of ordinary investors watched their retirement accounts and college funds evaporate. The same middle-class Americans who had been told they were foolish not to participate in the ‘new economy’ now faced financial ruin. Teachers’ pension funds were halved. Family savings meant for homes and education vanished"
And pray we don't enter a "lost decade" (which is closer to 30 years, now) like Japan.
> Anthropic raised $450 million at a $4.1 billion valuation despite negligible revenue
What year is this from? The author might want to do a recent news search.
Isn’t Anthropic worth hundreds of billions by now and their revenue is doubling every 6 months?
5.6 billion loss in 2024 on $918 million in revenue.
When you are selling a 5 dollars for 1 dollar doubling revenue is easy. It just creates more losses, same with OpenAI
What is their gross margins? Is the loss just because they have to keep competing at an ultra competitive race?
On a software focused forum like HN, I’m surprised people still don’t understand the grow at all cost until you are the top 2 or 3 left model. There has been dozens of examples of tech companies losing money for years just to become highly profitable after.
People are still not getting that big tech is investing like their lives depend on it is because they are. GenAI can render the core businesses of big tech obsolete.
> There has been dozens of examples of tech companies losing money for years just to become highly profitable after.
Sure, but there have been thousands of tech companies that lost money year over year and went bust. Odds are that any given AI company will end up losing a lot of money. Maybe the asymmetric potential payoff is worth the risk in certain cases, but it's not crazy to be skeptical about Anthropic or any other hot company.
That depends on the regulators being asleep on the wheel again and letting monopolies happen. At the minimum here in Europe they'd automatically fall under Digital Services Act. According to OpenAI they have 41.3 million average monthly active recipients in the European Union. Only a few million more and they fall under DSA.
That is if US sanctions don't kill the DSA.
So, how would you do it?
4.1 billion is nothing these days.
FYI, Altman also said OpenAI is planning to invest “trillions” into AI in the “near future”. He said this at the same time as saying AI is bubbly.
This article is based off of the Altman bubbly comment.
Self-contradictory communication seems to become his style.
"AI is an existential risk for humanity, that's why we have to dump all resources we have into building it".
"It's critically important that AI as an industry is regulated, but also we'll pull out of the EU if they try to regulate us"
I think you should read it like this:
"AI is an existential risk for humanity ...". ... so you should trust only us to build it
"AI as an industry should be regulated ..." ... to make it harder for newcomers on the market.
[flagged]
He’s saying it’s bubbly because he can’t get good prices to buy out startups. He’s a buyer, first and foremost. No one wants to have to pay $20bn for some of these companies. They don’t believe it’s a bubble on any level, and I do think anyone in involved sees it as an infinite investment until the very end of the world (not kidding). It’s the end-game for software tech, especially if you are willing to be humbled by what stuff like Genie3 will become.
There is absolutely nothing else left to invest in when it comes to software development, this is it.
Yep. Agreed. He said this to knock down price on AI startups for acquisition and to stop the ballooning talent war costing hundreds of millions.
It’s so painfully obvious but so many AI doomers use it as evidence.
He doesn’t want a talent war with Meta and Apple. And Meta has responded by signaling a truce in the talent war by saying they’re freezing AI hiring.
Citing Ray Dalio makes me question the credibility of the whole article.
My ex boss read too much Ray Dalio and it ate his brain.
Nothing new here, thats just a feature of bubbles.
“When I see a bubble forming, I rush in to buy, adding fuel to the fire,” goes one of George Soros’s well-known quotes. “That is not irrational.”
There is hubris, but calling it a bubble simply does not check out, for one reason alone: If AI did absolutely nothing from here on out but give maybe a somewhat better version of current claude code (and it confuses me to no end that some people still refuse to see what is going on there, which admittedly are increasingly few of those who try, which makes sense because stuff gets better) that leads to, say, a ~2x dev speed up it, given the size of the market and how much software is missing still, AI as a whole would still be undervalued.
Of course, assuming that this would be the only thing where economic gains come from is already such a laughably bearish vision. It's just that that's all you need for the bubble-thesis to fall flat.
This raises the question: hasn't the market already priced in a ubiquitous AI future? The current valuations seem to reflect the assumption that AI won't just 2x developer productivity but will also automate a huge portion of the workforce/boot productivity across the board. And I believe it has, and it's the only way to explain the sky-high valuations for companies that are 1) still losing money and, more importantly, 2) have no moat.
If that's true, then we are in a bubble by definition. When AI development eventually stagnates, failing to deliver on these promises, valuations will correct fast (and painfully). What happens then to Nvidia and other hardware companies? And what about the massive AI investments currently propping up the economy [1]? These would also be slashed, messing up the entire supply chain that's gearing up to meet this demand.
While I agree the technology is great and useful, I believe we are in bubble territory. I believe it's unlikely to be as transformative as the CEOs and VCs funding these companies claim.
[1] https://sherwood.news/markets/the-ai-spending-boom-is-eating...
A 100% increase in software development velocity is a wild claim to assert at this stage. The industry as a whole is not seeing anything like that and the handful of people making claims to that end are executives with a vested interest in boosting the hype. LLMs probably increase prototype or ad-hoc script development by that amount, but that only accounts for a minuscule amount of actual work being done in the industry.
Also whatever LLM productivity gains are currently happening are being massively subsidized. Once companies switch out of lighting money on fire mode most of these products will get dramatically worse and more expensive. Maintaining a cutting edge LLM isn't a railroad that you build once and can run and manage for centuries at a fraction of the initial price, they require constant expensive investment.
> Creative destruction is brutal math. The capital? Gone. Completely vaporized. But infrastructure isn’t stock certificates. Those fiber optic cables didn’t vanish when Pets.com did.
I read quotes like this and reminded that it is common that people forget money is just a competitive resource we use to outbid each other for _real_ things. Money moves around, it isn't lost or "Completely vaporized", someone receives it at the other side of the transaction. It is still in circulation, it can still be used to outbid people for real things, just by different people.
Also, pets.com still exists, it just forwards to petsmart.com.
Money can be "lost", and "created". In fact, it regularly is by commercial banks; this is the cornerstone of the modern economy. The bank of England wrote a pretty accessible document on money being created and destroyed [1]. For a slightly deeper dive (but equally accessible) check out "Can’t We Just Print More Money?" by Rupal Patel, et al. [2] which describes the different kinds of money.
The 2014 doc was a pretty wild read for me when it came out - it changed my perspective quite a bit.
[1]:https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...
[2]: https://www.goodreads.com/book/show/58796370-can-t-we-just-p...
> money is just a competitive resource we use to outbid each other for _real_ things
That's true, but the thing that's lost is the economic/productive capacity that the money was spent on, that could have been used for other (better) purposes.
For example, if I raise $100mn in a frothy market, and spend it on employing 100 Engineers on $1mn/yr salaries for 1 year before ultimately going bankrupt, it's true that the money doesn't disappear, as it was simply transferred from the VCs to the Engineers, but what's spent/consumed is the Engineers' time. Society can never get those 100 person-years back, and the VCs have to write their capital investment to 0.
The other comments are separately true - money is created by bank borrowing and destroyed by loans being repaid or going bad. Periods of speculation often result in increasing leverage (e.g. borrowing to buy stocks/houses), which does result in the destruction of money when it unwinds (as well as damage to bank's balance sheets, which can become problematic when it happens at a large enough scale - see 2008).
A stock price decreasing essentially "vaporizes" the wealth of owners, that is not a straightforward transfer. Stocks aren't cash.
What I find so weird always is that well value "vaporized" when prices went down. But what is the term when prices went up? As surely that wealth also respectively came from same place it went when it went down...
"capital" in the economic sense isn't money at all - it's tools, infrastructure, knowledge; from this point of view, you're correct. A bubble bursting on the stock market doesn't destroy capital.
On the other hand, the monetary value of the stock market (and other assets) going up and down does create or destroy "money". From a financial point of view, it's not a zero sum game.
Well, you need to pay taxes on each step.
This is incorrect. https://en.wikipedia.org/wiki/Money_creation . A bubble bursting is the inverse process of money creation. Money isn't paper bills or metal coins. It is mostly numbers in a computer.
My thoughts: I'm expecting the LLM-driven bubble to burst. Not AI in general, but it seems LLM has been soaking up all the investment dollars and LLM will eventually hit a wall in critical fields where an expert can poke holes at the results. The data centers go poof! Now, the contracted land rights, water rights, and electricity rights, highly discounted will be of value. Kind of like the defunct railroad rights in your community that can't easily be repurposed into a bike path as the city does not have the rights. So, I wonder if there will be companies formed to buy up the infrastructure rights (the contracted cheap power and water) and re-sell them to the city and counties that originally generated the contracts. Its too easy to see the naïve city and county officials succumbing to the hookers and other marketing techniques when these contracts were issued. Now they can be sold back at a profit.
Perez goes back to the technology of canals:
* https://en.wikipedia.org/wiki/Technological_Revolutions_and_...
People getting excited for something (perceived as) new is part of the human character.
The thing is, this is a financial bubble, not a capabilities bubble.
If you're worried about money, this is horrible news. If you just want to get shit done, it's great news, only if you can avoid losing personal agency long enough to survive the crash.
We're headed towards the hockey stick in terms of what people using AI can do. I'm rapidly learning that even ChatGPT5 can get confused, and lose sight of goals, but not in the hallucination variety, just the bog standard way people end up trapped in rabbit holes. I'm learning how to talk to it and get it back on track.
AI really can be productive, but it still needs guidance to be really useful.
The thing is the infrastructure that is being built now is owned by a small number of already large companies. Is it really that likely that Microsoft, Amazon, Meta/Facebook, Alphabet/Google, Oracle, Nvidia and all the companies Elon Musk is involved with are going to go bankrupt?
I recently gave an unprompted tirade about bubbles creating pockets of fake economic activity with no “real” economic output or value creation tied to them, and how sometimes, the circulatory systems in those bubbles feed into themselves.
E.g. someone borrowing against their higher property value(s) to put a down payment on another property.
Leverage is the amplifier. And I don’t see many self-circulating capital flows. I expect contractions to be reasonable for this bubble, or more realistically industry stagflation.
https://www.youtube.com/watch?v=bq9EOLdTf0E
Here's the mechanism in simple terms:
When US manufacturing jobs moved to China in the 2000s, American workers saw their incomes drop dramatically - like a factory worker going from $30/hour at Ford to $12/hour at Walmart. Instead of accepting lower living standards, the system created an alternative solution through housing and credit.
As home prices rose rapidly (often 10-15% annually), workers could borrow against their home's appreciation through equity loans and refinancing. A worker whose house went from $150,000 to $300,000 could borrow $50,000 to maintain their lifestyle - buying trucks, boats, and continuing to consume as if their income hadn't dropped.
This created a win-win illusion: China got manufacturing jobs, US companies got higher profits from cheap labor, Americans got cheaper goods at stores like Walmart, and workers felt wealthy despite earning less. Nobody complained because everyone seemed to benefit in the short term.
The system worked as long as home prices kept rising, allowing people to keep borrowing against appreciation. But when housing prices stopped climbing around 2005, the illusion collapsed - workers were left with lower wages, massive debt, and no way to keep borrowing.
This mechanism essentially allowed America to maintain consumption by borrowing against future wealth rather than addressing the fundamental problem of job losses. The 2008 financial crisis was the inevitable result when this unsustainable system finally broke down.
What remains of Japan's bubble? The country has never really got out of the rout of its "lost decade" and is sliding away into irrelevance.
The Nikkei 225 index is at all-time-highs in August 2025. Highest pay hikes in 30 years, BoJ raised interest rates etc. (sure, both because of inflation, but still).
Things seem to be slowly changing in Japan.
The yen is crashing, there are rice shortages and the country is at 0% growth - before Trump's tarriffs.
At this point it is wrong to speak about Japan's "lost decade" - it should be "lost decades".
I think this is directionally correct. But we tend to remember the technologies which became mainstream after the bubble burst and forget those that fizzled or found a much less world-changing niche.
Blockchain, NFTs and 3D printing are still around and have vacuumed up billions and billions without the average person being able to tell an impact on their lives.
3d printing has gone somewhat mainstream unlike the others. Manufacturers use it and it's somewhat common to see stuff that's been 3d printed being sold or created as small run prototypes.
Yeah and that’s exactly what I mean. It’s found its place and is a useful technology. But it has not revolutionized entire industries like the internet, smartphone etc
VR is good example of money being burned and middling adoption to a not that big population. For average person it has ended up something cool, but in the end not common and forgettable. And I am not sure if it even was a bubble, but selected players just investing in it.
Exactly. Right now it’s easy to look at it as a relatively niche thing.
But at the time it was going to be the next big thing transforming everything.
Same as 3D printing. Certainly cool and useful in some niche contexts, but it has not disrupted manufacturing.
I would argue it disrupted engineering. So many videos on YouTube can be found of people cutting out expensive molds (for example) and getting a product to market faster and cheaper. And this is happening in companies as well (Prusa released an enterprise grade printer not long ago).
At the same time, Printables and MakerWorld are flooded with…toys. They gamified their platforms and a ton of “thingy” models, ex. generic planter pots (some of them just renders, never even printed!) is the result.
This certainly hides the benefit but I very much think it’s there.
There is places and things that work for 3d printing. Very small scale manufacturing. Prototypes. But actually selling those is somewhat hard and not scalable market. And home printing... Yeah that sounds like hobbyist to me with corresponding market.
On other side you get to complex topologies and very specialised parts. Again pretty hard to scale and limited demand.
In the end it is manufacturing and manufacturing is huge. But also generally does not have great margins. It has lot of competition. So 3D printing would end up there with others say makers of CNC machines, various presses and so on. Multi-billion dollar industry, but not tech.
This is precisely what I mean though. It's a technology that has found its place and is definitely useful and a value-add to society.
But if we look at the types of predictions made in the early days (print a house in a day for under $5k, print any food you want at home, obviating factories you can make anything at home...), almost none of that has come through.
And that doesn't mean it's a bad technology. Most technologies don't revolutionize the average person's life, but can still change corners of civilization.
But compare that to the internet, which has literally changed how we do basically everything in our daily lives.
I think the point is that most technologies are like 3D printing while the current narrative is that AI will be more like the internet.
Influencers, streamers, crypto …
Housing is back …
Dotcom came back…
Nothing was a bubble. Dotcom was into a new paradigm shift with mobile in less then a decade. These aren’t even significant timelines when you think about it.
So you pull out of the AI hype today, fine. These past recent bubbles show that everything ramps back up within five years.
AI-is-hype people are delusional. The computer has never been able to do what it’s doing today. We could only dream of it.
Eventually coming back doesn’t mean it wasn’t a bubble that popped.
Precisely the article's point. AOL may not have been the successful company it could've been, but it did get millions of households online, which became infrastructure for the successful companies we all know today.
> AI-is-hype people are delusional. The computer has never been able to do what it’s doing today. We could only dream of it.
Sure, but do the math. It doesn’t work out yet. This stuff burns money and energy. Either revenue has to go up A LOT or costs do have to come down A LOT (or quality has to suffer by using smaller models).
If we assume that every American will pay 20 USD per month for AI that's already 100bn per year.
Electricity will become very cheap during the day at least with solar continuing its declining trajectory.
Except we're killing all solar and wind projects in the US :(
If I assume every American pays me 20 USD, I'm a billionaire too.
But that assumption would be as silly as yours.
>Housing is back … Nothing was a bubble.
Ironic how you can contradict yourself without realizing. The fact that something "came back", meant it WAS a bubble that popped.
Also nothing says that same thing can't be a bubble over and over again. Especially something as fundamental and old as housing. Those in power might even want it to be boom and bust cycle.
I think there's a big difference between things that have always been bought and sold (housing, oil, food, minerals, etc.) and actual net-new technology that may or may not pay off on its promise.
The former can be overvalued (see housing pre-2008), but we'll never come to the conclusion that it's useless or only needed in niche use cases. In that case, the item itself isn't really the bubble. The bubble is in what enables the irrational prices (e.g. subprime mortgages).
The latter can definitely be a bubble where the technology just isn't useful for a given use case (or at all).
What do you think will be the survivors of the AI business, once the bubble bursts?
Now that is the most interesting question anyone here asked.
It looks likely it could take all the big software companies with it, and all the big cloud providers. It may well kill most GPU vendors, most datacentre and hosting companies. Industrial-scale LLMs are propping up the entire cloud business, and that itself was bloated and overgrown. SaaS was a mistake. Anything -aaS was a mistake.
I'd _like_ to see this kill off MS, Oracle etc.
Intel is teetering. NVidia is probably screwed. AMD may follow.
There's geopolitics here too. China wants Taiwan and has actively been divesting from Western hardware and software. So has Russia. Lots of Linux growth there: it's free, it works, they can just take it.
And there's rapid climate change too, which is starting to become visible.
Everyone who manufuctures in Taiwan may well be doomed. But ditto everyone in the tropics, in the newer tech centres: Malaysia, Thailand, etc.
Everyone who gets chips from Taiwan is probably screwed. Everyone who assembles in PacRim and SE Asia too.
That will take down most Western companies.
Apple might weather it: it sells hardware, and it has its own unique OS family. But others make its hardware for it -- in those areas.
Chinese tech may bloom.
Small scale individual FOSS will be OK.
Stuff reusing legacy tech, that can run on old kit.
Everyone's deprecating x86-32. That may bite them hard.
Everything dependent on virtual stuff and public cloud, everything dependent on K8s and remote datacentres, everything you can't run locally on kit you own that sits in premises you own.
That includes a lot of the games industry.
Non-commercial OSes will be OK.
Bad times for RHEL and the clones. Bad times for SUSE and maybe Canonical.
Maybe OK for Debian. Good for Arch & Alpine & Slackware.
Stuff that needs GPUs, bad. Stuff that works fine in standard def on CPU graphics, good.
But I am just indulging my own biases and skepticism here, I freely admit.
I don't think for example MS will be doomed so fast. Even when they loose all their investments and a lot of money. They still have their software, and contracts with nearly every company.
A man can dream, can't he?
;-)
Yes.
I'm not so sure I want MS to go away though. While I'm not a fan of MS and I've never even really used a Windows computer beside it being mandated in school and university, I don't want Windows to go away.
When the masses come to Linux, it will simply become worse and locked down. There are already enough companies invested who will want to do so as soon as it becomes feasible and enough influencable users are on Linux.
Windows is better then mac OS in terms of user control, so I also don't want the masses to go to mac OS.
What I would welcome is, Desktop Linux to not be a rounding error and the OS market to become more competitive, so that MS needs to improve Windows and can't ship whatever crap of the day they want.
A golden rule that has been very decent in the last decades - When my mom starts asking me "What's up with this tech" - it's most usually is a bubble ;)
Mostly agree with the author. But I also believe that this is very emergent tech and we’re still figuring out the best way to actually make use of it
The clearest example is in AI generated visual content. If you dig through what people are doing, its clear that only a very small % of users are actually getting truly high-quality, ready-for-production content, while the rest are just prompting in pure slop. There is a skill level to this that hasn’t really permeated the mainstream
Once that happens, we might see some of that 95% waste figure change to, maybe, 50% waste
I think we should be weary of the fact that Sam Altman having an interest in cutting VC funding for new AI products and competitors in order to condensate most AI funding into OpenAI and kill any new competitors, doesn't make him exactly a neutral player in all of this.
The "fearmongering" he is trying to create, can be seen as self-serving, so his opinions should be taken with a very big grain of salt.
this was widely docummented BEFORE the "ai bubble", there's well known academic term for it, it's called:
https://en.wikipedia.org/wiki/AI_winter
I knew about since like 2010 or before, anti-tech Luddite will act like it's never a thing, shatup.
Relevant: https://news.ycombinator.com/item?id=44971273