"Over the last six months, capital expenditures on AI—counting just information processing equipment and software, by the way—added more to the growth of the US economy than all consumer spending combined."

If this isn't the Singularity, there's going to be a big crash. What we have now is semi-useful, but too limited. It has to get a lot better to justify multiple companies with US $4 trillion valuations. Total US consumer spending is about $16 trillion / yr.

Remember the Metaverse/VR/AR boom? Facebook/Meta did somehow lose upwards of US$20 billion on that. That was tiny compared to the AI boom.

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brotchie 7 days ago | parent | next [-]

Look at the induced demand due to Claude code. I mean, they wildly underestimated average token usage by users. There's high willingness to pay. There's literally not enough inference infra available.

I was working on crypto during the NFT mania, and THAT felt like a bubble at the time. I'd spend my days writing smart contracts and related infra, but I was doing a genuine wallet transaction at most once a week, and that was on speculation, not work.

My adoption rate of AI has been rapid, not for toy tasks, but for meaningful complex work. Easily send 50 prompts per day to various AI tools, use LLM-driven auto-complete continuously, etc.

That's where AI is different from the dot com bubble (not enough folks materially transaction on the web at the time), or the crypto mania (speculation and not utility).

Could I use a smarter model today? Yes, I would love that and use the hell out of it. Could I use a model with 10x the tokens/second today? Yes, I would use it immediately and get substantial gains from a faster iteration cycle.

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sudohalt 7 days ago | parent | next [-]

A bubble isn't related to whether something is useful or not, it's about speculation and detachment from reality. AI being extremely useful and being a bubble aren't mutually exclusive. It can be the case that everyone finds it useful but at the same time the valuations and investments aren't realized.

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kergonath 7 days ago | parent | next [-]

> A bubble isn't related to whether something is useful or not, it's about speculation and detachment from reality.

See the dotcom bubble in the early 2000s for a perfect example. The Web is still useful, but the bubble bursting was painful.

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dehrmann 6 days ago | parent [-]

The web in 2000 wasn't actually very useful.

	▲	kergonath 6 days ago \| parent [-]
		It was. There were blogs, news, forums, shops. I was buying CDs off Amazon and computers on the Apple Store in 2000. I met my wife on a PHPBB forum. I read hours upon hours of research on the Noldor language on someone’s blog. Jon Stokes and John Siracusa (and many others) were posting on Ars, including what was becoming the future of MacOS. Anandtech was already there, even if it had a lot of room to grow and improve. I really don’t know where you got that impression.

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shoo 7 days ago | parent | prev [-]

Yep, there's a big difference between a company and its stock. Even if the company is great, an investment such as a stock can never be good or bad without reference to the price you need to pay for it. A famous example from the dot-com era is Cisco. Great company, but buying Cisco stock at its March 2000 peak was a bad investment -- it was "priced to perfection" and the stock price today, over 25 years later, is lower than the dot com era price.

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sothatsit 7 days ago | parent | prev [-]

Claude Code was the tipping point for me from "that's neat" to "wow, that's really useful". Suddenly, paying $200/month for an AI service made sense. Before that, I didn't want to pay $20/month for access to Claude, as I already had my $20/month subscription to ChatGPT.

I have to imagine that other professions are going to see similar inflection points at some point. When they do, as seen with Claude Code, demand can increase very rapidly.

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keeda 7 days ago | parent | prev | next [-]

I posted a comment yesterday regarding this with links to a couple relevant studies: https://news.ycombinator.com/item?id=44793392 -- briefly:

* Even with all this infra buildout all the hyperscalers are constantly capacity constrained, especially for GPUs.

* Surveys are showing that most people are only using AI for a fraction of the time at work, and still reporting significant productivity benefits, even with current models.

The AGI/ASI hype is a distraction, potentially only relevant to the frontier model labs. Even if all model development froze today, there is tremendous untapped demand to be met.

The Metaverse/VR/AR boom was never a boom, with only 2 big companies (Meta, Apple) plowing any "real" money into it. Similarly with crypto, another thing that AI is unjustifiably compared to. I think because people were trying to make it happen.

With the AI boom, however, the largest companies, major governments and VCs are all investing feverishly because it is already happening and they want in on it.

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Animats 7 days ago | parent [-]

> Even with all this infra buildout all the hyperscalers are constantly capacity constrained, especially for GPUs.

Are they constrained on resources for training, or resources for serving users using pre-trained LLMs? The first use case is R&D, the second is revenue. The ratio of hardware costs for those areas would be good to know.

	▲	keeda 7 days ago \| parent [-]
		Good question, I don't believe they break out their workloads into training versus inference, in fact they don't even break out any mumbers in any useful detail. But anecdotally the public clouds did seem to be most GPU-constrained whenever Sam Altman was making the rounds asking for trillions in infra for training. However, my understanding is that the same GPUs can be used for both training and inference (potentially in different configurations?) so there is a lot of elasticity there. That said, for the public clouds like Azure, AWS and GCP, training is also a source of revenue because other labs pay them to train their models. This is where accusations of funny money shell games come into play because these companies often themselves invest in those labs.

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lisbbb 7 days ago | parent | prev | next [-]

Everything I have worked on as a fullstack developer for multiple large companies over the past 25 years tells me that AI isn't just going to replace a bunch of workers. The complexity of those places is crazy and it takes teamwork to keep them running. Just look what happens internally over a long holiday weekend at most big companies, they are often just barely meeting their uptime guarantees.

I was recently at a big, three-letter pharmacy company and I can't be specific, but just let me say this: They're always on the edge of having the main websites going down for this or that reason. It's a constant battle.

How is adding more AI complexity going to help any of that when they don't even have a competent enough workforce to manage the complexity as it is today?

You mention VR--that's another huge flop. I got my son a VR headset for Christmas in like 2022. It was cool, but he couldn't use it long or he got nauseaus. I was like "okay, this is problematic." I really liked it in some ways, but sitting around with that goofy thing on your head wasn't a strong selling point at all. It just wasn't.

If AI can't start doing things with accuracy and cleverness, then it's not useful.

	▲	cheevly 7 days ago \| parent \| next [-]
		You have it so backwards. The complexity of those places is exactly why AI will replace it.
	▲	cheema33 7 days ago \| parent \| prev \| next [-]
		> If AI can't start doing things with accuracy and cleverness, then it's not useful. Humans are not always accurate or clever. But we still consider them useful and employ them.
	▲	827a 7 days ago \| parent \| prev [-]
		So, to give a tactile example that helped me recently: We have a frontend web application that was having some issues with a specific feature. This feature makes a complex chain of a maybe dozen API requests when a resource is created, conditionally based on certain things, and there's a similar process that happens when editing this resource. But, there was a difference in behavior between the creating and editing routes, when a user expected that the behavior would be the same. This is crusty, horrible, old, complex code. Nothing is in one place. The entire editing experience was copy-pasted from the create resource experience (not even reusable components; literally copy-pasted). As the principal on the team, with the best understanding of anyone about it, even my understanding was basically just "yeah I think these ten or so things should happen in both cases because that's how the last guy explained it to me and it vibes with how I've seen it behave when I use it". I asked Cursor (Opus Max) something along the lines of: Compare and contrast the differences in how the application behaves when creating this resource versus updating it. Focus on the API calls its making. It responded in short order with a great summary, and without really being specifically prompted to generate this insight it ended the message by saying: It looks like editing this resource doesn't make the API call to send a notification to affected users, even though the text on the page suggests that it should and it does when creating the resource. I suspect I could have just said "fix it" and it could have handled it. But, as with anything, as you say: Its more complicated than that. Because while we imply we want the app to do this, its a human's job (not the AI's) to read into what's happening here: The user was confused because they expected the app to do this, but do they actually want the app to do this? Or were they just confused because text on the page (which was probably just copy-pasted from the create resource flow) implied that it would? So instead I say: Summarize this finding into a couple sentences I can send to the affected customer to get his take on it. Well, that's bread and butter for even AIs three years ago right there, so off it goes. The current behavior is correct; we just need to update the language to manage expectations better. AI could also do that, but its faster for me to just click the hyperlink in Claude's output, jumps right to the file, and I make the update. Opus Max is expensive. According to Cursor's dashboard, this back-and-forth cost ~$1.50. But let's say it would have taken me just an hour to arrive at the same insight it did (in a fifth the time): that's easily over $100. That's a net win for the business, and its a net win for me because I now understand the code better than I did before, and I was able to focus my time on the components of the problem that humans are good at.

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rockemsockem 7 days ago | parent | prev | next [-]

Tbf I think most would say that the VR/AR boom is still ongoing, just with less glitz.

Edit: agree on the metaverse as implemented/demoed not being much, but that's literally one application

	▲	Macha 6 days ago \| parent [-]
		Honestly, VR/AR is a small gaming peripheral business, like joysticks and third party controllers. And their are companies that make that their thing and make money from it, but it was never going to be profitable enough to be the thing that a company the size of Facebook pivots to, which I could see being a consumer in the space before Facebook got in and after too. Don't get me wrong, VRChat and Beat Saber are neat, and all the money thrown at the space got the tech advanced at a much faster rate than it would have organically have done I'm the same time (or potentially ever). But you can see Horizon's attempt to be "VRChat but a larger more profitable business" to see how the things you would need to do to monetise it to that level will lose you the audience that you want to monetise.

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827a 7 days ago | parent | prev [-]

I honestly disagree (mostly). Sure, we might see some adjustments to valuations to better account for the expected profit margins; those might have been overblown. But if you had access to any dashboard inside these companies ([1]) all you'd see is numbers going up and to the right. Every day is a mad struggle to find capacity to serve people who want what they're selling.

The average response to that is "its just fake demand from other businesses also trying to make AI work". Then why are the same trends all but certainly happening at Cursor, for Claude Code, Midjourney, entities that generally serve customers outside of the fake money bubble? Talk to anyone under the age of 21 and ask them when they used Chat last. McDonalds wants to deploy Gemini in 43,000 US locations to help "enhance" employees (and you know they won't stop there) [2]. Students use it to cheat at school, while their professors use it to grade their generated papers. Developers on /r/ClaudeAI are funding triple $200/mo claude max subscriptions and swapping between them because the limits aren't high enough.

You can not like the world that this technology is hurtling us toward, but you need to separate that from the recognition that this is real, everyone wants this, today its the worst it'll ever be, and people still really want it. This isn't like the metaverse.

[1] https://openrouter.ai/rankings

[2] https://nypost.com/2025/03/06/lifestyle/mcdonalds-to-employ-...