At the moment, every AI service is dealing with capacity issues. Demand is much bigger than supply.

As long as that remains true, don't see how this bubble will be popped

I’m sure someone has numbers but I do wonder how many of their users pay and whether that covers the free users. It can still be a bubble even with high demand, if you are burning money to serve those users, because you hope one day you will rule the galaxy.

I don’t really have a strong preference, so I just use any service where I’m currently not rate limited. There are many of them and I don’t see much difference between them for day to day use. My company pays for Cursor but I burned through my monthly quota in a day working on a proof of concept that mirrored their SDK in a different language. Was it nice that I could develop a proof of concept? Yes. Would I pay 500 dollars for it from my own pocket? No, I don’t think so.

It’s like those extremely cheap food and grocery delivery apps, they made their food cheap, no delivery fees for a while… of course everyone was using it. Then, they started to run out of VC money, they had to raise prices, then suddenly nobody used them anymore and they went bankrupt. There was demand, but only because of the suppressed prices fueled by VC money.

Respectfully, starting one's argument with a factually invalid statement is not a good way to argue against a bubble. If by 'every' you are referring to the foundation model providers, this is not 100% of the 'AI service' market and even then, I would argue that a lot of this demand will need to be answered to by companies measuring ROI after the FOMO or unreasonable expectations get settled in and right now, my primary argument is this ROI is driven by speculation rather than empirical measurement.

I have spoken with many companies and nearly all of them, when speaking about AI, have gotten to the point they don't even make any sense. A common theme is 'we need' AI, but nobody can articulate 'why' and in-fact they get defensive when questioned. It is almost perfectly parallel to the 'we need blockchain' argument or 'we need a mobile app'. That isn't to say those are not useful technologies, but the rapid rise, steep decline, then gradual rise is a theme in tech.

> As long as that remains true, don't see how this bubble will be popped

That's what everybody was saying in February 2000.

User retention is a more important metric. Everyone is silent there. That is directly tied to MRR, long term viability and ROI for investment. If those were positive I'd expect them to be crowing about it, but they aren't.

Capacity just means there is currently more demand than supply and that might be a number of negative factors driving that: users with no ROI (free users), too rapid growth, poor efficiency etc etc.

What percentage of that capacity is being put towards useful things and what is being put towards entertainment? The products main selling point is to make us more efficient at our job and if it’s being primarily used as entertainment which everyone I know who uses an LLM besides programmers falls into that category, then I’d say the expected profit from them is a bubble.

Are those services actually operating with profit to benefit from this demand? Or are they serving that demand while taking losses and showing unrealistically inflated metrics for demand?

I'd love to see the stats though, how much capacity is used for slop vs how much is used for actual productive tasks. If half of the capacity is used by bots on social medias and scammers it doesn't mean much for the economy

Well we'll keep scaling to meet the "demand".

Teachers are demanding not to do the work that is teaching. Lawyers are demanding not to do the work of lawyering. Engineers don't want to do coding and leaders don't want to steer the ship anymore unless it's towards AI.

Alllll the "value" is bullshit. Either AGI arrives and all jobs are over and it's eternal orgy time, or at some point the lazy ai-using losers will get fired and everyone else will go back to doing work like usual