| ▲ | atleastoptimal 14 hours ago |
| Its very simple, xAI needs money to win the AI race, so best option is to attach to Elon’s moneybank (spacex) to get cash without dilution |
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| ▲ | iknowstuff 13 hours ago | parent | next [-] |
| Remember how he argued for Tesla’s Solarcity acquisition because solar roofs? Data centers in space are the same kind of justification imo. |
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| ▲ | MobiusHorizons 13 hours ago | parent [-] | | Solar roofs are much more practical to be honest. | | |
| ▲ | undersuit 11 hours ago | parent | next [-] | | Putting solar roofs on a building? For a car company? | | |
| ▲ | kuschku 5 hours ago | parent | next [-] | | There's a synergy effect here - Tesla sells you a solar roof and car bundle, the roof comes without a battery (making it cheaper) and the car now gets a free recharge whenever you're home (making it cheaper in the long term). Of course that didn't work out with this specific acquisition, but overall it's at least a somewhat reasonable idea. | |
| ▲ | rsynnott 5 hours ago | parent | prev | next [-] | | It's obviously a pretty weird thing for a car company to do, and is probably just a silly idea in general (it has little obvious benefit over normal solar panels, and is vastly more expensive and messy to install), but in principle it could at least work, FSOV work. The space datacenter thing is a nonsensical fantasy. | |
| ▲ | MobiusHorizons 9 hours ago | parent | prev | next [-] | | In comparison to datacenters in space yes. Solar roofs are already a profitable business, just not likely to be high growth. Datacenters in space are unlikely to ever make financial sense, and even if they did, they are very unlikely to show high growth due to continuing ongoing high capital expenses inherent in the model. | |
| ▲ | mayoff 8 hours ago | parent | prev [-] | | For an electrification company. |
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| ▲ | darig 12 hours ago | parent | prev [-] | | [dead] |
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| ▲ | Findecanor 13 hours ago | parent | prev | next [-] |
| > win the AI race I keep seeing that term, but if it does not mean "AI arms race" or "AI surveillance race", what does it mean? Those are the only explanations that I have found, and neither is any race that I would like to see anyone win. |
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| ▲ | bigstrat2003 12 hours ago | parent | next [-] | | Big tech businesses are convinced that there must be some profitable business model for AI, and are undeterred by the fact that none has yet been found. They want to be the first to get there, raking in that sweet sweet money (even though there's no evidence yet that there is money to be made here). It's industry-wide FOMO, nothing more. | | |
| ▲ | FranklinJabar 7 hours ago | parent | next [-] | | Typically in capitalism, if there is any profit, the race is towards zero profit. The alternative is a race to bankrupt all competitors at enormous cost in order to jack up prices and recoup the losses as a monopoly (or duopoly, or some other stable arrangement). I assume the latter is the goal, but that means burning through like 50%+ of american gdp growth just to be undercut by china. Imo I would be extremely angry if I owned any spacex equity. At least nvidia might be selling to china in the short term... what's the upside for spacex? | | |
| ▲ | WalterBright 5 hours ago | parent [-] | | > The alternative is a race to bankrupt all competitors at enormous cost in order to jack up prices and recoup the losses as a monopoly I don't know of an instance of this happening successfully. | | |
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| ▲ | hannasanarion 9 hours ago | parent | prev | next [-] | | People keep saying this but it's simply untrue. AI inference is profitable. Openai and Anthropic have 40-60% gross margins. If they stopped training and building out future capacity they would already be raking in cash. They're losing money now because they're making massive bets on future capacity needs. If those bets are wrong, they're going to be in very big trouble when demand levels off lower than expected. But that's not the same as demand being zero. | | |
| ▲ | mbesto 2 hours ago | parent | next [-] | | > Openai and Anthropic have 40-60% gross margins. Stop this trope please. We (1) don't really know what their margins are and (2) because of the hard tie-in to GPU costs/maintenance we don't know (yet) what the useful life (and therefore associated OPEX) is of GPUs. > If they stopped training and building out future capacity they would already be raking in cash. That's like saying "if car companies stopped researching how to make their cars more efficient, safer, more reliable they'd be more profitable" | |
| ▲ | adgjlsfhk1 8 hours ago | parent | prev [-] | | those gross profit margins aren't that useful since training at fixed capacity is continually getting cheaper, so there's a treadmill effect where staying in business requires training new models constantly to not fall behind. If the big companies stop training models, they only have a year before someone else catches up with way less debt and puts them out of business. | | |
| ▲ | HDThoreaun 5 hours ago | parent [-] | | Only if training new models leads to better models. If the newly trained models are just a bit cheaper but not better most users wont switch. Then the entrenched labs can stop training so much and focus on profitable inference | | |
| ▲ | kuschku 5 hours ago | parent [-] | | If they really have 40-60% gross margins, as training costs go down, the newly trained models could offer the same product at half the price. |
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| ▲ | Nystik 10 hours ago | parent | prev [-] | | It will be genuinely interesting to see what happens first, the discovery of such a model, or the bubble bursting. |
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| ▲ | ekidd 12 hours ago | parent | prev | next [-] | | A significant number of AI companies and investors are hoping to build a machine god. This is batshit insane, but I suppose it might be possible. Which wouldn't make it any more sane. But when they say, "Win the AI race," they mean, "Build the machine god first." Make of this what you will. | | |
| ▲ | FeteCommuniste 10 hours ago | parent [-] | | On the edge of my seat waiting to see what hits us first, a massive economic collapse when the hype runs out, or the Torment Nexus. | | |
| ▲ | reverius42 7 hours ago | parent [-] | | It really seems like the market has locked in on one of those two things being a guaranteed outcome at this point. |
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| ▲ | totetsu 12 hours ago | parent | prev | next [-] | | It’s a graft to keep people distracted and allow for positioning as we fall off the end of the fossil energy boom. | |
| ▲ | strange_quark 13 hours ago | parent | prev | next [-] | | It’s a framing device to justify the money, the idea being the first company (to what?) will own the market. | |
| ▲ | atleastoptimal 11 hours ago | parent | prev [-] | | Being too far ahead for competitors to catch up, similar to how google won browsers, amazon won distribution, etc |
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| ▲ | danw1979 3 hours ago | parent | prev | next [-] |
| I’m not certain spacex is generating much cash right now ? Starship development is consuming billions. F9 & Starlink are probably profitable ? I’d say this is more shifting of the future burden of xAI to one of his companies he knows will be a hit stonk when it goes public, where enthusiasm is unlikely to be dampened by another massive cash drain on the books. |
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| ▲ | georgemcbay 12 hours ago | parent | prev | next [-] |
| > xAI needs money to win the AI race Off on a tangent here but I'd love for anyone to seriously explain how they believe the "AI race" is economically winnable in any meaningful way. Like what is the believed inflection point that changes us from the current situation (where all of the state-of-the-art models are roughly equal if you squint, and the open models are only like one release cycle behind) to one where someone achieves a clear advantage that won't be reproduced by everyone else in the "race" virtually immediately. |
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| ▲ | theshrike79 3 hours ago | parent | next [-] | | Like any other mega-scaler, theyre just playing Money Chicken. Everyone is spending crazy amounts of money in the hopes that the competition will tap out because they can't afford it anymore. Then they can cool down on their spending and increase prices to a sustainable level because they have an effective monopoly. | | | |
| ▲ | fhd2 7 hours ago | parent | prev | next [-] | | I _think_ the idea is that the first one to hit self improving AGI will, in a short period of time, pull _so_ far ahead that competition will quickly die out, no longer having any chance to compete economically. At the same time, it'd give the country controlling it so much economic, political and military power that it becomes impossible to challenge. I find that all to be a bit of a stretch, but I think that's roughly what people talking about "the AI race" have in mind. | |
| ▲ | ExoticPearTree 4 hours ago | parent | prev | next [-] | | > Off on a tangent here but I'd love for anyone to seriously explain how they believe the "AI race" is economically winnable in any meaningful way. Because the first company to have a full functioning AGI will most likely be the most valuable in the world. So it is worth all the effort to be the first. | |
| ▲ | CamperBob2 12 hours ago | parent | prev | next [-] | | They ultimately want to own everyone's business processes, is my guess. You can only jack up the subscription prices on coding models and chatbots by so much, as everyone has already noted... but if OpenAI runs your "smart" CRM and ERP flows, they can really tighten the screws. | | |
| ▲ | adventured 11 hours ago | parent [-] | | If you have the greatest coding agent under your thumb, eventually you orient it toward eating everything else instead of letting everybody else use your agent to build software & make money. Go forward ten years, it's highly likely GPT, Gemini, maybe Claude - they'll have consumed a very large amount of the software ecosystem. Why should MS Office exist at all as a separate piece of software? The various pieces of Office will be trivial for the GPT (etc) of ten years out to fully recreate & maintain internally for OpenAI. There's no scenario where they don't do what the platforms always do: eat the ecosystem, anything they can. If a platform can consume a thing that touches it, it will. Office? Dead. Box? Dead. DropBox? Dead. And so on. They'll move on anything that touches users (from productivity software to storage). You're not going to pay $20-$30 for GPT and then pay for DropBox too, OpenAI will just do an Amazon Prime maneuver and stack more onto what you get to try to kill everyone else. Google of course has a huge lead on this move already with their various prominent apps. |
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| ▲ | 11 hours ago | parent | prev [-] | | [deleted] |
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| ▲ | ben_w 14 hours ago | parent | prev [-] |
| That may be the plan, but this is also a great way for GDPR's maximum fine, based on global revenue, to bite on SpaceX's much higher revenue. And without any real room for argument. |
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