| ▲ | JumpCrisscross 5 hours ago | |||||||||||||||||||||||||
> because all the inputs are commodities AI compute hardware is not a commodity. And in a shortage, commodities can command high margins. xAI has lots of NVIDIA GPUs and HBM. It also has permits and power hook-ups, both things that are getting harder to come by day by day in the U.S. Natural gas is a commodity. Doesn't make having lots of right now bad business. > the whole game is hoping that they hope to charge more now because people can't build fast enough and try to recoup their upfront costs before either a) other capacity comes online and b) the installed hardware becomes obsolete Correct. But charging people now generates incumbency advantages that make beating (a) and (b) easier. (From what I can tell, (b) isn't an existential issue, at least for xAI, because they've basically already recouped their investment with commited contracts they'd have to fuck up on to lose.) | ||||||||||||||||||||||||||
| ▲ | bleepblap 5 hours ago | parent [-] | |||||||||||||||||||||||||
> AI compute hardware is not a commodity. And in a shortage, commodities can command high margins. I don't see the distinction you're drawing about "commodity", but I'm happy to be wrong on that. My point was that spaceX's ai division is buying all their inputs from external vendors and can't meaningfully differentiate themselves from person Y who buys all the same hardware except for the fact they bought them first. Which... > Correct. But charging people now generates incumbency advantages I don't see now this is an "incumbency advantage". There's nothing that sticks their clients to stay there and sign up for the next data center. | ||||||||||||||||||||||||||
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