AI model providers have zero "moat", clients change them as they see fit. This week ChatGPT, next week Claude. The real value is and going to be in hardware - as long as China doesn't enter the GPU/RAM race.

I increasingly see AI investment, generally speaking, as a lost cause. It has very little chance to pay off.

▲

glaslong an hour ago | parent | next [-]

Yup. Model capabilities seem to keep converging quickly, not leaders breaking away for long.

Frontier labs are racing towards SaaS commoditization at incredible speed. And while there might possibly be $Trillions in productivity gained from their use, there's no reason to think those gains get captured by the model makers or inference providers at this point.

Maybe the Claude or ChatGPT desktop apps will dominate as the new MS Excel, but that's hard to do without already having locked the whole market into Windows.

There's virtually no platform play available to them.

▲

nxobject an hour ago | parent | prev | next [-]

> AI model providers have zero "moat", clients change them as they see fit.

That might be true in tech-savvy industries -- but in non-tech industries where the biggest software purchase might be the office suite or the ERP, inertia means the GSuite shops stick with Gemini, and the Exchange/Office 365 shops stick with Copilot.

▲

lwkl 13 minutes ago | parent | next [-]

At least from some smaller marketing companies I know that isn't necessarily true. They often have Gemini or Copilot and Claude nowadays and before Claude it was ChatGPT.

The moat is way smaller than with Office or Gsuite because they feed data into the chat interface and it gives them an answer. The moat for Gsuite and Office is higher because you have to move all your data and reorganize it. Oh and everyone has to learn how to use the new software clients.

▲

bg24 an hour ago | parent | prev | next [-]

There is a time window when it will flip. When Internet came along, we had a number of businesses that did not survive over the next years.

This time, it is different with AI. The rate of change is significant.

	▲	fvwqcecvq 11 minutes ago \| parent [-]
		Just out of curiosity, what is the change and how are you measuring its rate? From no internet to internet the change is pretty profound. But my job is already very automated for the most part. It's true AI might automate it a bit more, but it's not like I'm going from zero automation to full on automation. That's not nothing, and it is worth something, but it's also not internet from no internet level of change either.

▲

mathisfun123 an hour ago | parent | prev [-]

I think you don't understand moat - that's not a moat.

	▲	sweetjuly 33 minutes ago \| parent [-]
		The trick is antitrust style bundling. The massive pile of documents and processes tied to GSuite is a moat which makes it hard to switch to something like o365. Since a company might effectively be locked into GSuite (the primary product), if Google forces companies to buy Gemini (the secondary product) by bundling it with GSuite, they've given themselves a moat in the LLM space using their document/email moat from GSuite. This is essentially what Google has done, and it's a shame the US is so weak on enforcing antitrust laws.

▲

thomasahle 16 minutes ago | parent | prev | next [-]

> as long as China doesn't enter the GPU/RAM race

China is obviously in the GPU/RAM race. Heard of Huawei, Moore Threads, Lisuan Tech, CXMT?

▲

petterroea 2 hours ago | parent | prev | next [-]

I'm just happy we get to reap the rewards "for free" (i.e open models are slowly becoming usable, and the winner of the arms race will definitely stand on the shoulders of their competitors that didn't make it)

▲

joelthelion an hour ago | parent | prev [-]

> The real value is and going to be in hardware

Unless someone comes up with a brilliant optimization strategy or new hardware that renders all that inefficient Nvidia crap overnight.

	▲	BowBun an hour ago \| parent [-]
		I'm privy to dozens of people working on this problem every day and I imagine there's many more people working on this problem out of sight. I'm bullish on this idea, but it's going to be a slow burn.