The fact that supply constrained GPUs holding value is negative indicator. It's like the tulips mania except bubble enthusiasts are buying wilted/dead tulips because live tulips supply constrained due to irrational demand. Now GPUs has more gross utility than tulips but seems like at current revenue/capex spend, every GPU is still negative net financial yield - they lose money - literally buying tulips and watching it wilt. Economically, better off simply not buying and losing more. That's the level of economic irrationality at place sustaining bubble, at least for hyperscaler/big tech balance sheet - small operators logic different and antagonistic to big operator demand/business model.

If cost of inference goes down 100x, would need 100x more demand. This makes overspending on GPU even more irrational. Jevons this, Jevons that but ultimately irrelevant. At end of day, leading players, hungergame winner candidates is saddling themselves with so much debt, even if they survive, post crash they are immediately uncompetitive against new entrant with blank slate and newer gen, more efficient GPUs that will be cheaper to buy/operate post crash when hardware prices will revert to mean.

It doesn't matter if some of the current players survive, they've basically stabbed and weakened themselves so much any healthy upstart in the future can wipe them out unless they lock in legislative protection... safety regulations, ban open source models etc.

That is the new bet, regulatory capture moat, because economic bet is entirely lost, especially with open models eroding mote.

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fooker 19 hours ago | parent [-]

You're making a classic philosophical error here by accidentally anthropomorphizing companies :)

A company losing out on a risky bet and failing, letting a new upstart rise up is pretty natural. A large fraction of experts from the failed companies continue at the new ones, business as usual. There are engineering teams at $BIGTECH now full of OS, database, or compiler experts from XP, Sun, HP etc.

This natural ability of companies to take risky bets is what made silicon valley successful.

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maxglute 17 hours ago | parent [-]

Companies are run by people, 100 billion dollar companies are ran by people who want to stay billionaires and will street accordingly. But I'm not sure what we're disagreeing on, yes the talent will migrate, AI industry will eventually settle on some none bubble equilibrium, but that doesn't mean current AI economics is sensible, or inflated hardware costs beyond yield is not danger indicator. Like yeah, risky bets are burning, most people are going to move and carry their technical expertise on instead of unalive themselves or flip burgers, but that's independent of whether business models and broader economy is going to explode.

	▲	fooker 4 hours ago \| parent [-]
		> that's independent of whether business models and broader economy is going to explode. It's independent of the former, but not the later. That is my point. Businesses and business models fail all the time, does not mean the 'broader economy is going to explode'. It could, sure. But that has been predicted several hundred times and happened only a few times.