Where are those 99$ coming from? Who is actually paying this money? Because it seems like so far everybody is losing money with no reversal of this trend in sight

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JumpCrisscross 4 hours ago | parent | next [-]

> Where are those 99$ coming from?

If this isn't a house of cards, AI companies' customers. The companies and individauls ponying up for a Claude subscription or compute through OpenRouter.

Customer financing isn't inherently fucked. It's just highly suspect at the scale Nvidia's doing it. There was another thread where I noted that Nvidia's investments are literally monetarily significant, to the point that I expect them to start being directly referenced in the Fed's beige book [1].

[1] https://news.ycombinator.com/item?id=49673871

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polski-g 2 hours ago | parent [-]

Demand for AI inference is infinite. It's coming from the rest of the economy.

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swiftcoder 2 hours ago | parent | next [-]

Money flowing from the rest of the economy means money no longer being spent on something else. Assuming for the moment it's not all a big circular inflationary scheme, what exactly is being cut back on to fund this infinite spend on AI inference?

	▲	ajb 4 minutes ago \| parent [-]
		Economic activity is a flow, not a stock. There might well be a bubble, but you can't prove it like that.

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boesboes an hour ago | parent | prev [-]

sure elon

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fc417fc802 4 hours ago | parent | prev | next [-]

And this is the actual problem. I can't see framing it as a ratio as anything other than an attempt to mislead. What do you predict will happen when the market deflates? Whether or not a segment will behave like a line of dominoes and catastrophically implode is the question.

As I understand it they are risking that even if the major AI labs fail all the compute capacity that's been built out will remain in demand at sufficiently high prices.

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jstummbillig 3 hours ago | parent | prev | next [-]

> Where are those 99$ coming from? Who is actually paying this money?

Companies who pay 99$ to make >99$ in return. I am not saying it works in all cases but that's the idea when a company spends money.

> Because it seems like so far everybody is losing money with no reversal of this trend in sight

I am not sure what you are seeing: Anthropic (as one of only two major companies that do just AI) is starting to return profits, while demand for AI is accelerating and, clearly, compute is maxed out. And I mean: On the entire planet. They are turning profits despite everything being in full buildout mode.

	▲	edgyquant 2 hours ago \| parent [-]
		Is Anthropic turning a profit? I thought that was only when considering discounted compute from spaceX

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4 hours ago | parent | prev | next [-]

[deleted]

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well_ackshually 3 hours ago | parent | prev | next [-]

>Who is actually paying this money?

You, when their circular financing scheme fails and you're the one left holding the bag as your government says "they're too important to let them fail".

	▲	paulryanrogers 2 hours ago \| parent [-]
		Also you if your retirement funds are heavily invested in AI, directly or indirectly through big caps who are.

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marginalia_nu 4 hours ago | parent | prev | next [-]

Inflated valuations, mostly.

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petcat 3 hours ago | parent [-]

The current valuations are only inflated until they're not. Especially if the big American labs can convince the US government to work out a joint "AI non-proliferation" agreement with China which will allow both countries to essentially carve up and techno-colonize the rest of the world without any other competition except between themselves.

We're already seeing signs of this strategy from Open AI and Anthropic warning about the dangers of AI and the need for safety regulations. None of that stuff matters if China is not also on board with it.

	▲	marginalia_nu 3 hours ago \| parent [-]
		> The current valuations are only inflated until they're not You could say that about any historically inflated valuation all the way back to the tulip mania. Either the expected profit materializes or it doesn't. > We're already seeing signs of this strategy from Open AI and Anthropic warning about the dangers of AI and the need for safety regulations I would read this as a desire to pause training to be able to present a profit in anticipation of the IPO. The major AI labs mad scramble to IPO is if anything a sign that they aren't at all confident in the valuation. If they were they would be no hurry to cash out.

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simianwords 4 hours ago | parent | prev | next [-]

You do realise it’s not a fixed pie right?

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streetfighter64 3 hours ago | parent [-]

Well, it is. Thermodynamics. Earth is pretty much a closed system, except for the sun.

So for example if you invest $100 in a farm and get a return of 10%, where does that come from? The nutrients in the soil, the effort expended by the workers, and the power of the sun to turn seeds into food. All value comes either from finite resources in the ground (nuclear, oil, ...), from solar power, or from human effort (work, innovations, etc.)

So can you trace back Nvidia's incredible 10000% return on investment to any of these sources? Which ones?

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Footnote7341 3 hours ago | parent | next [-]

Economic value isnt a physical resource being depleted....

	▲	ptx an hour ago \| parent [-]
		But it seems this "economic value" is often created by depleting actual physical resources (e.g. people's health, clean air and water), usually resources belonging someone other than the person capturing the "value".

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chungy 3 hours ago | parent | prev | next [-]

Money is created all the time. It is not a zero-sum game.

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someguyiguess 2 hours ago | parent [-]

When money is created, the total amount of money in circulation increases, decreasing the value of each unit of money overall. It’s called inflation.

	▲	simianwords 2 hours ago \| parent \| next [-]
		No it’s not fixed like that. Total prosperity of world has increased inflation adjusted over 100 years. Why? Surprised basic stuff is now being questioned.
	▲	YetAnotherNick 2 hours ago \| parent \| prev [-]
		It's not that simple. Of course there is inflation but in the long run in history, real money has increased massively. We have give opportunity of education to almost everyone, abolished slavery, given food and basic medicine to almost everyone. 100 years back having all of these sounded like a perfect world.

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simianwords 2 hours ago | parent | prev [-]

If it’s a fixed pie why do we have more collectively now than 200 years ago?

Value also comes from technology which you seem to suspiciously remove

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neonstatic 3 hours ago | parent | prev [-]

This month I spent $50 on OpenRouter credits. I find it very useful for coding assistance (not coding per se). It's $50 that I never spent before on this kind of service. That's what we call growth - it quite literally came out of nowhere.

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hypercube33 2 hours ago | parent | next [-]

This month I reduced my spend on cloud AI and started using local models as primary - it's maybe 2 or 4 times slower for some things but it still is getting the job done just fine. I talked to a friend of mine who's been doing the same running smaller Qwen models locally for coding.

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oblio 3 hours ago | parent | prev [-]

Your $50 isn't enough to sustain trillions of dollars in CapEx investments. This investment cycle - at this scale - only makes sense if within the next 5 years AI replaces something crazy like 5-10% of jobs, if not more. Not changes, replaces completely.

And I'd argue the timer started in 2023.

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brunoarueira 2 hours ago | parent | next [-]

It's the marketing they were doing all the time that AI will replace developers and other jobs, then the companies started this bullshit firing thousands of people without really thinking through. It's more sane to advertise that AI will augment us and I guess if they followed this path a more sustainable growth is expected to happen!

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

I merely pointed out, that there is real growth behind this - 50$ from my wallet went to this, that did not go towards it at any point in the past. Your argument that my 50$ is not enough is duly noted, but also intellectually lazy.

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saberience 2 hours ago | parent | prev [-]

I've spent several 1000 dollars on AI products this month, roughly 3000 dollars.

Trust me, there are many other people like me in the world and the enterprises are spending even more.

There is more money flowing into the overall AI ecosystem (by far) than the money Nvidia puts in.

The idea that Nvidia is artificially creating the whole demand is laughable and doesn't add up.

	▲	ReflectedImage 39 minutes ago \| parent [-]
		The AI numbers only work if it replaces white collar work. Power tools for knowledge workers, which is what we are getting, isn't enough to save it.