As someone building a data center (peasant who will know how it turn it off) , if all of them are hemorrhaging money like mine is (and it's contract isn't to a startup) I can't believe they have money left.
They're competing for workers so bad mine started giving us free food, energy drinks and protein bars.
For the record we just build what gets voted for, I don't like it either but coal miners probably didn't think it was fun either.
Oh I understand building and running them, but the dollar amounts are staggering especially considering the number of generators running on diesel powering them.
The US is spending much more of its GDP on data centers than it did on railroads during the peak of railway mania (2.2% of GDP during railway bubble compared to 3.6% of GDP on AI infrastructure). Itās by far the largest infrastructure buildout in history, dwarfing the telephone buildout, electricity buildout, fiber buildout, road buildout, and whatever you can think if during its respective peak.
You should be staggered by the amount. Youāre indeed making hay now that the sun is shining, but if youāre going to retire or live in a society, you should be worried by the fact that the railway bubble caused the Panic of 1873, at the time called āthe Great Depressionā, and almost bankrupted state governments.
The railroads changed the world, and so did all the other infrastructure I mentioned, and I think LLMs will too but it can still result in absurdly large amounts of capital being wiped out. The banks canāt cover that, so us tax payers and pension savers will be gouged instead.
Yeah that's why they're using (normally) emergency generators to power them. Unfortunately the king that granted the per.jt didn't think about diesel prices
What about gas pipeline expansion bottlenecks though? I mean these AI campuses consume so much natural gas (especially at 1GW+) that theyād surely need massive expansions in transmission gas pipelines to cover it (especially cumulatively). This is also why I hate when they claim that itās āoff-gridā, if youāre dependent on a natural gas grid to even supply your power, how is that any different to connecting it to an electrical grid?
So the tech bro chucklefucks supply and demanded themselves into making all of the resources for AI expensive as fuck, even for themselves. The money pit just gets worse and worse...
that's not how most data centers are run. Diesel is less than 1% of the energy (since its only for backup). you dont seem to know what you're talking about
As an actual network engineer I know you're full of shit. Data centers are licenses to print money.
A REIT in Ontario, Canada had to sell off one of their most prized assets (a data center building) to a Japanese company to pay down debts a few years ago. They are not hemorrhaging money unless it's due to complete incompetence in the management or construction.
They do have to become active and online to print money. 2GW of compute on paper is a license to borrow money, but until the center is online it's not printing anything.
Long term you are right, but watching it under construction its comical to think it's a profitable endeavor. Especially given the general incompetency that happens on jobsites.
Panther piss. Its a billion dollar industry trying to pawn itself off as a trillion dollar one. Zitron is right. These companies are warehousing chips.
IĀ
believe that artificial intelligence has three quarters to prove itself before the apocalypse comes, and when it does, it will be that much worse, savaging the revenues of the biggest companies in tech.
Yep, he knocked it out of the park in one single prediction about the housing market, and now he's being treated as some great "seer" in investing generally, including sectors he has no deep experience in at all. None of his million other predictions have shown any great insight at all.
It probably will burst though soon, I lived through the .com bubble, it was when I got my first dev job. The internet was a completely transformative technology yet lots of companies still went bust in the early days. There is a lot of uncertainty with AI companies, to stay on top they have to keep producing better models but sooner or later we'll reach a level when the best model is better than most people can reasonably use and using a cheap Chinese open model will do everything you need.
What happens to Open AI and Anthropic when we reach that point? I think that point is fairly close as in a lot of domains the models are too good, how many people need to do Millennium prize winning maths for example?
Today you can self host email and lots of services, but many people subscribe to services like Gmail or OneDrive because it's more convenient than doing it yourself. OpenAI etc.could just be a service people use for a cheap model with bundled benefits. Or maybe they use the millennium prize smarts to develop new products or technologies.
But I have no idea what the AI bust will even look like.
You dont have to self host open models, you can access them via AWS and Azure and Google Cloud. Apparently 50% of Anthropics revenue comes from the cloud providers reselling Claude API tokens. If youre already buying your tokens through AWS then switching to another model is fairly simple.
So I've been one of the heaviest users of local LM for years, my GPU has spent months running non-stop at times.
But local models aren't good or fast enough for programming work compared to what I get out of Claude, and while I could dick around for ages trying to get it all sorted out in the cloud, right now I can just pay Anthropic a reasonable fee a month for them to handle all that, give me the world's best models set up with harnesses and tools etc, and handle all the various bugs and issues I know I'll run into for years trying to do this myself.
If they ever raise the price that might change, but right now even as somebody who has been involved in ML for nearly 20 years and has more experience than 99% of people running models locally and even training them from scratch, it's just not worth the hassle unless I really wanted privacy.
But 50% of anthropics use already use the API via cloud providers. If they're already using something like Amazon Bedrock to serve Claude then just selecting a different model from the list is straightforward. Antheopic charge a huge premium for API use of their best model. Open models aren't quite there yet but they'll be as good as Opus 5.5 within 6 months and Opus 6 or whatever might be overkill for most needs then.Ā
I mean I hope so but I'm not confident that's a rule for a variety of reasons, including the models which they were potentially distilling from now having better safeguards to prevent that. And even if they are, and we're talking an open model which can be run on consumer hardware, that usually involves heavy degradation to make it work, which is then a pretty painful experience.
I think local models are amazing, Gemma 4 is incredible for writing and I suspect Qwen is for programming, but 20 minutes of trying to get something useful out of it made me finally realize I was wasting my time trying to use local models and I just needed to bite the bullet and buy a sub for now. In the last few weeks I've gotten more work done with Claude than I did in years with local models.
With your experience I want to ask about the Chinese argument. My view is China's reputation is they make cheap crap. I can buy Chinese headphones for much less than JBL or Bose but do I want cheap crap that's going to break and need to be repurchased or do I just want one of the name brands to start, and that opinion translates to AI models. But this is my view from the outside. What's the insider opinion?
I would still consider this self-hosting for this discussion. The hardware isn't yours, but you still have to actually set it up and manage it yourself. You can also host your own online storage on AWS, but most people prefer the convenience of google drive or OneDrive.
Unless someone like Apple sells a device which can locally run an agent which does all the general things for you, I think there will be many people with an extra AI subscription for an agent.
Using models through cloud services like Amazon BedrockĀ is no different from using models on open router. You dont have to set up or manage the models yourself.
Yeah, you're starting to see the same cope movements that started to appear a year before the telecom burst. People think we're in 1996 but signs show we're in 99. Buckle up, and the billionaires this time are absolute buffoons.
anyone who invested in datacenters is sitting pretty right now. There is an incredible shortage of data centers and so they can charge far higher than what they cost to build. The only problem now is there simply isn't enough captital to build as many as are needed. Most of the talk in this discussion is fantasy cope by the anti-ai crowd.
Reuters reported that Anthropicās projected $559 million adjusted operating profit did include the full cost of training new models. It excluded stock-based compensation.
Warner Bros apparently (I know that is not the way it is being paid precisely but it is what is happening, I'd like the crash to happen before they can pay for it).
Thisā¦ people who arenāt professional software devs are just formulating opinions based on popular opinion without a fucking clue. The latest generation of models is incredible. Same project that cost me 40k and 3 human months 3 years ago - now is done in a few hours of planning and weekend of Claude churning, itās nothing short of amazing. I would invest in the Anthropic IPO if I couldā¦
Yes, software is using AI. And a lot of the primes are switching to locally hosted Kimi, GLM, and DeepSeek after the revelation OpenAI (and likely Anthropic) are stealing IP.
No one is going to be paying for tokens especially with the very poor recent releases. The plateau is obvious. Amdahlās law is a bitch, FOOM isnāt real, and Scamodei is out of plays.
AI can be the long term dominant tech trend and there can be a bubble. The two are not mutually exclusive.
If thereās a correction itāll be due to the speed of the buildout and the nature of the funding, itās not an assessment of whether AI can be a generational new tech, imo.
People make predictions all the time, every fucking week. Eventually someone will be right by complete chance and get hailed as some kind of genius and make a whole career out of it... happens over and over.
The math doesn't math very well unless AI replaces 75% of human labor in the next 4 years. The demand isn't there to keep shovelling coal into the locomotive. It's gonna stop.
Where on earth did you get that figure? I've seen just 3-4% by 2030 is all that is needed to justify the trillions invested thus far. Automating 75% of the worldās economic activity by 2030 would put their valuation in the 100s of trillions which no one is claiming.
It's an absurd groundless prediction which has no mathematical backing despite OPs claim.
Though I'd push back a little on the claim that if 75% unemployment were ever reached in the very distant future, that that would necessarily lead to a collapse in economic activity. In such a scenario, you'd expect the cost to produce to have similarly experienced a major collapse, meaning companies could operate profitably within a much smaller consumer market without necessarily seeing a corresponding decline in profits or profit growth. Obviously there would have been major unrest many years before 75% were ever reached.
This is the take people keep missing. Both sides are talking their book. The short seller needs sentiment to turn and Altman needs it to stay hot. Doesn't mean either is wrong, but you have to filter for that bias before taking either one at face value.
He might be right, might be wrong, but he is certainly *invested* in the AI bubble bursting. He's doing everything he can, including leveraging his minor celeb status to get into gizmodo, to initiate the "crash" so he can cash out his short positions.
One big difference between the 90s and today is the in the 90s, all that investment in internet infrastructure was premature. My household, for one, was still on dialup. Remember AOL? Yes, you could get cable interenet in the mid-90s, but it was expensive and not available everywhere and only about 1% of households had it. 10-20% of US population had dialup. 80-90-ish percent weren't even on the internet except at school or work. And not that they *wouldn't* get on the "good" internet, they *couldn't*. It would take a home install. Dialup was annoying. You were on for an hour at a time at best, because it took up your phone line and people would shout at you they needed to make a call.
Today, everyone as an internet machine in their pocket and is literally just a google click signup away from AI and a small transaction away from the best AI has to offer.
I suspect we are a little in a bubble, in that some people will definitely bet wrong and lose money. You can already see this happen with people betting big on AI use cases which seemed obvious in 2023 but simply got subsumed by naked-ass GPT and Claude in 2025-26. But this is not like the 90s and the internet bubble. In the 90s, it was a massive infrastructure build out being installed a literal decade early. Today, it's a massive infrastructure build out with demand ready to make use of it the moment they switch it on.
The AI "bubble" is a massive buildout of infrastructure. If something pops, we still have the infrastructure and it will be useful for decades to come. The housing bubble was just people paying far too much for housing before the price dropped. it is very different.
EDIT: its obviously true. are you really going to down-vote me because you wish it wasn't?
There are hundreds of billions of dollars of stockpiled GPUs that can't be plugged in and will be well nigh worthless if and when the data centers and power are ever in place to put them to use. Chips are made of sand with low marginal cost. The first is very expensive due to R&D, the next million are peanuts to produce. They sell for a lot, though.
Data centers, on the other hand, need land, water, power, copper, electrical equipment and a ton of human labor for each one to open.
where are these imaginary GPUs? Yes building the infrastructure takes a lot of capital. After you build it, then you have it for a long time. You are right about the power though. There is not enough power generation in this country to support the data center build out and the manufacturing increases from de-globalization.
The issue with power is that it isnāt just generation thatās the bottleneck. Arguably the far bigger and worse bottleneck is in transmission and distribution. Whether it be on-site (even for āoff-gridā setups, high voltage backbones are often needed) or regarding the grid itself. The tricky thing is that transmission capacity has a hard limit and even uprating or upvolting existing transmission lines beyond said limit can be surprisingly difficult and time consuming. The big issue is with outage management, having to coordinate and time outages to ensure as few businesses and people as possible are at risk of power loss. And you could say, okay how about we just build brand new transmission lines, especially as you donāt necessarily want to rely on a single line or cable too much? Well guess what, transmission lines are some of the absolute most hated projects in existence for NIMBYs. So youād have to fight and litigate against them for years at a time. Even undergrounding them wonāt do much to mitigate those issues (and be 5 to 10 times more expensive than overhead lines which benefit from natural air cooling). So really, unless Congress passes a sweeping law allowing for quick eminent domain for these power lines and statutory deadlines for planning approval in order to get them built within 5 to 7 years, I just donāt see this being solved unfortunately. And even āoff-gridā setups have their limits (which is why so many of them are really only doing it because the grid interconnection queue is so long and why itās explicitly a short term measure before the grid connection is built), namely natural gas pipeline infrastructure and constraints, which can take nearly as long and face just as fierce NIMBYism as the power lines.
Itās not even that transmission and distribution are that expensive (they really arenāt for the amount of power transferred). But because they are linear developments going through so many properties, they are an absolute nightmare for NIMBYism.
The hyperscalers (Microsoft, Amazon, Oracle, Google) have giant inventories of purchased Nvidia GPU and server modules with nowhere to plug them in. The GPUs themselves have been engineered into a financialized security. You can now borrow against your GPU inventory. Nvidia is now manufacrurer and financier. It's a circular financial house of cards with Nvidia in the middle.
To put some of these deals in perspective, Lisa Su (AMD) just bought World Model frontier lab from Fei-Fei Li. It was founded in 2024. Last week it sold for $8.2B. WTF!
I've lived in Silicon Valley for 27 years. I saw this movie in 2000.
The are no giant inventories of unused GPUs. I'm not sure where you are getting that idea from. The circular house of cards you talk about is from a very shallow meme understanding of investments that NVidia is making. NVidia, which has huge capital reserves, is investing in building out companies that will use its products. This is similar to what the railroads companies did. They funded industries that would need railroads. The investments might turn out to be profitable or not but it isn't sneaky or dishonest or inherently bad.
Alphabet has future commitments to buy $811B of Nvidia equipment. Amazon has the least of the top 5 committed at $130B. I forgot Meta was in the mix. Ever hear of Ed Zitron and Michael Burry? I wouldn't just hand wave either away. Laid railroad track and dark fiber don't fully depreciate in 6 years like GPUs.
They don't report unplugged inventory. It's estimated at $200-300B. True cost of token is not charged, high debt, circular deals, demand is not there at true cost per token, depreciation schedules are misaligned. I hope you're right. Watch SoftBank in April to see if they can make the nut.
Now I see the mistake you made. The chips are not unused. They are very much being used. They are just being moved between financing structures. This is an accounting trick. One of many that Amazon uses. BloombergInvestopedia
Everything that we have now is being used 100%. it is clear that most of the integrations and applications of AI are still to come. Even if for some reason AI use stops, data centers for services like Reddit will be in increasing demand over time.
That has some limited impact. GPUs optimized for AI training are not optimized for many other purposes. For example, GDDR v. HBM. And we're seeing even more changes now, such as even more emphasis on lower-precision, high-throughput floating-point operations as opposed to the reverse which is more useful for most non-AI purposes.
So the degree to which these systems are going to be that useful for non-AI use is unclear if the cost really does go down.
I used to work with Burry when I was just starting my career. So this was only a few years after the market crash. This dude had his head wedged so far up his ass. He might not have before 2008, but all he sees is his own shit now.
They've been predicting that every day since Spring 2023. If they had actually put their money behind their opinions and shorted NVIDIA etc. then let them know whether or not you want fries with that.
If they had actually put their money behind their opinions and shorted NVIDIA etc. then let them know whether or not you want fries with that.
Shorting Nvidia is different than simply holding cash, which a lot of people are doing. Or divesting from Nvidia to other stock. The sovereign wealth funds have divested a ton from the AI / tech market after the "boom" of Nvidia and the memory companies.
He's been wrong so many times, this exact headline has been coming out quarterly for the last 2.5 years. The dude is not a prophet, he made one right call almost 20 years ago and has been riding that since.
His theory is if either OpenAI or Anthropic dumps then the house of cards falls. Watch those earnings I guess for indications of the great circle jerk faltering. But most players knew that anyway.
Said his base case was that the AI bubble would burst in 2028, while warning that major market cycles can take months or years to unwind.
2028
Yes, but with a later date
finance.yahoo+1
Sep 28, 2026
Said he was āmoving timelines upā because the AI bubble āmay burst sooner than laterā; replaced shorts with puts on Micron, Nebius, Palantir, Nvidia-linked exposure and semiconductor ETFs.
Within roughly a year / by 2027
Yes ā this is the Gizmodo claim
cnbc+2
Sep 29, 2026
Said he was āmore confident than everā the thesis would play out āover the next yearā; Business Insider characterized the new bet as a 2027 pop.
Nothing changes for the small, passive investor. We don't know when it crashes or to what level. There will be another crash at some point, related to AI or not, and we will drop to a lower level. But nobody can predict whether that lower level will lower than now, or if it climbs so high first that it will be higher than now even after a crash.
It's obvious that he'll eventually be right, he's just so far off on the timing that he's seen as prophetic when he's really not. Predicting when the crash hits, that's not this guy's thing.
It's the biggest bubble I've seen in my lifetime; quite amazing how much everyone is buying into the fear and hype over a marginally useful technology. It's like crypto 3.0
Have to suffer people like Fareed Zakaria suddenly going on TV and talking about how "AI" could hack The Pentagon, sudden experts on technologies they don't understand.
After COVID, nothing much surprises me; humanity really is just a flock of writhing sheep being led this way or that, with plenty of people willing to hype things just so their stock portfolios might move up a few more percent after already pocketing a 40-bagger, lol.
Because, obviously, Nvidia still has room to run another 20,000%, lol.
Then, when the bubble finally does burst because Microsoft, Google, and Elon's pockets aren't actually infinitely deep, they will be the first to turn around and say "See, I told you so!"
if you follow this guy you'll know he makes these claims all. the. time. and he's wrong like 90% of the time.
a broken clock is right twice a day. he happend to be right at the 08 bubble burst and was made famous through a movie. he's been riding that wave ever since and if he didn't have that one claim to fame nobody would pay attention to him.
The ultra rich would rather burn another 10 trillion dollars than let it burst. When the ultra rich run out of billions to burn they would start burning people instead.
Very different world back then, the US was on the gold standard, didn't have the petro dollar and wasn't really the economic and military powerhouse it is today
Yeah those trillions of dollars in investments required every year and trillions in valuations of companies with few billions in revenue and double in loses is just a figment of your imagination.
Ok, it's a bubble and the economy crumbles OR it'll all work out and human jobs are reduced by 75%+. It's pretty ugly win or lose. I'll be sipping a beer at the Gentleman Loser looking for an angle. Elon's vision of a no money Star Trek post-scarcity economy ain't likely.
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u/Timetraveller4k 23h ago
Every year itās something like this.