Hacker News Reader

Comment by surgical_fire | Hacker News Reader

It appears to be a scam because it sort of is.

AI needs to be propped up because the bug tech cloud providers they depend on need AI to be a thing to justify their valuations. Tech is going through a bit of a slump where all things being hyped a few years ago sort of died down (crypto? VR? Voice assistants? Metaverse?). Nobody gets very hyped about any of those nowadays. I am probably forgetting a couple of hyped things that fizzled out over the years.

Case in point, as much as I despise Apple, they are not all-in the AI bandwagon because it does nothing for them.

View on HN

Go look at earnings reports for big tech companies. AI is definitely driving incremental revenue.

Apple is definitely on the AI bandwagon, they just have a different business model and they’re very disciplined. Apple tends not to increase research and investment costs faster than revenue growth. You’ll also notice rumors that they’re lowering their self driving car and VR research goals.

> Go look at earnings reports for big tech companies. AI is definitely driving incremental revenue.

Yes. Which proves my point.

Google Cloud revenue up 35% thanks to AI products [1,4,5]. Azure sales by a similar amount (but only 12% was AI products [2]. AWS is up too [3].

In so glad your point was that it’s not a scam, and there are billions of dollars in real sales occurring at a variety of companies. It’s amazing what publicly traded companies disclose if we only bother to read it. I’m glad we’re all not in the contrarian bubble where we have to hate anything with hype.

1. https://technologymagazine.com/articles/how-ai-surged-google...

2. https://siliconangle.com/2024/10/30/microsofts-ai-bet-pays-o...

3. https://www.ciodive.com/news/AWS-cloud-revenue-growth-AI-dem...

4. https://www.reuters.com/technology/google-parent-alphabet-be...

5. https://fortune.com/2024/10/29/google-q3-earnings-alphabet-s...

> In so glad your point was that it’s not a scam

Except it sort of is. It needs AI to be hyped and propped up, so that all those silly companies spending in GCP can continue to do so for a wee bit longer.

I don’t know if that makes it a scam.

I think you’re putting the cart before the horse.

Big cloud providers will push anything that would make them money. That’s just what marketing is.

AI was exciting long before big cloud providers even existed. Once it was clear that a product could be made, they started marketing it and selling the compute needed.

What’s the scam?

I think the implication of the top comment is that cloud providers are buying revenue. When we say that cloud provider revenue is "up due to AI", a large part of that growth may be their own money coming back to them through these investments. Nvidia has been doing the same thing, by loaning data centers money to buy their chips. Essentially these companies are loaning each other huge sums of money and representing the resulting income as revenue rather than loan repayments.

To be clear, it's not to say that AI itself is a scam, but that the finance departments are kind of misrepresenting the revenue on their balance sheets and that may be security fraud.

Crypto was exciting too. And metaverse. And VR. And voice assistants. Et cetera and so forth.

All those things would change the world, and nothing would ever be the same, and would disrupt everything. Except they wouldn't and they didn't.

The scam is that those companies don't want to be seen as mature companies, they need to justify valuations of growth companies, forever. So something must always go into the hype pyre.

By all means, I hope the scam goes on for longer, as it indirectly benefits me too. But I don't have it in my heart to be a hypocrite. I will call a pig a pig.

I think AI isn’t the same as crypto or metaverse.

The LLMs and image generation models have obvious utility. They’re not AGI or anything wild like that, but they are legitimately useful, unlike crypto.

VR didn’t fail, it just wasn’t viral. Current VR platforms are still young. The internet commercially failed in 2001, but look at it now.

Crypto the industry, imo, is a big pyramid scheme. The technology has some interesting properties, but the industry is scammy for sure.

Metaverse wasn’t even an industry, it was a buzzword for MMOs during a time when everyone was locked at home. Not really interesting.

I don’t think it’s wise to lump every market boom together. Not everything is a scam.

People are losing jobs because of AI. Like it or not, as imperfect as AI may be, AI is having a real world disruptive impact, however negative it may be. Customer service teams and call centers are already being affected by AI, and if they aren't being smart about it, being rendered obsolete.

A lot of folks here seem to look at AI through examples of YC companies apparently. Step back and look instead at the kind of projects technology consultancies are taking up instead - they are real world examples of AI applications, many of which don't even involve LLMs but other aspects such as TTS/STT, image generation, transcription, video editing, etc. Way too many freelancers have begun complaining about how their pipelines have been zilch in the past two years.

That was, perhaps, the only good retort made so far. Yes, call centers and customer service is being affected, although it is unclear to me if the cost-benefit make sense when AI stops being heavily subsidized - I may be wrong, but my impression is that AI companies bleed money not only with training, but in running the models, and the actual cost of those services for it to make sense will need to be substantially higher than they are right now.

Price dropping is just a matter of time. Compute gets cheaper and the models get better. We’ve seen 100x drop in price for same capabilities in ~2 years.

Don’t forget about writers and designers losing jobs as well. If you’re not absolute top and don’t use AI, AI will replace you.

There are also a lot of macroeconomic changes making hiring contractors (or anyone, really) a less attractive option at least in the US.

> Case in point, as much as I despise Apple, they are not all-in the AI bandwagon because it does nothing for them.

not sure if you've been paying attention, but AI is literally _the only thing_ Apple talks about these days. They literally released _an entire generation of devices_ where the only new thing is "Apple Intelligence"

Is Apple investing in AI as much as Google, Meta, Microsoft, and xAI? If not they are not "all in".

they are investing differently. Apple has a much more captive audience than the others, and as such is focused on AI services that can be run on device. as such, they aren't doing the blessing edge foundation modern research, but instead putting a ton of money into productionizing smaller models that can be run without giant cloud compute.

They don’t disclose it, but I’d imagine so. They also admit to being a couple of years late, so they’re accelerating (as per their last earnings call)

Trivia: not sure if you’re aware, but there’s billion dollar companies in all these spaces you claim “nobody cares about”. Every single stock broker in the US trades crypto now. Omniverse earns Nvidia a ton of money, Apple earned a billion dollars with a clunky v1 and Meta is selling more and more Quests every half.

Apple has spent over $10B on AVP and made back less than 10% of that with no signs of improvement in the next year or two and continued big spending on dev and content.

Meta has spent over $50B on Quest and the Metaverse with fewer than 10M MAU to show for it.

If you think those are successes, I'll go out and get several bridges to sell you. Meet me here tomorrow with cash.

Yeah. Was not really a world changer as it was claimed to be during hype cycle.

Billion dollar valuation for a conpany in a given space is not as impressive as you think it is. Do I need to mention some high profile companies with stellar valuations that are sort of a joke now? We can work together on this ;)

Reply on news.ycombinator.com