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> The only durable moats will be compute, energy, and data

"Compute" is capital investment; normal and comprehensible, but on a huge scale.

"Data" is .. stolen? That feels like a problem which has been dodged but will not remain solved forever, as everyone goes shields-up against the scrapers.

"Energy" was a serious global problem before AI. All economic growth is traded off against future global temperature increases to some extent, but this is even more acute in this electricity-intensive industry. How many degrees of temperature increase is worth one .. whatever the unit of AI gain-of-function is?

one.. fully autonomous, self improving, replicating, general intelligence.

> How many degrees of temperature increase is worth one .. whatever the unit of AI gain-of-function is?

Billionaire. And they are definitely willing to make the trade.

> All economic growth is traded off against future global temperature increases to some extent, but this is even more acute in this electricity-intensive industry. How many degrees of temperature increase is worth one .. whatever the unit of AI gain-of-function is?

The premise here is that if we use more electricity then we burn more carbon. And the media hates AI, so if anybody restarts any coal-fired power plant to run a data center anywhere, that's the story. But then there's this:

https://electrek.co/2026/01/28/eia-99-of-new-us-capacity-in-...

Nobody actually wants coal because solar is cheaper.

And data centers are a pretty good combination for this because the biggest problem with solar and wind is what to do during multi-day periods of low generation, but data centers have backup generators and would be willing to turn them on whenever the cost of grid power is higher than the cost of operating them. Running some gas turbines for a week every two years in exchange for stabilizing the grid and being able to run on renewable power for the other 103 weeks is a pretty good outcome for everybody, not least because that amount of grid stabilization would exceed their consumption, i.e. allow more renewables to be added to the grid than they're using. If they can shed 1GW of load when a 2GW (long-term average) solar farm is generating at 50% of typical capacity for a week, you can add that 2GW of solar to the grid and remove 1GW of fossil fuels even while the data center is increasing consumption by 1GW.

The question isn’t if the demand is real or not (supplies are low, so demand must exist). The question is if the demand curve has permanently shifted, or is this a short-term issue. No one builds new capacity in response to short term changes, because you’ll have difficulty recouping the capital expense.

If AI will permanently cause an increase in hard drives over the current growth curve, then WD, et al will build new capacity, increasing supply (and reducing costs). But this really isn’t something that is known at this point.

My post argues that the demand has permanently shifted.

By the way, plenty of people on HN and Reddit ask if the demand is real or not. They all think there's some collusion to keep the AI bubble going by all the companies. They don't believe AI is that useful today.

AI can be useful today, while also being insanely overvalued, and a bubble.

There will be a bubble. It's inevitable.

The most important question is are we in 1994 or 2000 of the bubble for investors and suppliers like Samsung, WD, SK Hynix, TSMC.

What about 10 years from now? 15 years? Will AI provide more value in 2040 than in 2026? The internet ultimately provided far more value than even peak dotcom bubble thought.

> The internet ultimately provided far more value than even peak dotcom bubble thought.

Yeah, but not to the early investors. The early investors lost their shirts. The internet provided a lot of value after the bubble popped and everyone lost money.

> My post argues that the demand has permanently shifted

The time horizon for this is murky at best. This is something you think, but can’t know. But, you’re putting money behind it, so if you’re right, you’ll make a good profit!

But for the larger companies (like WD), over building capacity can be a big problem. They can’t plan factory expansion based on what might be a short term bubble. That’s how companies go out of business. There is plenty to suggest that you’re right, that AI will cause permanently increased demand for computing/storage resources. Because it is useful and does consume and produce a lot of new data and media.

But I’m still skeptical.

The massive increase in spending can’t be sustainable. We can’t continue to see the AI beast at this rate and still have other devices. Silicon wafer fabs can’t be built on demand and take time. SSD/HD factories take time. I think we are seeing an expansion to see who the big players will be in the next 3-5 years. Once that order has been established, then I think we will fall back to more sustainable rates of demand. This isn’t collusion, it’s just market dynamics at play in a common market. Sadly, we are all part of the same pool and so everything is expensive for all of us. At some point though, the AI money will dry up or get more expensive. Then I think we’ll see a reversion back to “normal” demand, maybe slightly elevated, but not the crazy jump we’ve seen for the past two years.

Us being in the same pool as AI is one of the potential risks pointed out by AI safety experts.

To use an analogy, imagine you're a small fluffy mammal that lives in fertile soils in open plains. Suddenly a bunch of humans show up with plows and till you and your environment under to grow crops.

Maybe the humans suddenly won't need crops any longer and you'll get your territory back. But if that doesn't happen and a paradigm change occurred you're in trouble.

Usefulness and overvaluation are not mutually exclusive. AI is useful, but it is not a fraction as useful as these companies spending rates would have one believe.

If it is, then the world is going to lose pretty much all white collar jobs. That's not really the bright future they're selling either.

I wonder if I'm alone in being optimistic about this. I believe that the gigantic inflow of money into hardware will lead to large increase in production capabilities, accelerated progress and perhaps even new, better architectures.

I actually agree: a spike in prices due to bumping against capacity limits is way better than a downturn in the market. But this is only really true if AI hyperscalers are incented to space out their big buildouts over time (while raising their prices enough to ration current demand) so that suppliers can have some guarantee that their expanded capacity will be used.

This fact never ceases to amaze me. It's so cool how relentlessly AI is pushing the horizons of our current hardware!

Maybe now we will start to see the "optical" CPUs start to be a thing. Or the 3D disk storage,;or other ground breaking technology.

Optical interconnect in the rack is a thing already. It's just a matter of time until it moves to single-PCB scale. And most persistent memories (competing with DDR memory for speed, and with far lower wearout than NAND) are of the "3D storage" type.

> AI will cause shortages in everything from GPUs to CPUs, RAM, storage, networking, fiber, etc because of real demand.

Real demand, sure, I agree, but maybe not retail or business demand; at the moment the "demand" is entirely VC demand.

It's a really distorted market which is to be expected in any bubble/hype phase. The current retail/business demand doesn't appear to exist at the price point these investments require - even at the low low cost of "free, gratis and for nothing", not enough consumers and businesses are signing up.

The ones really going all-in on AI are the slop-producers. I dunno if slop is enough to pay back the investment into AI - I mean, even the slop producers are going to realise that paying $200/m to produce something in 1/10th of the time is a race to the bottom because someone else on the same plan is going to do the same, but cheaper.

> The physical world can't keep up with AI progress. Hence, shortages.

I think the word "progress" is inaccurate there - the physical world supply product at the demand maintained by VC's money.

It's not "cannot keep up with progress", it's "cannot keep up with demand from VCs".

> The only durable moats will be compute, energy, and data.

That'll be a first :-) Physical commodities have never been moats on their own before.

AI's output is not reproducible. It's a disaster.

This is wrong for all LLMs which have a temperature setting.

And even if there were guaranteed to be non-deterministic, there is still lots of value in many aspects of content generation.

If we want reproducible output we already have conventional software. Stop using a hammer on screws.

Good luck in a near future. Science be damned modulo the users of reproducible software and distros.

We do in fact want reproducible output. Which means LLMs are not fit for actual work.

No, you want verifiable output. That is not the same thing.

So it's like humans then