AI Bubble vs. Dot Com Crash. History Is Repeating
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suppose the current frontier models are final and there is no more progress. it still wouldn't matter because the cheaper the tokens the more demand there will be which will drive the silicon demand onward.
consider what you can do if a billion tokens cost cents: you could create a scaffold that would literally burn ungodly numbers of tokens on every conceivable angle. you could create scaffolds that don't just generate the next token but perform MCTS then at the end you keep the best results.
another way to look at it, we know that there is a document in the space of all possible documents which holds an answer to every conceivable solvable problem. but the combinatorics prohibit random exhaustive search. LLM's make exhaustive search somewhat more tractable, because there will probably exist a prompt/chain of thought which can yield it (especially when you can always get experts to poke it with cheap ideas).
creating silicon fabs is probably the most reliable investment at the moment, because there will always be room around the sun. orbital launch is probably less reliable because ocean floors still have a lot of room but it will depend on nuclear regulatory innovations. amusingly, had SpaceX actually gone up it would actually draw parallels to the dotcom bubble as being too soon.
note that tokens aren't just text anymore, MCP is very effective. if nothing else with billions of cheap tokens you will be able to exhaustively create endless virtual worlds with just Unreal Engine MCP - this is the absolute floor. entertainment without end.
and this all with just the current generation models frozen in time. but suppose only the intelligence is frozen, suppose training still works. if it's cheap enough you can always just dump compute on RL on the MCP directly. and the MCP can be something like silicon design...
> How is this related to the post?
That doesn't mean there isn't a bubble. The internet is useful and we still had a dot com crash.
> The internet is useful and we still had a dot com crash.
"we reached a point where there will always be demand for tokens."
So you think reality is static and not an ever growing ever changing process?
1. Like any commodity, I expect the price to converge to the marginal cost. The marginal cost is the price of electricity which is currently 10% or so of the cost of inference.
2. I expect the cost of electricity to go down an order of magnitude. Solar power and batteries are getting cheaper fast.
3. As the price of electricity starts dominating costs, you can drastically reduce costs by by taking advantage of electricity price variations. Build data centers all around the world and answer requests from the part of the world where the sun is shining.
4. Moore's law
5. Algorithm improvements
6. Moving from general purpose chips to chips that are highly optimized for inference.
yes but who will pay for them.
I fear it will be tax payers and consumers of high end products... everyone else else can go eat dirt.
The second trend is that AI is not mature enough to be used as a human replacement. Maybe as a helper, but even then they need close guidance and check. All these talks about autonomous agents, AI employees. etc - this is all hype that current level of AI technology cannot deliver. Realization of this fact will cause bubble deflation.
Who on earth is running a 1.8T parameter model locally? The hardware to do that with a usable token/s rate for a single person is (at least) well into 5 figure territory.
I've seen so many of these articles that I'm actually looking forward to a YouTube video or article that talks about a techno-feudal future, where API tenant farmers become the scenario if AI companies succeed. Sometimes I just want to see something new.
Claims like 'it will collapse someday' are actually unfalsifiable. Predictions that specify a quarter, on the other hand, are not. This is exactly why I think so-called pundits are useless. They repeat unfalsifiable claims over and over, and when it finally happens later, they say 'I told you so.' How ridiculous is that? I can make that kind of claim too. 'The US will collapse.' Sure, it will. But who knows if it'll even exist in a thousand years? So honestly, if there's no timeframe, it's meaningless.
But most of what gets posted on HN is exactly this kind of unfalsifiable punditry. I'd rather write a new scenario. A scenario where AI succeeds, we're all classified as API tenant farmers, only a few influencers chosen by OpenAI and Anthropic survive, most programming companies shrink, and a new mega-tech emerges. That would be more fun to write.
I think most people throwing shade are doing so of jealousy rather than well thought arguement.
https://en.wikipedia.org/wiki/Underoccupied_developments_in_...
Going to have to sell a kidney to build a new gaming PC the next few years.
I suspect improved power supplies and some downloadable weights.
It's not guaranteed, and the pent-up demand for RAM from all the other people who had been holding off on buying new hardware will mean that supply won't exceed demand for quite some time. But that's my strategy: wait for one of the companies who are currently outspending their resources to go bankrupt, then buy hardware once the supply is no longer quite so ridiculously tight as it is now.
if there is a bubble, then watch out for money supply. if it contracts because of interest rates or some random reason, then bubble will collapse.(if there was a bubble)
also iran war, nobody know what will happen if it escalates to full scale war. nothing good will happen, that's for sure.