Dan Luu did not engage on anything more, than a disorganized wall of text, ranted like a teenager using toxic personal attacks, while obsessing over calendar errors and a placeholder in a spreadsheet. If this is what passes here for a smart engineer...Lets analyze his post in a more logical and analytical way:
- His entire argument is based on the naive logic that because LLM execution speeds or benchmarks marginally improved over the last 24 months, the entire trillion dollar investment cycle is justified. A short window of venture subsidized chip buying...tells you absolutely nothing about the multi decade debt structures, physical infrastructure depreciation, and power grid constraints that dictate whether a capital heavy business model survives.
- While he whines about Zitron numbers, fails to provide a single! macro level equation to address the real financial threat. NYU finance professor Aswath Damodaran for example, explicitly warned that the current AI build out is an asset heavy, debt funded run up backed by private capital markets. Unlike the dotcom boom which was equity funded and contained to tech shareholders today AI infrastructure burdens companies with a massive $80 billion in CapEx per gigawatt, meaning a monetization correction will trigger widespread systemic debt distress and loan defaults across the real economy.
"Aswath Damodaran: Big Tech Has No Idea How AI Pays Off" - https://news.ycombinator.com/item?id=49229981
- Luu and this HN crowd, today in a mob mood...completely ignore the highly unstable plumbing of the sector growth metrics. Patrick Boyle is a quantitative finance professor and former hedge fund manager, and has meticulously mapped out the mutual dependence the entire AI boom. Big Tech companies are pouring massive venture pools into AI startups, which are then contractually bound to hand that cash right back to the hyperscalers to buy cloud compute. Analysts have identified more than $800 billion in these arrangements:
"Why Wall Street is ignoring big tech's debt" - https://news.ycombinator.com/item?id=49230630
- The worst of Luu logical failure, is ignoring ( on purpose? ) were Zitron numbers come from! They come from some very disciplined institutions, which Luu completely ignores. Citigroup quantitative analysts project cumulative global AI CapEx hitting $9 Trillion through 2030, with maximum global AI revenues ( not profit...) covering less than 30% of that expenditure.
- To break even on the physical infrastructure currently under construction, the AI sector needs to generate over $2 Trillion in annual end user revenue by 2030. Total actual revenue generated across the ENTIRE global AI sector today sits at a fraction, around $150 billion.
- Anthropic in a hysterical push, to make it to public markets, before the bubble bursts, recently claimed their addressable market is 30 trillion... the whole of US economy. Are we getting a post from Luu on that? This of course this ignores that MIT Professor and Nobel Laureate, Daron Acemoglu, mathematically proved that while 20% of all labor tasks are exposed to AI, only about 5% can be automated profitably due to upfront enterprise systems integration and the high financial burden of constant human in the loop verification.
"A new look at the economics of AI" - https://mitsloan.mit.edu/ideas-made-to-matter/a-new-look-eco...
- Dismissing the AI bubble thesis, because you found a spreadsheet typo in a newsletter, and ignoring the other voices who are aligned with Zitron core premise, means you are also dismissing the research of a Nobel Laureate in economics, the Dean of Valuation, veteran hedge fund managers, Barclays, S&P Global, and Citigroup. Arguing that "the models are hitting benchmarks" while ignoring that the physical balance sheets and enterprise budgets cannot support a multi trillion dollar infrastructure build out, is exactly the type of Dunning Kruger this corner excels at....
Ed Zitron is correct, despite the clumsiness or unpleasantness of his message delivery, and this community reaction, will be an historical record of the AI bubble crowd madness.
It took years to take down Maddoff, and more to take down Bear Stearns. It will take maybe 5 - 10 years of "Ed Zitron is wrong posts here" until Anthropic and OpenAI have to be bailed out by the US government, but the day of reckoning will come. The end of this universe is all tax payers will own a piece of AI and will pay for it with increased interest rates for the next 25 years...