AI Bubble burst coming sooner?
Nice try, I ain’t gonna pay anyway
Exactly, I just keep using the free plan and when I finish the amount for the day I just switch to another service
I wonder how much they spend for every $0 I pay them.
$1000 I would guess. They are just burning money at this point.
I can’t imagine paying for AI when the open source tools have made it so easy to set up a model locally.
Easy to set up, but still needs a 15k $ graphics card and electricity bill. The price you pay openai/anthropic is much cheaper than that for that quality of model.
Sure, you can setup a small model on a consumer graphics card, but the output will be considerably worse and the processing speed considerably lower.
For 240€/year you got a subscription to anthropic which will happily ingest a whole repository and process it in about one minute. No matter what latest model GPU you installed on your computer, you won’t be able to do that.
Sure, this guy was able to run a 26B model on an old CPU: https://point.free/blog/gemma-4-on-a-2016-xeon/
But that was not easy at all and the speed you get is definitely not the same as the one provided for a very cheap price.
There is a middle ground. Crypto farmers have transitioned into running AI workloads for money. There are things sort of like folding@home but you can let people use your GPU and you earn tokens which are used to buy compute or sold to people who want to buy compute on the network. So you can setup a bigass open source model for private on demand use it’s still not cheap but a lot closer to reality for a lot of people than a 15k initial purchase.
I mean, this is no different than Walmart making prices low until other businesses die out and then raising them.
It is no different than police shoving all the homeless people and drug addicts into one area of town to crash the property prices, and then evicting them once developers buy everything for cheap.
They’re purposely operating at a loss in the expectation that they can get ingrained into a ton of workflows, and then gouge everyone absolutely to death while also worsening the quality of the service to make it cheaper for them to run.
If it weren’t so horrible for the environment, I’d kind of like it, because all the dumbass executives that are signing up for this are going to get exactly what they deserve. You’d think they’d recognize a scheme when they see one.
Trust me bro we’re so close to profitability bro, just need this IPO to secure funding one last time bro then we’ll be profitable bro I swear.
Oh come on bubble, why won’t you crash already?
What is the actual “cost” after they buy the hardware, is that $1000 really pure power usage cost?
The problem is that the hardware has a 5 or 6 year depreciation schedule on paper, but NVIDIA keeps saying that their next generation chip will be twice as good as their last chip so there is a FOMO schedule of like every two years.
Would be nice to see that used hardware for sale rather than it being junked as a writeoff.
I’m curious as well. My knowledge is probably quite outdated, but from what I understood the training part is what’s expensive and then querying the model is pretty cheap. Is it still true (or was it ever) that the generated answers on search engines are cheaper to generate than the actual search results?
I find that hard to believe, I recently had to uninstall co-pilot after it weaseled its way into my search bar. Its not an exageration to say that my PC literally ran cyberpunk 2077 with pathtracting better than it ran the fucking windows search bar with co-pilot.
That’s just a shitty front end interface implementation, it has nothing to do with the actual inference run by the models.
Look at the public numbers, it seems true. Copilot on your taskbar is just windows being garbage, not the AI being bad. Just look at self-hosted AI and measure the power costs of your queries. It’s tiny.
It is sorta. Training is orders of magnitudes more intensive than inference, but we infer billions of times within a model generation.
I wish that was inversely proportional. The less I pay, somehow it costs them more money.
Yes, that’s called a “marketing budget”
Honestly Google is likely to beat openAI and Anthropic as things are.
OpenAI and Anthropic have to buy/rent their hardware from Nvidia, while Google is making their own TPU hardware. Google’s hardware costs on AI is way lower, every dollar they spend on it goes a lot farther.
And unlike the other two, they’re already a profitable company. They’re making record profits right now. They don’t have a desperate need to figure out how to make back billions on their AI models, they can just keep offering Gemini at a comparatively cheap price and wait for anthropic and open AI to bankrupt themselves.
I guess you missed this story from last week: Google To Pay SpaceX $920 Million Per Month For Massive AI Compute Power
That’s definitely costing them more than running it on their own hardware, but it doesn’t mean AI is costing them more than the AI startups. Anthropic for example is already paying SpaceX 1.25 Billion a month for compute, and has agreed to pay Google 200Billion oflcer the next 5 years for access to Google’s compute and TPU chips.
Google’s deal with xAI specifically lets them terminate the deal with 90 days notice after the end of the year. Google is also investing heavily in building new data centers with their hardware. I’m assuming this deal means they’ve eclipsed their current TPU capacity, and are just looking for a short term bandaid until they can catch up with their new constructions.
Anthropic is doing the same too. SpaceX over here providing the shovels and pans for the modern day gold rush, sheesh.
Plus they have a hook with the common folk, the phone steers you toward Gemini (Android phones, obviously, and Apple currently partners with Google for Gemini for iPhone…).
For Claude and OpenAI, you have to explicitly want to go out of your way to use them, or use them indirectly through another service that has a hook.
Claude seems to have some software developers explicitly preferring them, though a alot of the corporate money is on Microsoft and Microsoft leveraged Visual Studio and Github to become the business-friendly frontend, and sure, you can use Anthropic models too… Though Microsoft ultimately has control of what is reasonably available and how much each one costs. Anthropic has a shot but I could see Microsoft pivot to really mess with Anthropic. The one gap in Microsoft strategy is the “native AI” workflow where Claude Code has won hearts and minds, but it uses massively more tokens for frankly marginal or sometimes negative value compared to a more curated use in-editor.
OpenAI I see as the most exposed. Lot’s of data showing they are suffering from people being over the fad of going out of their way to use ChatGPT, especially since their phones have started embracing ‘default’ Chatbot. Software developers that are inclined to use LLM are also inclined to be pretty dismissive of anything other than either Anthropic or open weight models, depending on their inclination. Also Altman seemed the most agressive in committing to spending money they didn’t have, though all of them exhibit this to some extent.
I predict Microsoft ultimately pivots to in-house models and convinces the businesses to go that way. Apple may continue with Gemini or roll their own eventually. Anthropic currently has the stronger position between OpenAI and them, but I think you are right that both have risk of just being left behind.
Claude just kills the other models, it’s not close. Microsoft could ban claude extension from VSC tonight and ill start using command line Claude tomorrow. There’s just no comparison right now. Itd be like Microsoft trying to ban NVidia gpus from Windows, they’ll just lose.
Of course it is, it’s essentially a scam. They just need enough humans to keep investing until they check out and run with a bailout.
I don’t get why companies get to legally bailout like this. Why do people have to suffer for their bullshit? Enslave the CEOs if you have to make things right, leave the people out of it.
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Although, most people aren’t talking about Alphafold when they’re talking about AI. They’re usually specifically referring to the generative transformer models that are currently all the rage.
I doubt anyone would care too much about a linear regression model, or multi-layer peceptron , for example.
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Good thing I don’t personally pay them anything
Oh, you are going to pay. The bubble is going to fuck us all quite thoroughly.
Exactly, these companies will keep leveraging more and more because they know the govt will step in and print whatever number of trillions of dollars needed to fix the accounting. Then they’ll tell us “core” inflation is only 2.8%.
reminder than during 2019 there were streaming services popping left and right, all showing tremendous growth because they started from zero, and articles were about how bad Netflix was doing due to having practically no growth compared with the competition (they already had a massive subscriber base). Twist? Netflix was the only streaming service that was actually making a profit, the rest were a massive loss but big growth.
Needless to say most of those streaming services died; who remembers DC streaming service, or Yahoo’s? While Netflix is basically as stong as ever, despite the prevalent enshitification happening through the whole industry.
Point of the story? shareholders don’t care about stable profitable business, only cancerous growth. AI is like that, zero profits, ton of cost, but as long as they show growth the shareholders are happy, regardless of how cooked the books are.
2019 Yahoo
My immediate thought, there is no way Yahoo! Screen survived into 2019.
I looked it up and Yahoo! Screen (which featured Community season 6) was shutdown in January 2016. But Yahoo! View launched in late 2016 (as a Hulu-like replacement), and that did shutter in mid 2019.
So Yahoo! was already dead, but it also died for real in 2019.
Imagine having a streaming service so bad it fails twice
Isn’t that kind of Yahoo!'s business model?
Actually, when Yahoo was the search giant, before Google went mainstream, they were pretty damn good at what they did.
With how shit Google is these days, I kinda wonder if Yahoo could dust out their search engine from two decades back and it would just be… better.
Yahoo had it’s own web crawler only between 2004 and 2009, then they made a deal with Microsoft to use Bing indexes, so i highly doubt they even have their old index
who remembers DC streaming service, or Yahoo’s?
Quibi will always have a place in my heart. Or, at least, my golden arm
no wonder why OpenAI is losing alot of money.
They’ll never earn
