After the Bubble

> Nobody who is doing this is willing to come clean with hard numbers but there are data points, for example from Meta and (very unofficially) Google.

The Meta link does not support the point. It's actually implying a MTBF of over 5 years at 90% utilizization even if you assume there's no bathtub curve. Pretty sure that lines up with the depreciation period.

The Google link is even worse. It links to https://www.tomshardware.com/pc-components/gpus/datacenter-g...

That article makes a big claim, does not link to any source. It vaguely describes the source, but nobody who was actually in that role would describe themselves as the "GenAI principal architect at Alphabet". Like, those are not the words they would use. It would also be pointless to try to stay anonymous if that really were your title.

It looks like the ultimate source of the quote is this Twitter screenshot of an unnamed article (whose text can't be found with search engines): https://x.com/techfund1/status/1849031571421983140

That is not merely an unofficial source. That is just made up trash that the blog author just lapped up despite its obviously unreliable nature, since it confirmed his beliefs.

I have been thinking. The reality is that in general employees are not paid for value/revenue/profit they generate. That sets the floor. But they are paid what market sets as rate for their demand. See people putting together high cost electronics. Clearly lot of value there with margins what they are, but not lot of pay.

Wouldn't AI largely be race to bottom? As such even if expensive employees get replaced, the cost of replacing them might not be that big. It might only barely cover the costs of interference for example. So might it be that profits will actually be lot lower than costs of employees that are being replaced?

> When the early-electrification bubble built, we were left with the grid. And when the dot-com bubble burst, we were left with a lot of valuable infrastructure whose cost was sunk, in particular dark fibre. The AI bubble? Not so much.

Except for the physical buildings, permitting, and power grid build-out.

> The GenAI bubble is going to pop. Everyone knows that.

I think the first part of this is probably true, but I don’t think everyone knows it. A lot of people are acting like they don’t know it.

It feels like a bubble to me, but I don’t think anyone can say to a certainty that it is, or that it will pop.

>When companies buy expensive stuff, for accounting purposes they pretend they haven’t spent the money; instead they “depreciate” it over a few years

I thought there was a US IRS Law that was changed sometime in the past 10/15 years that made companies depreciate computer hardware in 1 year. Am I misremembering ?

I thought that law was the reason why many companies increased the life time of employee Laptops from 3 to 5 years.

I think the interesting thing to think about its that we _already_ fired people in the name of AI (because AI was supposed to be this huge efficiency gain).

When the bubble pops, do you fire _even more_ people? What does that look like given the decimation in the job market already?

> If the genAI fanpholks are right, all the debt-only-don’t-call-it-that will be covered by profits and everyone can sleep sound. Only it won’t.

[citation needed]

There is no AI bubble. The housing bubble was about artificially inflated housing assets.

People have been calling Bitcoin a bubble since it was introduced. Has it popped? No. Has it reached the popularity and usability crypto shills said it would? Also no.

AI on the other hand has the potential to put literally millions of individuals out of work. At a minimum, it is already augmenting the value of highly-skilled intellectual workers. This is the final capitalism cheat code. A worker who does not sleep or take time off.

There will be layoffs and there will be bankruptcies. Yes. But AI is never going to be rolled back. We are never going to see a pre-AI world ever again, just like Bitcoin never really went away.