alt Hacker NewsThat doesn’t sound right. Silicon Valley is clearly responding to massive demand for AI services. The reason Nvidia has so much money is that people are paying them for something only they can make. It’s not like they’re issuing stock into a meme stock spike or something. They’re selling hardware that companies are demanding in large quantities because those companies need the hardware to provide services that people and companies want so badly that every marginal hardware dollar spent earns a large number of service dollars.
This is probably the most demand-mediated response of all time. The natural form of that is that the guy who we give lots of money to for his stuff is going to have lots to spend.
Replies
> Silicon Valley is clearly responding to massive demand for AI services > to provide services that people and companies want so badly
Not at all. In economics, demand has little to do with "wants", it means paying the price to buy the service. In that light, there isn't much demand for AI because the companies providing it are losing huge sums of money to subsidize underpriced and mostly free services.
The AI "demand" is now paid for by circular deals and huge debts incurred for the sake of centrally planned subsides - in confirmation of the comment you're trying to refute.
> They’re selling hardware that companies are demanding in large quantities because those companies need the hardware
Those companies don't need the hardware for funded demand (which isn't there), they need it to scalp the hardware market by hoarding and centralizing compute, while suppressing possible competitors - another centrally planned activity lacking any wider economic benefits.
PS. There's another big mistake in this expression "hardware that companies are demanding in large quantities" - the demands increase the price but they don't increase the quantity, because all relevant fabs are running at full capacity, they literally cannot provide more.
To what extent is it organic demand rather than manufactured demand? Clearly there's some demand for AI use but a lot of it has been shoved down people's throats with usage quotas, pushing it into every webpage and application, etc. To me it seems like there is a large degree of central dictate to use it pushed, at some level, by the perceived need to invest in it faster than China.
They are borrowing a lot and need to hype to absurd ways to create demand. It is forced on things rather then demanded.