I’m not so sure about that. Already AI vendors are back to cutting prices to try and keep customers from cutting back on their usage. My own employer is working hard at pivoting to much smaller fine-tuned models for established use cases, and seeing model performance improvement in addition to large inference cost reductions. Being able to run them locally hasn’t exactly been a disaster for devex, either.

It may turn out that demand for SOTA frontier models isn’t so limitless after all.

This + your ROI in $10k device will be always lower than busy datacenter, its literally math. They sell free compute to others when you dont use it, you will never sell at that level or even you magically sell home compute, you will not compete at price

You don’t need frontier-level performance for every task. That’s why companies hire both junior and senior developers. I suspect a decent percentage of people using Fable would probably be fine with Opus.

Also, the frontier can’t keep advancing at this rate forever. Eventually the low-hanging fruit will all be gone and advances will slow down.

I'm not sure if this prediction will hold true.

We're not seeing the progress in those "frontier models" that we have previously seen. There's certainly still gas left in tank tank, but we're way into the diminishing returns by now.

Cloud inference still beats hardware investments by orders of magnitude of course, but that's only if your data doesn't really matter to you.

It's going to happen very soon, which is why these frontier labs are scrambling to shut down open source language models. There's an existential risk threatening their obscene returns.