I can easily see the AI bubble crashing.

But I do not expect the 'excess compute supply' to be a problem. That is very likely to be the main asset that people buy up. The price will drop for it as compared to now, but not by much.

Memory prices however I expect to crater. Once that compute supply is shifted away from making AI slop to more productive uses, we will have a glut of memory chips combined with excess production.

The main fall will be the idiots that 'invested' in AI companies. The AI founders will still come away in the 1%, but most of that money will have been striped away from the investors.

I am fairly certain that the AI bubble bursting will result in a worse economic situation than the great depression, except that it will be worldwide. The stock market prices for everything will collapse, and it is likely to result in hyper-inflation because none of these multi trillion dollar companies are going to be cool with losing significant portions of their market cap, or their valuation as a result. Scary.

Siri's poor comprehension and general utility used to be a funny joke but it's gotten to the point where I'm questioning my longtime iPhone use, esp how poorly it transcribes verbal texts. I get Apple doesn't want to bet the farm on AI but they need to invest enough to at least stay roughly competitive with useful features like transcription.

Generally speaking, Apple doesn't follow trends, it sets them. Not following the AI "trend" is in their DNA, and very much to their benefit.

From the start, the current AI iteration led by the likes of OpenAI has been a dumpster fire for investor money. No profit in sight, and a continuous burn rate that dwarfs every other financial bubble in history. A few firms in the hardware business have cashed in on the shovel trade, while outright fraudsters like the DRAM cartel have raked in a windfall, but neither is sustainable in the long term. Apple, unlike just about every other tech firm out there, has contented themselves with sitting out the AI bubble, and it very much looks like they're going to benefit. At the end of the day Apple will have pile of cash on hand to cherry pick the remains, while the likes of Microsoft and Meta will be left holding so much debt it could well sink them. Oracle will be toast.

His podcast Better Offline is squarely targeted at people who are very much online. Indeed his entire gig is the epitome of online living.

If Ed Zitron really felt better offline, he wouldn't be making a living off of a podcast and constant AI bashing.

Not that I necessarily disagree with him though... It's just that the messenger doesn't really befit the message.

making that as small as humanely possible

So, no painful implants?

...increasingly unpredictable

But there seems to be money to be made by predicting doom

Evidently some people enjoy thinking about doom

"No."

But from the heat map we can probably map concentrations of stupid.

"...I think Apple is in a very weird place at the moment. The Vision Pro was a dud, but it was also the most interesting and future-forward thing I've seen anyone put out in a while. If they were smart, they'd tread water and sink as much money into making that as small as humanely possible -- no matter how long it takes -- because the entire AI bubble is a result of everybody running out of hypergrowth ideas, mostly because we're flat out of new interfaces...." The AVP is perhaps Apple's most valuable pro

So as I understand it, current AI models need about two orders of magnitude efficiency improvement to be sustainable as a business. You burst the bubble if usage growth doesn't exceed roughly infrastructure growth divided by efficiency improvement-- flat usage means a 10x growth in infrastructure requires a 10x efficiency improvement. There is some fudge factor to cover sunk costs, but I'm not sure how meaningful that is as you talk about orders of magnitude.

Most of what AI is useful for today could be done more efficiently with small models, and the idea of AGI is a long long time away despite what true believers hold as gospel. That, from my limited understanding is where most of the token spend is today-- the money could easily be starved in that context.

I have a like/not-like opinion of this guy. His seemingly adderall-induced patter is fun to listen to, and I sort of agree with him on many points, but it is basically an auto-repeat loop now. Not much changes. I suppose that’s true of many slow-motion train wrecks.

This whole article is based on the suppositions that (a) the AI bubble is going to burst and (b) it's going to take down Apple's competitors. I don't think that's a likely sequence of events.

I do think we're in something of an AI bubble, and that it will burst... but it won't burst in the sense of "All this AI stuff will go away and no one will need data centers", it will burst in the same sense that the dotcom bubble burst, or the railroad bubble burst. What happened in those cases wasn't anything remotely like "and the hyped technology became unimportant".

I think the railroad analogy is the most interesting because while a lot of railroads went under and a lot of railroad investors lost their shirts, it wasn't because railroads -- especially trans-continental railroads -- were just as huge a game-changer as everyone thought they were, it was just because the capital investment required was massive and the payback didn't come as fast as the financial structures built to fund the construction required. What happened was that those with the money snapped up the failing railroad assets and made a lot of money as the massive economic growth unleashed by the railroads was realized, over the course of a few decades.

Similarly, the dotcom bust famously left a lot of "dark fiber" laying around... but all of that fiber got lit up within a handful of years, plus we've added a ton more.

AI is looking like it will follow a similar path. It absolutely is a revolutionary technology, it will upend the structure of our economy -- even more than railroads did -- and there is a lot of money to be made. And even if AI gets much more efficient and doesn't need all of those data centers, they're still going to get used. The problem is just that some of the early investors pushed so hard trying to out-grow the competition that they've built some unsustainable financial structures, and there's a good chance that AI won't generate payback fast enough to keep those cards from tumbling down.

This probably won't be because AI doesn't advance fast enough, but because it takes time to figure out how to integrate any new technology, to make the business and even social adaptations to make use of it. I suspect those things will happen far faster then they ever have for such a large shift, because AI will actually help to accelerate them, but they still probably won't happen fast enough.

OpenAI has the most exposure. Anthropic has done a better job of figuring out how to monetize AI and is a little less exposed, though still quite exposed. I don't think Google, Amazon or Microsoft have significant exposure, mostly because they all have very large non-AI revenue streams and large piles of cash, both of which can help them survive heavy investment. For example, although Google did post its first quarterly net loss in forever, thanks to heavy data center investment, it was only a $6B loss, and for a company that would otherwise be generating $80B per quarter in net profits and has a $130B cash warchest, that's nothing.

As for Apple? Well, Apple might be able to sit cagily on the sidelines, waiting for the crash so it can use its pile of cash to snap up the assets and buy in. But it's also very possible that they're going to miss the boat. Not completely, of course, but somewhat like Microsoft missed the boat on the Internet. I do agree that really making something like the Vision Pro work really well would be huge.

If "AI" is used "successfully" to make a large part of previously well-off humans unemployed, then it will not matter whether Apple invested into "AI" or not, because their former customer base will have no money to buy their products. Apple is not prepared for a future where humans as customers do not matter anymore - unlike some of the companies now gambling Trillions on data-centers.

That guy is a doom monger who makes his living bashing AI and I don't believe a word he says.

We're still in early days with these LLM's and AI in general. There's huge potential and very large demand for it, that's the reason for the infrastructure boom. The companies that could benefit the most from AI haven't had time to properly integrate it, so naturally there are growing pains. Anthropic and OpenAI are themselves just fledgling companies trying to grapple with success.

Meanwhile, token prices have fallen dramatically.

"According to Ramp’s enterprise spending data, the average cost per million tokens across major providers fell from roughly $10 to $2.50 in a single year. Epoch AI’s research suggests that inference costs are dropping at rates approaching 200x per year when accounting for both pricing and efficiency improvements."

"The pattern here echoes the early days of cloud computing, when providers offered aggressively low pricing to capture market share, then gradually introduced reserved instances, tiered pricing, and consumption-based billing as usage matured. The AI pricing cycle appears to be compressing that same evolution into a much shorter timeframe."

[1]https://www.artefact.com/blog/... [artefact.com]

But alongside that people are now deploying agentic AI that burns through tokens far more rapidly. Companies have even been incentivizing employees to burn tokens. This is all going to even out in the coming years.

[1] https://www.artefact.com/blog/is-ai-really-getting-cheaper-the-token-cost-illusion/