The industries that cause recessions are always obvious ahead of time, it’s timing/extent of the damage that’s unknown. There is eventually going to be an AI/data center/big tech-led recession, but whether it’s 2025 or 2028 who knows.
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The John Collison Money Stuff podcast episode had an interesting observation: that the dotcom bubble led to the massive fiber overcapacity that allowed for the tech companies of the 2000s to rise. Maybe overbuilding of electrical infrastructure for AI could facilitate widespread electrification
I think 2 things happened - there was a correction for over hiring of remote collaboration service development during pandemic, and a rebalancing of both open and capex towards more AI. So layoffs, but not a recession
I do agree there was a correction for all of the hiring that happened during covid. I work in security and I've never seen a security team's budget cut until recently though. It's not just layoffs but also having to get rid of or not acquire security tools
We’re spending heavily on security, but the types of staff and tools are changing as cloud adoption increases and all our internal processes are being updated and tightened
What’s interesting in the current moment is it’s not clear anyone is acting irrationally. Big tech companies have more to lose from under-investing in AI than over-investing. They’ve all said as much. It’s why overbuilding is 100% going to happen.
Something I caught in the @robinsonmeyer.bsky.social podcast with Secretary Granholm is she seemed to welcome the data center boom because it created an excuse to overbuild renewable power generation, which is something she supports. There are a lot of industries trying to overbuild right now.
We never really had a boom in the 2010’s, which was disappointing in a lot of ways but you can’t have a bust if you never have a boom, which allowed the expansion to go on for so long. We clearly have a boom right now, which is what creates the risk of a downturn at some point.
Yeah, I was wondering whether an energy-related recession would be in the cards, given AI-electric demand/global warming contributing to higher heating/cooling, Syria/Russia/Ukraine, etc. But maybe we're making progress on renewables to reduce that likelihood.
Yes, and no. The solution, without a real problem carousel is leading many down the path of misguided investing. There is so much work to be done in the supply chain to get any noticeable value from AI
It's going to be bad. AI is and always has been a dead end. The CEO class is technically clueless and it's going to bankrupt many of them -- a silver lining, I suppose.
Thanks! Meaningful number for sure, but only starts to look like a large proportion of total investment spending when you add the value of the GPU's and networking gear.
The amount of resources pumped into AI feel peculiar to me as someone who doesn't work in tech. It seems like an extreme amount for a field that seems constantly in search of what you do with it
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