Newsletter: the AI bubble is close to bursting, with Big Tech losing $2 trillion in market cap as everybody wakes up to the mediocrity of generative AI. Here’s a comprehensive guide to how everything might fall apart - and how little time OpenAI has left. www.wheresyoured.at/burst-damage/ - ThreadSky

edzitron.com • 206 days ago

Newsletter: the AI bubble is close to bursting, with Big Tech losing $2 trillion in market cap as everybody wakes up to the mediocrity of generative AI. Here’s a comprehensive guide to how everything might fall apart - and how little time OpenAI has left.
https://www.wheresyoured.at/burst-damage/

Comments

kirkmurphy.bsky.social•206 days ago

Sincerely wonder how this may affect residential real estate (sales, rentals) in San Francisco and Bay Area at large.

leatherstocking.bsky.social•205 days ago

I hope it goes back to the fun town where young people go to retire

kirkmurphy.bsky.social•205 days ago

Thank you for replying, but I’m not sure I’m following you. If you can elaborate, I’d be grateful!

leatherstocking.bsky.social•205 days ago

San Francisco used to be a much more livable, laid-back town with lots of weird, quirky people, a vibrant arts community, etc. etc. Not the cheapest, but with a couple friends you could carve out a nice life there. Before the first tech boom, I heard SF called the place where young people go to…

kirkmurphy.bsky.social•205 days ago

TY for taking time to reply! And yep-I moved there in 2003: gentrification takeover grift SF Bay Guardian ( SFBG / 48 Hills at other place) long warned of was already imploding SF’s social ecology which had fostered activists artists creatives who supported 90’s forest defense/ global justice mvmt.

pppatticake.bsky.social•205 days ago

Capitalism has ruined every great place

missgeisterhausen.bsky.social•202 days ago

📌

skleinedler.bsky.social•206 days ago

I really like this sentence: “The people propping this bubble up no longer experience human problems, and thus can no longer be trusted to solve them.”

juphoff.bsky.social•205 days ago

Indeed, that was such a highlight of the piece for me that I saved it in my timeless-quotes collection.

It can be tweaked to describe so much about big tech, oligarchic wealth, etc. in general:

"[These] people...no longer experience human problems, and thus can no longer be trusted to solve them."

gwenckatz.bsky.social•206 days ago

mburchett.bsky.social•203 days ago

RE: Microsoft and NVIDIA, My Grandpa used to say about bad ideas “this is like selling pick axes in a gulch with no gold” only, you could sell the pick axes in another gulch.

I don’t know where Microsoft and NVIDIA make up those costs.

cerril.bsky.social•200 days ago

It's weird being in a group where it's very clear a thing is going to happen and the money people appearing not to realize it. Is this the sort of thing a smarter person could capitalize or is it just going to be economically crushing in terms of job loss to keep stock prices shored up?

juphoff.bsky.social•205 days ago

Sigh.

edzitron.com•206 days ago

Last week was dire for the AI bubble, with Google, Microsoft and Amazon getting spanked for spending tens of billions of dollars on generative AI with little revenue to show for it, and on Friday, multiple media outlets ran a story on the bubble popping.
https://www.wheresyoured.at/burst-damage/

grogofgrog.bsky.social•206 days ago

wonder if musk will still try to send 5 bil from tesla to Xai.

400trix.bsky.social•205 days ago

The purpose of that “investment” is to move money from a public company (where the accounting is public-ish) to a private company (where accounting is hidden) so that Musk can do whatever he wants with it.

grogofgrog.bsky.social•205 days ago

yup, big Solar City vibes there

edzitron.com•206 days ago

Aug 2 was Black Friday for the AI hype cycle, with (as predicted) the absorption of unsustainable chatbot company https://Character.ai by Google, followed by a 3+ month delay of Nvidia’s new chips - ones that are critical to the future of generative AI.
https://www.wheresyoured.at/burst-damage/

edzitron.com•206 days ago

The 3+ month delay of Nvidia’s “Blackwell” chips likely means that OpenAI and other LLM companies will see massive delays in new models like GPT-5 - with OpenAI now not getting access to them until *March 2025* - which is longer than Sam Altman has. https://www.wheresyoured.at/burst-damage/

falselogic.bsky.social•206 days ago

These tech bubbles are blowing up faster and faster.

edzitron.com•206 days ago

I can't tell when the bubble bursts, but here’s a list of the signs it's doing so - price increases, OpenAI or Anthropic not being able to raise, big tech reducing capex, layoffs, or big, vague new products with indeterminate features/launch dates.
https://www.wheresyoured.at/burst-damage/

eilatan.bsky.social•205 days ago

Oh, someone else who understands capex (I used to be an analyst in the manufacturing sector specializing in capital spending).

edzitron.com•206 days ago

Though all of this feels sudden, it’s been building for months - Goldman Sachs, Barclays and Gartner have all seriously questioned generative AI’s utility, and Barclays believes big tech will only make *$20bn a year* in revenue from it by 2026. It's bad.
https://www.wheresyoured.at/burst-damage/

edzitron.com•206 days ago

At this point, it’s really Microsoft keeping the bubble inflated, and they’ve dumped bubbles before - AR, blockchain and the metaverse. What's in it for them to keep OpenAI alive? If the markets make Microsoft blink, OpenAI could get cut off, and quickly.
https://www.wheresyoured.at/burst-damage/

henryfeldman.bsky.social•1 hour ago

SCO - what a horrible company to deal with. You just gave me PTSD - shame on you, lol.

kalilchernov.bsky.social•205 days ago

I am, of course, rooting for the collapse of these larcenous, exploitative, scammy companies, but I'm curious what it actually looks like 'on the ground'. If OpenAI and the like fold, do their models stop operating? Or will ChatGPT and its ilk continue to pollute the internet with fake content?

sharphall.org•204 days ago

There are plenty of "open source" models at this point, for both text and image, that can either be run locally or on rented machines in datacenters with no OpenAI, etc involvement.

pussyfullawasps.bsky.social•205 days ago

this whole thread would be greatly improved and more accessible if you’d added alt text. there’s even an easy to use icon to select alt text when you’re posting and just paste it into the alt text box! you got this! please endeavor to do better! and also thank you for sharing important news! 🌈🦄

7leaguebootdisk.bsky.social•205 days ago

The one bit of history I think you miss, is this goes back to Netscape's 1995 IPO, for a cool product with no profits nor obvious hope of getting any. This kicked off the first modern bubble, and crypto and AI are the latest, with less and less reality in them. Browsers were at least revolutionary.

krenster.bsky.social•205 days ago

Netscape was a browser as well as the company.

dmrma413.bsky.social•206 days ago

Altmans gotta be sweating bullets at the headlines lately

weigard.bsky.social•206 days ago

Why? Even if he goes away, he'll be back in three days, being the Jesus Christ of Listening and all.

dpilley.bsky.social•205 days ago

Huh, who could have imagined something not demand-driven would fail?

gekido.bsky.social•3 days ago

Something you didn't mention: the impact that hitching their bandwagons onto the "remaking of the US" will have

It's obvious that they all expect the US govt gravy train to be at least a short-term gold mine (as much of a disaster that will be).

Thoughts?

nicolas.grumpycoder.net•206 days ago

"The people propping this bubble up no longer experience human problems, and thus can no longer be trusted to solve them."

Or, as some famous French queen famously said, "let them eat cake".

mikethemadbiol.bsky.social•206 days ago

📌

cyberjauvie.me•206 days ago

@zitron.bsky.social Have you heard any developments on this? I feel like a major player in Microsoft/OpenAI’s success now is the U.S. military and they would have pockets deep enough to keep things going.

boontonkat.bsky.social•206 days ago

Thankfully, either way this election goes, the Pentagon will be under “new management”; we need to ensure it’s not dumpster

cyberjauvie.me•206 days ago

also, people in the Pentagon/military ranks often see themselves as permanent fixtures of military service while presidents are 4-8 year inconveniences to their agenda

cyberjauvie.me•206 days ago

Democratic or Republican presidents have not been able to curtail the endless expansion of the military-industrial-congressional complex and its unaccountable spending. That’s why I imagine the Pentagon dumping untraceable money into Microsoft/OpenAI is plausible.

stephenspower.bsky.social•205 days ago

The thing I didn't realize until I read this is that all the AI firms are trying to invent AI and monopolize the market at the same time. Like Alex G Bell inventing the phone and Ma Bell simultaneously.

stephenspower.bsky.social•205 days ago

Actually a better way to put it is, they're trying to corner a market before there is a market--and a corner. Because all that matters is the cornering. Like Zuck trying to make AOL3D with the metaverse

its.stonehippo.com•206 days ago

A zinger! But did you mean P.T. Barnum?

edzitron.com•206 days ago

sorry, i don't accept typo fixes unless i see a repost

andrecomics.bsky.social•203 days ago

deathshead419.bsky.social•206 days ago

What are the odds this causes a recession?

jaytingle.bsky.social•206 days ago

Mediocre? Now, who’s overselling AI?

mobby6kl.bsky.social•206 days ago

Economists have successfully predicted nine of the last five burst bubbles.

It might burst of course but I wouldn't count on it.

joeydantoni.com•206 days ago

Great column. So much agree.

marsrover.bsky.social•205 days ago

Ed can I reuse this newsletter for one very specific non-commercial purpose, that purpose being nailing it to every unguarded door from Monterey to Chico dressed as a 15th century monk?

Comments

Posting Rules

Reply