Well... define "economic crash."
The outputs no longer correlate with the inputs. Is it possible it's "crashed" already? And is now running in a faulty state?
It might change if we get into millions of foreclosures like the great recession and the pain really hits home. From what I can tell right now they're in wartime mode where they just need to buckle down until Trump wins and makes other countries pay for tariffs or something.
You said it right here. No one is going to give up energy at such a cheap rate anymore. Those days are over. Darkness for the US is coming.
AI, or whatever a mountain of processors churning all of the worlds data will be called later, still has no use case, other than total domination, for which it has brought a kind of lame service to all of the totaly dependent go along to get along types, but nothing approaching an actual guaranteed answer for anything usefull and profitable, lame, lame, infinite fucking lame tedious shit that has prompted most people to.stop.even trying, and so a huge vast amount of genuine human inspiration and effort is gone
> I was discussing with a friend that my biggest concern with AI right now is not that it isn't capable of doing things... but that we switched from research/academic mode to full value extraction so fast that we are way out over our skis in terms of what is being promised, which, in the realm of exciting new field of academic research is pretty low-stakes all things considered... to being terrifying when we bet policy and economics on it.
That isn't overly prescient or anything... it feels like the alarm bells started a while ago... but wow the absolute "all in" of the bet is really starting to feel like there is no backup. With the cessation of EVs tax credits, the slowdown in infra spending, healthcare subsidies, etc, the portfolio of investment feels much less diverse...
Especially compared to China, which has bets in so many verticals, battery tech, EVs, solar, then of course all the AI/chips/fabs. That isn't to say I don't think there are huge risks for China... but geez does it feel like the setup for a big shift in economic power especially with change in US foreign policy.
It happened ten years ago, it's just that perceptions haven't changed yet.
For AI, the pivot to profitability was indeed quick, but I don't think it's as bad as you may think. We're building the software infrastructure to accomodate LLMs into our work streams which makes everyone more efficient and productive. As foundational models progress, the infrastructure will reap the benefits a-la moore's law.
I acknowledge that this is a bullish thesis but I'll tell you why I'm bullish: I'm basically a high-tech ludite -- the last piece of technology I adopted was google in 1996. I converted from vim to vscode + copilot (and now cursor.) because of LLMs -- that's how transformative this technology is.
I, too, don't understand the OP's point of quickly pivoting to value extraction. Every technology we've ever invented was immediately followed by capitalists asking "how can I use this to make more money". LLMs are an extremely valuable technology. I'm not going to sit here and pretend that anyone can correctly guess exactly how much we should be investing into this right now in order to properly price how much value they'll be generating in five years. Except, its so critical to point out that the "data center capex" numbers everyone keeps quoting are, in a very real (and, sure, potentially scary) sense, quadruple-counting the same hundred-billion dollars. We're not actually spending $400B on new data centers; Oracle is spending $nnB on Nvidia, who is spending $nnB to invest in OpenAI, who is spending $nnB to invest in AMD, who Coreweave will also be spending $nnB with, who Nvidia has an $nnB investment in... and so forth. There's a ton of duplicate-accounting going on when people report these numbers.
It doesn't grab the same headlines, but I'm very strongly of the opinion that there will be more market corrections in the next 24 months, overall stock market growth will be pretty flat, and by the end of 2027 people will still be opining on whether OpenAI's $400B annual revenue justifies a trillion dollars in capex on new graphics cards. There's no catastrophic bubble burst. AGI is still only a few years away. But AI eats the world none-the-less.
[1] https://www.sciencedirect.com/science/article/abs/pii/S09275...
Is that a bit hyperbolic? isn't this just the same as dotcom and housing bubbles before where we pivoted a bit too hard into a specific industry? maybe... but I also am not sure it would be wise to assume past results will indicate future returns with this one.
How the AI Bubble Will Pop
https://news.ycombinator.com/item?id=45448199
America is now one big bet on AI
https://news.ycombinator.com/item?id=45502706
Jeff Bezos says AI is in a bubble but society will get 'gigantic' benefits
https://news.ycombinator.com/item?id=45464429
etc
etc
Can we still have a financial crisis from all this investment going bust because it might take too long for it to make a difference in manufacturing enough automation hardware for everyone? Yes.
But, the fundamentals are still there, parents will still send their kids to some type of school, and people will trade good in exchange for health services. That's not going to change. Neither will the need to use robots in nursing homes, I think that assumption is safe to make.
What's difficult to predict change in is adoption in manufacturing, and repairs ( be that repairing bridges or repairing your espresso machine ) because that is more of a "3D" issue and hard to automate reliably (think about how many gpus today would it actually take to get a robot to reason out and repair a whole in your drywall), given that your RL environments and training data needs grow exponentially. Technically, your phone should have enough gpu performance to do your taxes with a 3B model and a bunch of tools, eventually it'll even be better than you at it. But to tun an actual robot with multiple cameras and stuff doing troubleshooting and decision making.... you're gonna need a whole 8x rack of gpus for that.
And that's what makes it now difficult to predict what's going to happen. The areas under the curve can vary widely. We could get a 1B AGI model in 6 months, or it could take 5 years for agentic workflows to fully automate everyones taxes and actually replace 2/3 of radiology work...
Either way, while theres a significant chance of this transition to the automation age being rough, I am overall quite optimistic given the fundamentals of what governments actually spend majority of their money on.
AI has been the only new investment our company has made (half hearted at that). I definitely get the sense that everyone pretending things are fine to investors, meanwhile they are playing musical chairs.
Back in my economics classes at college, a professor pointed out that a stock market can go up for two reasons: On one hand, the economy is legitimately growing and shares are becoming more valuable. But on the other hand, people and corporations could be cutting spending en masse so there's extra cash to flood the stock markets and drive up prices regardless of future earnings.
Reason #1 is lower interest rates, which increase the present value of future cash flows in DCF models. A professor who does not mention that does not know what they are talking about.
Boy, you're on for a MAJOR dissapointment.
Dumb question: isn't a lot of the current investment in the form of equity deals and/or funded by existing tech company profit lines? What do we actually know about the debt levels and schedules of the various actors?
We're in extremely unprecedented times. Sometimes maybe good, sometimes maybe shit. The old rules don't apply. Etc.
but as far as this article, the "tech capex as a percentage of GDP growth" is an incredible cherrypicking of statistics to create a narrative... when tech became a boodbath starting in 2022, the rest of the economy continued on strong. all the way until 2025, the rest of the economy was booming while tech layoffs and budget cuts after covid were exploding. so starting that chart in early 2023 when tech had bottomed out (compared to the rest of the economy) is misleading. tech capex as a percentage of the overall GDP has been consistently rising since 2010 - https://gqg.com/highchartal-paper-large-tech-capex-spend-as-... this is obviously related to the advent of public cloud computing more than anything. why this chart appears to clash with the author's chart is the author's chart specifically calls out just percentage of GDP growth, not overall GDP. so the natural conclusion is that while tech has been in borderline recessionary conditions since 2022, it is now becoming stable (if not recovering) while the rest of the economy that didn't have the post-covid pullback (nor the same boom during covid, of course) is now having issues largely due to geopolitics and global trade.
is there an AI bubble? who cares. it's not as meaningful to the broader economy as these cherrypicking stats imply. if it's a bubble, it represents maybe .3% of the GDP. no one would be screaming from the mountain tops about a shaky economy and a bubble if that same .3% was represented by a bubble in the restaurant industry or manufacturing. in fact, in recent years, those industries DID have inflationary bubbles and it was treated like a positive thing for the most part.
I think a lot of this overanalysis and prodding for flaws in tech is generally an attempt at schadenfreude hoping that tech becomes just another industry like carpentry or plumbing. in particular, hoping for a scenario where tech is not as culturally impactful as it is today. because people are worried and frustrated about the economy, don't understand the value of tech, and hope it stops sucking up so much funding and focus by society in general.
they're not 100% wrong in being untrusting or skeptical of tech. the tech industry hasn't always been the best steward of the wealth and power it possesses. but they are generally wrong about valuations or impact of tech on the economy. like the people spending all this money are clueless. the stock market fell 900 points on friday, wiping out over $1 trillion in value over the course of a couple hours. yet the hundreds of billions invested in datacenters is a sign of impending economic doom.
is the economy good? I don't think it's doing great. but it has little to do with AI one way or another. "AI" is just another trend of making technology more accessible to the masses. no more scarier, complicated, or impactful than microcomputers, DSL, cellular phones, or youtube. and while the economy crashed in 2008, youtube and facebook did well. yet there was none of this dooming about tech specifically at the time simply because the tech industry wasn't as controversial at the time.
There's also a significant number of people (e.g. Doctorow) who have made their entire brand on doomerism; and whether they actually believe what they say or have just become addicted to the views is an irrelevant implementation detail.
The anti-AI slop that dominates HackerNews doesn't serve anything productive or interesting. Its just an excuse for people to not read the article, go straight to the comments, and parrot the same thing they've parroted twenty times.
tptacek•1h ago
specproc•1h ago