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Corporate America Is Starting to Ration AI as Cost Skyrockets

https://www.wsj.com/tech/ai/corporate-america-is-starting-to-ration-ai-as-cost-skyrockets-1eb99d7a
61•1vuio0pswjnm7•2h ago

Comments

gonzalohm•1h ago
In my opinion, the problem is not even the cost. The problem is that people are using AI for running recurrent stuff instead of writing code to automate it.

For example. Imagine that you are comparing two documents (let's assume diff doesn't exist). You could ask an AI to compare the differences from you or you could use AI to write a tool to do it. For whatever reason, people are starting to go with the former not realizing that now they basically have to pay to compare documents.

avereveard•1h ago
Same, even opus favor short term solution and scripts with a billion flags that constabtly require rescanning to understand how to launch it is a constant struggle to get it to build sane default and reusable scripts that run with minimal parameters
CompoundEyes•1h ago
Agreed. I’ve been telling my team to build up internal packages so we can push all that ad hoc reinvention into something more tangible and deterministic. Invest the $$$ in inference into something the agent can reach for next time that’s neutral and consumable by other code to reduce future spend.
plmpsu•1h ago
AI can do things around semantic analysis that a deterministic diff tool cannot.

I understand and agree with your point though.

bilekas•40m ago
I'm curious if you could give me an example of something that couldn't be down deterministically. We have fuzzy search/matching too ? Regex is a monster when used correctly.
r_lee•57m ago
it's all about cost at the end of the day. if you're allowed and encouraged to tokenmaxx, then of course this'll happen.
jgalt212•56m ago
I agree, but even this use case isn't the most wasteful. The interwebs says Agentic consumes 50% of token use, but I'd hazard this number is north of 90% for many shops. My cynical view of Agentic is its sole purpose is to make "number go up".
id•30m ago
Look at me! I'm the smartest guy. I've wasted 10M tokens! No one has wasted more!
bluejay2387•53m ago
I have exposure to AI initiatives at several companies including a few F500's. I have seen teams dump huge logs into frontier models that took hours to get so-so results that we were able to replace with a few lines of python code at 1000 times the speed and 100% accuracy. When asked why they were doing this they literally said "because we don't understand the subject matter so we were depending on the AI". I saw one team file a complaint with a vendor about a frontier backed coding harness and it's inability to consistently format headers because they were using it as a reporting engine. When I recommended they just use the coding tool to write code to generate reports you would have thought I had just cured cancer from their response. I frequently see people complain about the fact that AI is going to take their jobs and then see them gripe about the fact that AI is 'worthless' because it can't do more of their job than it already does. It's easy to see the difference between the people seeing 10x productivity gains from leveraging AI and those who aren't and it's not the AI.
sbarre•24m ago
I've heard this framed as "AI raises the floor by 2x or less but raises the ceiling by 10x or more"
cyanydeez•47m ago
Oh no! People are doing what they've been told to do!
throwatdem12311•45m ago
Laziness, pure and simple. The inevitable consequence of “the LLm is the compiler now”. And what do you even expect people to do when they are forced at threat of termination to use AI for everything as much as possible? Not to mention people are being pressured to do insane thing like review hundreds of pull requests per day and deliver like 15 features per week so OBVIOUSLY there isn’t time to build out proper tooling. Just shove everything in a prompt and call it a day. Some people have families to feed, just do what you’re told.
bilekas•42m ago
It's this and worse. To use your example, it's like people using AI to write a diff algorithm, incorrectly, then using AI to fix it, because they don't know that diff exists already. Lazyness and starting development with a very low level of understanding. People think lowering the barrier to entry is a good thing, when in reality there are just fundamentals and things you just have to know before you can start using a tool like llms properly.
dawnerd•39m ago
Same with writing boilerplate code. It’s been a solved problem yet here we are.
rich_sasha•36m ago
Isn't that the supposed point of it though? At least how it is marketed/hyped. Don't use your brain, you don't need one, spend all your thinking energy on... dunno, something else, and leave all the "mundane" stuff to AI. Just pay for the tokens, it's going to make you 10x more efficient, the $1000/month is worth it.
jerojero•24m ago
Because you look at the work from the perspective of a programmer, not the perspective of a regular person.

Normal people have never gone around automating their work. The most automation they do is dynamic tables on excel sheets.

I obviously know building a tool that can programmatically do something is a better solution, but I think that requires a fundamental shift in how people work. People need to be told by someone "this is how you should be using the AI" but right now they're simple told "use the AI".

m3nu•24m ago
100% this. For my own company I mostly build deterministic workflows that may have a simple AI step in the middle using an appropriate Chinese model in a very limited way. I wouldn't want to burn tokens to satisfy some metric.

With this AI is a fallback and not the default. Sounds like large companies have it backwards.

checkaiclaims•1h ago
As a developer, I don’t think it’s just that costs are going up. I’m also seeing more people lately talk about “vibe slop”.
scronkfinkle•1h ago
On the one hand, organizations are without question using LLM's well beyond what is actually necessary, and as reality kicks in they're forced to scale back accordingly. However at the same time, on intervals counted in months, we're seeing breakthroughs both in hardware and software that dramatically reduce the cost of inference.

Between corporate FOMO and the rapidly decreasing costs of actually running LLM's I'm interested to see at which side of the spectrum these two meet

amazingamazing•1h ago
AI is overhyped. I have yet to see an end user product that in itself isnt a wrapper around LLMs that is impressive created by LLM assistance. I have also yet to see dramatic increases of revenue of companies using LLMs that don't involve selling things in its supply chain. Is it a nice affordance? Sure. 1T capex good? No.

If it was so good I would expect to see 2005-2015 advancements yearly.

Meanwhile China is blowing past the world with real improvements in the real world- solar, EVs, etc. meanwhile people keep making their fancy sans serif websites about todo apps, faster than ever before. Useless.

dawnerd•36m ago
Productivity gains seem like it’s at best a wash when you factor in the massive tech debt cleanup and additional time needed to spec and review.
criddell•19m ago
> I have yet to see an end user product that in itself isnt a wrapper around LLMs that is impressive created by LLM assistance.

I don’t disagree that AI is overhyped. But I think you are probably looking in the wrong place.

I think most software that is written isn’t really a product, at least not a public product. It’s an in-house tool or a one-off project needed to complete some larger task. People everywhere are always writing small programs that make their life or job just a bit easier (and explains why so many corporate projects are little more than an excel spreadsheet).

And there are a lot of people who have made custom software just for themselves with AI. Not a product, just a tool or project that finally made sense to build.

elevation•1h ago
Another reason to favor using AI to build automation instead of relying on it in prod: the risk of war and global instability.

If LLMs are genuinely helpful or even decisive in a military engagement, you can expect any host country to commandeer whatever data centers they need, leaving commercial entities to bid up the prices on the leftover capacity.

Another risk is that data centers are a great target for cyber warfare.

It’s ideal if your business can leverage LLMs when they’re online but continue to operate profitably when they’re offline.

ChrisArchitect•1h ago
Some related discussions:

https://news.ycombinator.com/item?id=48268871

https://news.ycombinator.com/item?id=48238896

https://news.ycombinator.com/item?id=48307098

feverzsj•1h ago
LLM doesn't work, let alone profit.
r_lee•57m ago
elaborate please, how does it not work?
ninkendo•16m ago
Yesterday I updated our dependency on the sqlx crate and put up a PR, and it failed in the CI build in a way I couldn’t reproduce locally.

I asked codex to take a look, and it:

- Grabbed the CI logs on its own to figure out what the CI error was

- Looked at my local setup

- Looked at the changes in sqlx from 0.8 to 0.9

And figured out that sqlx depends on an updated version of the “whoami” crate but doesn’t specify default features, which causes it to fall back on a stub implementation that makes the default user “anonymous”, which was failing to authenticate to the UNIX socket we use in our CI Postgres server. It patched the environment variable for our docker container to explicitly specify a username and the issue was fixed.

It would’ve taken me probably several hours to figure this out on my own. It took codex maybe 5 minutes.

Tell me again how LLM’s “don’t work”?

marcosdumay•53m ago
There's a paywall, but it's an interesting question how much of the recent explosion of the AI companies revenues is because of the explosion in prices, and how much their customers will accept the increased prices.
tyingq•42m ago
The abrupt swing in many non-technology company IT departments from "hey developer, you aren't using enough tokens" to this is just too funny.

And I'm seeing almost no self-awareness from leaders. They are making decisions about things that they just don't understand. And are completely unworried about it. Just blindly following whatever the news cycle is about AI.

onlyrealcuzzo•40m ago
The actual cost is going to drop 99% in ~4 years.

How much that makes it into enterprise pricing is TBD, since none of the hyper scalers are making money yet of selling AI inference.

Almost all businesses are ahead of the gun. For most of their use cases, AI is either not yet good enough on its own, or good enough but too expensive.

No one wants to get left behind, so everyone's trying to get onto it now, even though it's not ready for what most enterprises want to do with it.

It's easy for them to look at a small startup without billions of lines of legacy business logic debt and see them having success and wonder why they can't have just as much - or more - why they're bigger so they should have better and more success, right???

Wrong...

But when it gets ~99% cheaper for local inference over the next 4 years, at the same time the price per watt improve 4x -> a lot of those cases will start to pencil out.

datakan•38m ago
What makes you think prices will drop? Everyone I’ve spoken to believes they will only skyrocket. Genuinely curious
onlyrealcuzzo•32m ago
The technology already exists now on the algorithmic front the next 10x drop between everyone adopting DeepSeek's MLA, MoE (mostly already done), Medusa (a better version of Google's speculative decoding), Kimi's Attn Residuals, and Mimo's Sliding Window Attn, and (possibly) Microsoft's 1.58b (this may be a nothing burger).

Historic trends, every 18 months, performance for the same level of quality has gone down 90%.

See: https://www.reddit.com/r/LocalLLaMA/comments/1gpr2p4/llms_co...

And Chart 13 here: https://www.rdworldonline.com/ais-great-compression-20-chart...

And here: https://epoch.ai/data-insights/llm-inference-price-trends

Historically, algorithmic gains are only ~30% of the pie, but there's enough out there to get to 10x, with just what's available already. The other ~70% of the pie is better training data (often synthetic) and distilling frontier knowledge. There's no sign we are tapped out on that front.

Additionally, GRAM (from ~10 days ago) is likely to be a 5-10x on its own (if not substantially more for smaller models).

Further, that's not even counting that cost per watt is still dropping ~2x every 2 years on its own on the hardware front.

The human brain is still 8-10 orders of magnitude more efficient than the best LLMs of today. With ~1/10th of global capex riding on AI, if you don't think they're going to knock of 2 orders of magnitude more, when it's this obvious and easy... I don't know what to tell you...

throwatdem12311•41m ago
It will be interesting to see to see Anthropic’s “revenue bubble” pop as this happens. At least it should hopefully free up some capacity.
1970-01-01•39m ago
Would have been nice to see 'soaring costs' with numbers. WSJ could do better here. Hundreds of thousands of dollars a month is nothing compared to how much they take with better financial models.
cs702•34m ago
There's an old saying, "in the land of the blind, the one-eyed man is king."

Here we have the opposite: In the land of the one-eyed, the blind are leading.

The blind in this case are all those executives and managers who don't understand much about AI's current potential and limitations, and so far have treated it like a magic button that will solve everything. The one-eyed are rank-and-file employees who maybe sort of know a little more about AI.

wg0•31m ago
The other day we (wrongly) concluded that product market fit has been achieved and now the rivers of hot molten milk chocolate and honey are all that's in the future etc.
dangus•25m ago
I’ve seen comments on other threads on this subject the general idea that these article headlines are overstating the pullback from AI.

In other words, the news cycle is looking for an AI story that lands with readers, and that the example of Uber blowing through its AI budget and Microsoft discontinuing use of Claude internally are not good indicators.

I agree that those aren’t good indicators.

However, at some point we have to remember that CEOs and boards of directors are just regular morons who read the news the same way everyone else does.

At some point, if a lot of corporate leaders associate AI with mediocre results, high costs, and public backlash, they might just start saying “this juice isn’t worth the squeeze.”

Majeh905•11m ago
Don't have a subscription to wsj.

Only thing I can say AI was useful for, in a corporate environment, was learning a new coding language on the fly. Gives me a baseline to work off of and fix.

But I can learn without it, too. A nice tool, but not a need.

datakan•6m ago
This is great food for thought, thank you
krona•35m ago
> The actual cost is going to drop 99%

Do you mean the marginal cost by the producer, or the cost on the consumer? I can't see the price of electricity falling much, and the demand curve is apparently exponential if the hype is to be believed.

bakugo•35m ago
Prices have been very obviously trending up, not down. Even open weights models are becoming more expensive with every release. Computer hardware is ballooning in price.
abalashov•7m ago
Just wait for the next model and the next model architecture. Just wait for it, bro.
packetlost•35m ago
I don't see how this is even remotely true. Unless there's some super breakthrough into a fundamentally different architecture, there's not really a path to a 50% reduction in price, much less a 99% reduction.
BearOso•4m ago
[delayed]
datakan•39m ago
The closer people live to the consequences of their decisions the more rational they become. Until leaders(and I use that term loosely) are held accountable, the insanity will continue.
greesil•29m ago
Their only accountability is to the stock price. The insanity will continue.
qoez•37m ago
I feel like most successful businesses have such a moat of required capital to compete with them that even tho in theory poor decisions like this is supposed to give opportunities for entreprenuers to hit when the big dogs make a wrong move, it doesn't end up happening.
sdeframond•24m ago
Groups resist to change - the bigger the group, the most resistance there is.

As a leader, pushing for rapid change cannot really be nuanced lest the push dissipates into the organization's entropy.

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