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  joshstrange
  > RAM prices are crashing because new models won’t need as muchReality begs to differ [0] and following the link for that text goes to an article [1] where they talk about Google's TurboQuant which supposedly will lower the RAM requirements. Now if that means RAM prices come down (as speculated, not reported on, in the link) or the AI companies just do more things with their extra ram is yet to be determined. The fact this article links there with text "RAM prices are crashing" throws the entire rest of the article into doubt for me.RAM prices are most certainly not crashing (yet) and treating it as a forgone conclusion because _one_ lab found gains could be made and hasn't even reported on the efficiency of their method is just irresponsible. It's almost as bad as when LLMs link things to prove their point, you visit the link, and find it says nothing of the sort or even the opposite.[0] https://pcpartpicker.com/trends/price/memory/[1] https://tech.sportskeeda.com/gaming-news/how-google-s-new-tu...
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  infecto
  It’s incredible how polarizing the AI rush is. I keep the perspective that the technology is an absolute step change but I have no idea where the cards will fall. I take a lot of issue with these style of articles. I get a sense that the authors are being overly defensive.The cost to serve tokens is absolutely profitable today and that’s been true for at least a year. What’s unclear is how R&D and capex fit into the picture. I am not that pessimistic on this front either though. For the data center build outs, demand for tokens is still exceeding supply. On the R&D front, well most of us here on HN have benefited from decades of overinflated engineering salaries being paid by often companies that were not profitable and not only unprofitable, usually without a plan for success. In this current rush, companies cannot keep up with supply, it’s a much easier math problem when you have something that people want (tokens) and you need to figure out profitability when including R&D.
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  Aurornis
  This article tries to build upon a lot of half-truths or incorrect facts, like this:> OpenAI is struggling to monetize. They turned to showing ads in ChatGPT,The ads aren’t going into your paid plans (except maybe a highly discounted tier, depending on the market). The ads are a play to offer a free version. Having an ad-supported free tier isn’t new.The discussion about being unprofitable also repeats the reductionist view that these companies are losing money and therefore the business model doesn’t work. This happens with every VC cycle where writers don’t understand that funded companies are supposed to lose money while they grow. That’s what the investment money is for.We have very strong indicators that inference is not a money loser for these companies and is likely very profitable. They should be spending large amounts of money on R&D to get ahead and try new things while they’re serving up tokens.The “but they’re losing money” argument never seems to be brought out against competitors that literally give away their models for free and for which we can calculate the cost of serving 400B-1T parameter open weight models.
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  logravia
  The thing I am struggling with is where is the impact of LLM tools, especially given the massive increase in token consumption from 2025 to now and the saturated presence of LLMs everywhere.Naively speaking, I have so many expectations for the impact of this tech.I'd expect a noticeable uptick in applications published on Google, Apple and Microsoft app stores. I'd also expect an uptick of games published to Steam. I'd expect an uptick in Github repos and libraries on PyPi.I'd also expect some impact on the GDP ⸻ a non-negligible part of running a business is communication, planning, ads. Naively, I'd expect that LLMs should be able to both speed some of these things up and lubricate others.I'd also expect that large corpos like Microsoft and Apple would have more resources to spare on the essential details of their OS like having a functioning taskbar or a predictable, consistent GUI.I'd expect increased SAT scores or improved PISA results. Maybe even improved mental health, let's go wild.It's strikes me as a reasonably useful tool, personally.Yet, where are the goods in the aggregate?
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  nopinsight
  > nobody is sure if even their metered pricing is profitableThis is most likely wrong. Lab executives insist that serving tokens is profitable. It's the cost of training next-gen models that requires them to keep raising ever larger rounds. More importantly, many independent providers price tokens of open-weight models at a fraction of Anthropic's prices.
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  schnitzelstoat
  It's a winner-takes-all market and everyone wants to be the next Google and not the next Lycos or AskJeeves etc.It'd be interesting to see what they spend all the money on though as we seem to be hitting diminishing returns and I'm not sure if the typical enterprise user really cares about small improvements on benchmarks.It seems like it'd probably be better to spend all that on marketing, free trials, exclusivity/bundle deals etc. ChatGPT already has a strong advantage there as it has so much brand recognition. I've seen lay people refer to all LLM's as ChatGPT like my grandparents did with Nintendo and all video game consoles.
• ethagnawl
  > If investor money dries up, they will be forced to cut their losses and pass the true costs to their users.I do not see this talked about often enough whilst everyone is in the process of introducing hard dependencies on these services into their workflows.
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  piker
  > They lose a big customer for their cloud services. Even worse considering that now, using the AI they helped fund, everyone can compete with their sub-par products. GitHub is a good candidate for disruption, and that’d be just the start.Look, I'm a Microsoft hater like the rest of us, but calling Microsoft's products sub-par discredits the author a good bit. I invite anyone who thinks this to try and compete with them. Go after something like Word, for example. Then prepare to be awed by what some of the most brilliant programming minds ever can produce after grinding for four decades.
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  hyperpape
  > Magnificent 7 companies are increasing capex to their biggest ever to differentiate their tech from each other and the big AI labs, but the key realization is that they don’t have to spend it to win. It’s a defensive move for them, if they commit $50B, OpenAI and Anthropic need to go raise $100B each to stay competitive, which makes them reliant on investors’ money.Stay competitive how? If the Magnificent 7 aren't spending the money, then how could it possibly hurt OpenAI/Anthropic to not raise equal amounts of money? Maybe you can pull together an explanation, but this author didn't even try to do so.This piece seems poorly thought-out, but well designed to get shared.Promote writers who will actually explain their claims carefully.
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  qoez
  History doesn't have to repeat. There's barely anything else going on in terms of innovation, and AI is a real step function technology. We might be overspending but there's no way we're getting another AI winter like last time (remember last time investment in 90s AI had to compete for resources with the internet boom).
• agentultra
  It sounds like most of the data centers promised in 2025 and 2026 are not even built yet and most of the GPUs bought haven't even been installed.If it does all go down in flames, even floor value is not going to be that valuable.I can't predict the future but it's smelling a lot like a recession already under way that is bigger than the sub-prime crash.
• skeeter2020
  >> Building a datacenter is supposed to be a “safe” investment in normal times, so banks give private credit and mortgages to finance them.Except the investment is more like a railway or utility. It generates like 3% return, which is definitely not good enough for the people providing the money, or (in the case of the profitable companies) anywhere near the double-digit returns they make on their technology products. I won't be surprised when we see consolidation of marginal players and abandonment of the losers, just like you can find rail lines to nowhere, and fiber that's never been used.
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  Chance-Device
  From the beginning of this I’ve wondered the same question: how do these companies justify spending such massive amounts now (and 3 or 4 years ago) when software and hardware efficiencies will bring down the cost dramatically fairly soon?They basically decided that scaling at any cost was the way to go. This only works as a strategy if efficiency can’t work, not if you simply haven’t tried. Otherwise, a few breakthroughs and order of magnitude improvements and people are running equivalent models on their desktops, then their laptops, then their phones.Arguably the costs involved means that our existing hardware and software is simply non viable for what they were and are trying to do, and a few iterations later the money will simply have been wasted. If you consider funnelling everything to nvidia shareholders wasting it, which I do.
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  ajay-b
  I would be very sad to lose services like ChatGPT. It has significantly improved my workflow by digesting and analyzing huge documents, and helping me to synthesize and respond better. May be I am part of a minority.
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  aurareturn
  This is an awful article. I don't know how it reached #1 on HN.Bottom line is that H100 prices are near 3 year highs, A100s are still profitable to run, B200 prices are increasing, no one has enough compute. Google, OpenAI, Anthropic, Meta, AWS, Azure are all compute constrained. Every single one of them said so publicly. Neo clouds are telling customers they're all sold out now and you even have to book compute in advance if you're an AI company. OpenAI is struggling to monetize. They turned to showing ads in ChatGPT, something Sam Altman once called a “last resort”, while Anthropic is crushing them with the more profitable corporate customers and software engineers. AI bubble is bursting because OpenAI is trying to monetize free users on ChatGPT with ads but Anthropic is kicking butt in AI. What kind of logic is that? So it seems like AI can be monetized as Anthropic shows. Is AI going to burst because OpenAI can't monetize but Anthropic can? I wouldn’t be surprised at all if in the next couple of quarters we see OpenAI looking for an exit. It will be interesting because the sizes are now so big that we will probably know all the details. The most likely buyer is Microsoft, they already own a lot of it, and because of that, they are the most interested in showing a win. I'll take the opposite stance. I think OpenAI is going to be bigger than Microsoft in market cap within the next 3 years. I think Anthropic and OpenAI are going to run laps around current big tech except maybe Google. For example, in a few years, I think AI agents could completely replace Microsoft Office, Microsoft's cash cow. Independent reports state that Claude metered models are priced 5x more expensive than their subscribers pay Already dispelled. It isn't 5x more expensive than their subscribers pay. Inference has a gross margin of 50%+. It's been repeated over and over again by Anthropic CEO, OpenAI CEO, and just about anyone who's done deep analysis on token profitability. If you don't believe OpenAI and Anthropic CEOs, just look at inference providers on Openrouter. They don't have VCs backing them selling tokens at a loss. They should be making margins on every token in order to keep the lights on.
• Lerc
  A lot of this make me imagine an Aeroplane flown by a mad pilot, overloaded and running out of fuel. The passengers are all blaming the guy sitting in the back knitting a parachute and telling him that the chute will never work because the wool is the wrong colour.The tragedy is when it's all over one of the surviving passengers will go "See! I knew we were going to crash because of that knitter"
• titzer
  The article says "...and RAM prices are crashing because new models won’t need as much," and I went and read the link. The link was a puff piece for a very specific compression mechanism that...no one is using?I do hope that RAM prices come down but this was just wishful thinking.
• EternalFury
  If somehow recovering the capex expenditure is not counted, if somehow the cost of developing future models is not counted, then yes, inference costs of current leading models allow a profit.But those things are tied together.Even xAI, that now has a reasonably competitive model, is struggling to achieve PMF. Meta is in shambles because their models have underperformed for years now.
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  KaiserPro
  The problem with these kind of posts is that "How" is almost useless, I can tell you how the bubble pops: The value of these AI companies crash and take out a lots of other stuff with it.The interesting questions are: "What triggers it" and "what also goes tits up"?The issue with high/international finance is that a good percentage of it (if not more) is fraudulent or semi fraudulent bollocks."Here is a startup that is worth x million because y" Both of those statements are bollocks. However its in the interest of most people to agree with that bollocks to get money. If enough money is given there is a chance that the startup will make money.If we look a few year back, NFTs fulfil that niche quite nicely. It was obviously bollocks, but a very convenient way to launder money, or run a series of rugpull operations.The problem we have to contend with now is that the sheer amount money that has been invested all disappearing at once would require 2007/8 levels of coordination to unfuck. The US government does not have the requisite number of admins to pull that off again, and no political will to ever have that expertise again. So if AI does go pop, and it takes a lot of money with it, I would put a guess on china doing the money lubrication and extracting a subtle but richly ironic level of control in exchangeAlso, its no guarantee that AI will trigger the next bubble popping, my money is on Private Equity.
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  NickNaraghi
  > Taking this into account, Google is extremely well positioned to weather the storm. When they announce capex expenditure, they don’t spend it overnight. They can simply deploy month by month until their competitors struggle to raise and get forced to capitulate. At that point they can just ramp down the spending and declare victory in a cornered market. They don’t need capex, they just need to make it very clear for everyone that nobody can outspend them.Have you tried Gemini 3.1 lately? It is not even close to Opus 4.6 never mind Claude 5.This post, like many pessimistic takes, seriously discounts innovation and the exponential takeoff of recursive self-improvement.
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  shubhamjain
  > OpenAI is struggling to monetize. They turned to showing ads in ChatGPT, something Sam Altman once called a “last resort”, while Anthropic is crushing them with the more profitable corporate customers and software engineers. Their shopping feature flopped and they shut down Sora, both supposed to be revenue drivers.I don't think Sora ever thought of as a "revenue driver" considering how notoriously expensive and unpredictable video generation via inference is. OpenAI is just a repeat of Uber—minus the scandals—in a different decade. Uber got itself into tons of businesses related to transportation on the assumption that it would all be viable "one day." Same stuff that OpenAI is going.I would say, once the bubble bursts—which is likely, considering the geopolitical environment—OpenAI, Anthropic, and Alphabet are likely to be the winners, with a lot of small players at the tail end. Anthropic won over programmers and OpenAI on everyone else. For millions of people, AI = ChatGPT, so I would bet that OpenAI can still become profitable, once they cut down their expenses.
• LarsDu88
  The world has seen this play out before. Launch a service, sell it at a loss to achieve hypergrowth, raise prices add ads and enshittify.The thing that is difference is the scale and the hardware. When Britain underwent its rail building boom in the 1850s, the bubble bursting left the kingdom with 150 years worth of infrastructure. Unless we invest in energy buildouts, we will be left with billions in rapidly depreciating GPUs
• thebeardredis
  Hopefully soon. My new unwords are f.e. "agentic".
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  hnthrow0287345
  I don't see this bubble really popping as-in sinking the economy. Some circular investing and enough write offs will happen to avoid the largest recession indicators from informing the general population that there's actually a recession. You also have a government willing to do shady shit for their own benefit at the expense of responsible governing and ethics, and we have already seen the business leaders of the biggest tech companies cozy up to the administration.My guess is that cloud companies will scoop up the data centers for pennies on the dollar and the GPUs get written off or fire-sold to enthusiasts still wanting to run local models. Then they can offer exceptionally low initial prices to new customers and get more people to be locked in. Or maybe we see a couple of new cloud companies start up but that would likely need lower interest rates.
• jarek83
  I wonder if AI labs could be bailed out - like banks.See, they kind of became a national asset and letting it go down, will leave USA watching China taking the lead for a very long time ahead. It just can't happen - right? So we'll just all fund it in taxes.
• Havoc
  Gov bailout seems like the only way out.
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  lnfromx
  Okay lets suppose all those companies are profitable if training would stop today. What if token demand is shrinking ? I think big parts of the current demand is artificially build by e.g. FOMO and marketing without real value generated by them. There is no indication in economic data about some productivity boom resulting from AI usage. Next thing is Energy costs - that will soon eat into profitability too. I don't see how this bubble can't burst.
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  256BitChris
  I could see OpenAI hitting financial issues which triggers some media induced panic and for people to claim the AI bubble has popped.However, the core utility of the best AI (read: Anthropic's ATM, by miles), will still exist and be leveraged by those who have learned to use it well.I could also see the exponentially declining power requirements offsetting the exponential-but-slower rate of AI compute demand, which then renders a lot of unused capacity in these massive data centers.I think of it like the old mainframes in the 70s which would take an entire city block to run, and now we have the equivalent of millions, if not billions of them in our pockets.
• beepbooptheory
  Just checked and my API bill for this stuff is about $2.50 this month. Am I really the minority here? I know there is a lot of kids into the openclaw and paying for subscriptions and stuff, but after that literally no one I know (who isn't a developer) is paying for it, and seemingly would never dream of paying for it. It would be like paying for Gmail to them I think.I just dont understand why it justifies so much spending!
• nickcageinacage
  AI is shit. I just want this to be over. Can we move on
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  elorant
  I feel that even if the bubble bursts hardware prices will still take years to normalize. So no clear benefit for the average consumer here.
• nexos
  I think ultimately the AI bubble is bound to burst solely based on the fact that no AI company has turned a profit. A business model consisting of pure speculation on profitability when profit has not come in for 4 years now indicates that the tech industry is over-betting on AI. That plus consumer backlash at the way AI is jacking up consumer prices on RAM and etc means that the bubble is bound to burst. To paraphrase Linus Torvalds, AI is a helpful tool but I look forward to the day it’s a regular part of life and the hype cycle ends
• HackerThemAll
  Excellent reading to realize how the rich greedy investment monkeys with no plan other than "let's build a data center" will ultimately drag the market and the economy down. This time it may not explode as abruptly as in dotcom era, but will slowly sink as the stupid US data center boom proves unprofitable. Billions burned for nothing more than a run for the money.
• post-it
  Cheaper hardware, discounts on stocks, and we keep AI itself? My flavour of hopium, sign me up.
• positron26
  When will this concern farm end? Internet is ant-milling harder than a model gone psychotic on synthetic data. Call me when it's over.Back to the mines. The Vulkan only writes itself when prompted with well-conditioned problem statements.
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  monegator
  > How this affects you?> checks list ...nope, nothing will either directly or indirectly affect me. Let it happen sooner, rather than later, and unleash the mobs at the tech bros that set the world on course to make everybody's life more miserable. We'll still be here to get the scrapped RAM and GPUs to train and infere local models thank you very much.
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  franze
  .... so what? the technology exists, the models exist. Even when the bubble bursts things will not go to the state "before AI". Even if model development would stop today (not the worst thing to happen) it would still be the most impactful invention since the printing press
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  jqpabc123
  Another possibility not really addressed here --- local LLMs.AI on hardware you own and control --- instead of a metered service provider. In other words, a repeat of the "personal computing" revolution but this time focused on AI.TurboQuant could be a key step in this direction.
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  HardCodedBias
  In general:Cynicism makes you sound smart. Optimism makes you successful.The cynicism around this technology is everywhere, even though it clearly has real power to solve problems. It is a technology which enables so many use cases that were impossible before, that makes it very highly hyped/expected. And that is causing an immune (over) reaction by natural skeptics, that's an error.People need to take a measured, reality based, view of how the technology is being used today, the adoption curve, and the increase in capabilities over time.It's clearly being used strongly, and may even be revolutionary.Bubbles burst when there's no 'there' there. AI has an undeniable 'there'—the only question is the timing of the ROI.
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  richard___
  Complete bs.
• imta71770
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  general_reveal
  HN is no longer a reliable place for the truth. Quite frankly, unless you are utterly self educated, you are terribly vulnerable to this place.At this rate, I’d almost prefer to talk on a private mailing list with vetted resumes.
• anon
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