After the AI binge, companies balk at soaring bills

[Free Vulcan]

Artificial intelligence is getting expensive -- and companies are starting to rethink their embrace of the disruptive technology.

Playing by a well-worn Silicon Valley playbook, AI companies charged rock-bottom prices to hook customers after ChatGPT burst onto the scene.

Kevin Simback of startup incubator Delphi Labs calls it the era of "subsidized intelligence" -- meaning investors were basically footing the bill so companies could offer AI on the cheap.

"But the tides are beginning to turn," Simback warned and an era where the big AI companies actually need to make money has begun -- with leaders OpenAI and Anthropic looking to go public and attract main street investors later this year.

https://finance.yahoo.com/sectors/technology/articles/ai-binge-companies-balk-soaring-014735313.html?guccounter=1

[Timber Rattler]

The AI rose is losing its bloom.

[DefiantMassRINO]

One guy blew through our monthly allocation of AI "tokens" in one afternoon in one transaction.

For the rest of the month, others just sit and twiddle their thumbs until the new month starts.

I priced out the cost of a home machine to lease out compute, and it was prohibitively expense.  It consumes a $h!tload of electricity.

For this AI compute to be scalable and profitable, they need to co-locate their compute data centers with sources of economically priced energy and power.

Whichever state can provide the lowest cost per kwh will be the winner.

[Free Vulcan]

I started seeing articles over a month ago about how exactly now with all this AI infrastructure built, how were they going to cash flow it?

And basically there was no answer. The problem with tech guys is they have this 'build it and they will come' attitude, not understanding that it's the finance guys that rule the roost.

So now I believe we are headed for the great AI financial crash. In any economic system, money always wins. Always.

These jokers never learn.

[Timber Rattler]

I started seeing articles over a month ago about how exactly now with all this AI infrastructure built, how were they going to cash flow it?

And basically there was no answer. The problem with tech guys is they have this 'build it and they will come' attitude, not understanding that it's the finance guys that rule the roost.

So now I believe we are headed for the great AI financial crash. In any economic system, money always wins. Always.

These jokers never learn.

Just like the dot com bubble that broke in the early 2000s.

[Free Vulcan]

Just like the dot com bubble that broke in the early 2000s.

Exactly. Deja vu all over again.

Don't dislike tech guys, but they too often have a full measure of arrogant superiority and delusional conceit that their tech apps seem to make them immune to the laws of money and economics.

You look at the history though, it's a long chain of big and small booms and busts. As I said these guys never seem to learn. A finance background guy like me just shakes their head.

[DefiantMassRINO]

Silicon Valley has a "you need to break some eggs to make an omelette", "it's better to ask for forgiveness than permission", and  "fail early, fail fast, fail often" mentality.

To push the boundaries of technology, they inherently condone high tolerance for risk.  The cost is justified by the long-term productivity, efficiency, and economic gains.

They are high stakes gamblers, much like wildcat oil drilling operators.  They rationalize losses as the cost of progress.

Institutions and enterprises that are less cost sensitive, or can realize greater real-world productivity gains, will be benefit most from AI.

Locales with lower costs of electricity, and fewer tree-hugging NIMBY's, will become AI hubs.

The greatest impediments to AI adoption is the cost of energy ($$$) and the regulatory/opportunity costs (time) of NIMBY's.

[Free Vulcan]

Silicon Valley has a "you need to break some eggs to make an omelette", "it's better to ask for forgiveness than permission", and  "fail early, fail fast, fail often" mentality.

To push the boundaries of technology, they inherently condone high tolerance for risk.  The cost is justified by the long-term productivity, efficiency, and economic gains.

They are high stakes gamblers, much like wildcat oil drilling operators.  They rationalize losses as the cost of progress.

Institutions and enterprises that are less cost sensitive, or can realize greater real-world productivity gains, will be benefit most from AI.

Locales with lower costs of electricity, and fewer tree-hugging NIMBY's, will become AI hubs.

The greatest impediments to AI adoption is the cost of energy ($$$) and the regulatory/opportunity costs (time) of NIMBY's.

And that's their self image - cowboys and gamblers. It's pretty delusional. They suck up all sorts of resources for questionable return, if any, and call it the price of doing business.

Meanwhile, no one outside their little circles gains any benefit.