Google boss says AI investment boom has 'elements of irrationality'

https://www.bbc.com/news/articles/cwy7vrd8k4eo

by jillesvangurp • 8 months ago

335 726 8 months ago

bbc.com

ZYbCRq22HbJ2y7• 8 months ago

Except, yes, they will.

Not immune, maybe, but pretty well off if they didn't buy in.

WarOnPrivacy• 8 months ago

I'm okay with being victim to RAM and NVME prices returning to pre-skyrocket levels.

general1465• 8 months ago

And GPUs being available again for normal prices.

aurareturn21• 8 months ago

Is it really a bubble about to burst when literally everyone is talking about AI being in a bubble and maybe bursting soon?

To me, we're clearly not peak AI exuberance. AI agents are just getting started and getting so freaking good. Just the other day, I used Vercel's v0 to build a small business website for a relative in 10 minutes. It looked fantastic and very mobile friendly. I fed the website to ChatGPT5.1 and asked it to improve the marketing text. I fed those improvements back to v0. Finished in 15 minutes. Would have taken me at least one week in the past to do a design, code it, test it for desktop/mobile, write the copy.

The way AI has disrupted software building in 3 short years is astonishing. Yes, code is uniquely great for LLM training due to open source code and documentation but as other industries catch up on LLM training, they will change profoundly too.

zerosizedweasle3• 8 months ago

Let him cook

watwut4• 8 months ago

Is it really a bubble about to burst when literally everyone is talking about AI being in a bubble and maybe bursting soon?

Yes, it is even one of necessary components. Everybody is twitchy afraid of the pop, but immediate returns are too tempting so they keep money in. The bubble pops when something happens and they all start to panicking at the same time. They all need to be sufficiently stressed for that mass run to happen.

aurareturn21• 8 months ago

So after the bubble pops, do you think the AI market will still be bigger in November 2025?

In other words, do you think we're in 1995 of the dotcom or 2000?

camillomiller2• 8 months ago

This is a very biased example. Also, it is possible only because right now the tools you've used are heavily subsidised by investors' money. A LOT of it. Nobody questions the utility of what you just mentioned, but nodoby stops to ask if this would be viable if you were to pay the actual cost of these models, nor what it means for 99.9% of all the other jobs that AI companies claim can be automated, but in reality are not even close to be displaced by their technology.

aurareturn21• 8 months ago

Why is it biased?

So what if it's subsidized and companies are in market share grab? Is it going to cost $40 instead of $20 that I paid? Big deal. It still beats the hell out of $2k - $3k that it would have taken before and weeks in waiting time.

100x cheaper, 1000x faster delivery. Further more, v0 and ChatGPT together for sure did much better than the average web designer and copy writer.

Lastly, OpenAI has already stated a few times that they are "very profitable" in inference. There was an analysis posted on HN showing that inference for open source models like Deepseek are also profitable on a per token basis.

StopDisinfo9102• 8 months ago

I think you are missing the fundamental point here. The question is not really if AI has some value. That much is obvious and the exemple you give, increasing developer productivity, is a good one.

The question is: is the value generated by AI aligned with the market projected value as currently priced in AI companies valuation? That's what's more difficult to assess.

The gap between fundamental financial data and valuations is very large. The risk is a brutal reassessment of these prices. That's what people call a bubble bursting and it doesn't mean the underlying technology has no value. The internet bubble burst yet the internet is probably the most significant innovation of the past twenty years.

Xelbair• 8 months ago

Well it all started with usual SV style "growth hacking"(price dumping as a SaaS) of "gather users now, monetize later" by OpenAI - which works only if you attain virtual monopoly(basically dominance over segment of a market, with competition not really competing with you) over segment of the market.

The problem is no one attained that position, price expectations are set and it turns out that wishful thinking of reducing costs of running the models by orders of magnitude wasn't fruitful.

Is AI useful? of course.

Are the real costs of it justified? in most cases no.

aurareturn21• 8 months ago

  The question is: is the value generated by AI aligned with the market projected value as currently priced in AI companies valuation? That's what's more difficult to assess.

I agree it is difficult to assess. Right now, competitive pressure is causing big players to go all in or get left behind.

That said, I don't think the bubble is done growing nor do I think it is about to burst.

I personally think we are in 1995 of the dotcom bubble equivalent. When it bursts, it will still be much bigger than in November 2025.

SchemaLoad2• 8 months ago

There's also a lot of debate over how long a GPU lasts. If a GPU loses most of it's value after 2 years because a newer model is much better/cheaper, that destroys the economics of the companies who have spent billions on now obsolete hardware.

TrackerFF2• 8 months ago

It's not that the AI models or products don't work.

It's how much money is being poured into it, how much of the money that is just changing hands between the big players, the revenue, and the valuations.

aurareturn21• 8 months ago

Well, do you have a model for this? Or is it just regurgitating mass media that it's a bubble?

If hyperscalers keep buying GPUs and Chinese companies keep saying they don't have enough GPUs, especially advanced ones, why should we believe someone that it's a bubble based on "feel"?

jennyholzer4• 8 months ago

to be fair, they don't work

checker6594• 8 months ago

The economics of it is what's the problem, not the power of LLMs.

aurareturn21• 8 months ago

So tell us the economics of it?

The vast majority of AI doomers in the mass media have never used tools like v0 or Cursor. How would they know that AI is overvalued?

rvz• 8 months ago

Most of all of Big Tech, especially Google are doing just fine, making $100B a quarter.

Startups and other unprofitable companies however...

marcyb5st• 8 months ago

After COVID they were still making a killing, but axed 12k people anyway. So, if someone starts doing layoffs and the market reacts well profitable companies will do layoffs as well

gizajob9• 8 months ago

You do have to question the usefulness of Big Tech burning all that profit to the ground in order to buy GPUs though.

thisislife2• 8 months ago

In other words - "We will be firing many of you when the bubble bursts."

yawpitch• 8 months ago

It’s not a matter of if, it’s a matter of when.

donkeylazy456• 8 months ago

Now they are talking like Wall Street greedy bankers back in subprime crisis.

Ekaros4• 8 months ago

Also it seems like Wall Street greedy bankers might have an other subprime crisis on their hands at same time... I wonder which one will be saved again...

TrackerFF2• 8 months ago

Sounds like "We're too big to fail. If we go down, everyone goes down. It is your choice."

But unlike 08 crisis, we're getting a heads up to bring out the lube.

franktankbank3• 8 months ago

I hope it goes down. Its really not a very powerful threat.

nabla94• 8 months ago

Google, Meta, Microsoft, and Amazon will get through easily. They don't have excessive debt. They can afford to lose their investments into AI. Their valuations will take a hit. Nvidia will lose revenue and profits, stock will go down by 60% or more, but it will also survive.

Oracle will likely fail. It funded its AI pivot with debt. The Debt-to-Revenue ratio is 1.77, the Debt-to-Equity ratio D/E is 520, and it has a free cash flow problem.

OpenAI, Anthropic, and others will be bought for cents on the dollar.

tow21• 8 months ago

Google, Meta, Microsoft and Amazon might get through easily as companies. I don't think all G/M/M/A staff will get through easily.

conartist6• 8 months ago

Microsoft is in a pickle. They put AI lipstick on top of decades of unfixed tech debt and their relationship with their userbase isn't great. Their engineering culture is clearly not healthy. For their size and financial resources, their position in the market right now is very delicate.

nabla94• 8 months ago

I cry for Elon, that precious jewel of a human being.

Tesla (P/E: 273, PEG: 16.3) the car maker without robots, robotaxis is less than 15% of the Tesla valuation at best. When the AI hype dies, selloff starts and negative sentiment hits, we have below $200B market cap company.

It will hurt Elon mentally. He will need a hug.

aurareturn21• 8 months ago

  OpenAI, Anthropic, and others will be bought for cents on the dollar.

OpenAI is existential threat to all big tech including Meta, Google, Microsoft, Apple. Hence, they're all spending lavishly right now to not get left behind.

Meta --> GenAI Content creation can disrupt Instagram. ChatGPT likely has more data on a person than Instagram does by now for ads. 800 million daily active users for ChatGPT already.

Google --> Cash cow search is under threat from ChatGPT.

Microsoft --> Productivity/work is fundamentally changed with GenAI.

Apple --> OpenAI can make a device that runs ChatGPT as the OS instead of relying on iOS.

I'm betting that OpenAI will emerge bigger than current big tech in ~5 years or less.

nabla94• 8 months ago

OpenAI has no technical moat (others can do what they do), generate content, all have the same data.

OpenAI does not expect to be cash-flow positive until 2029. When no new capital comes in, it can't continue.

OpenAI can's survive any kind of price competition.

j_w• 8 months ago

Apple --> OpenAI can make a device that runs ChatGPT as the OS instead of relying on iOS.

Yeah... No they can't. I don't agree with any of your "disruptions," but this one is just comically incorrect. There was a post on HN somewhat recently that was a simulated computer using LLMs, and it was unusable.

r053bud• 8 months ago

I’ll HAPPILY bet that it won’t. $10,000 to a charity of each other’s choosing?

officeplant4• 8 months ago

Apple --> OpenAI can make a device that runs ChatGPT as the OS instead of relying on iOS.

Ah yes, PromptOS will go down in the history books for sure.

thewebguyd5• 8 months ago

I'm betting that OpenAI will emerge bigger than current big tech in ~5 years or less.

I seriously doubt it. If this bubble pops, the best OpenAI can hope for is they just get absorbed into Microsoft.

nomel• 8 months ago

Apple --> OpenAI can make a device that runs ChatGPT as the OS instead of relying on iOS.

Or, instead of spending billions training models that are nearly all the same, they instead take advantage of all the datacenter full of GPUs, and AI companies frantically trying to make a profit, many most likely crashing and burning in the process, to pay relative pennies to use the top, nearly commoditized, model of the month?

Then, maybe someday, starting late and taking advantage of the latest research/training methods that shave off years of training time, save billions on a foundation model of their own?

I don't think it makes sense for Apple to be an AI company. It makes sense for them to use AI, but I don't see why everyone needs to have their own model, right now, during all the churn. It's nearly already commodity. In house doesn't make sense to me.

bigstrat2003• 8 months ago

OpenAI has yet to make a single, solitary thing that works well. It's nothing but Sam Altman hyping things. They aren't an existential threat to anyone.

petesergeant• 8 months ago

No, LLMs are an existential threat. OpenAI is a heavily leveraged prop-model company selling inference, which often has a model a few months ahead of its competitors.

AI isn’t bullshit, but selling access to a proprietary model has certainly not been proven as a business model yet.

belter2• 8 months ago

You will be able to rent a whole Meta datacenter with thousands of NVIDIA B200 for $5/hour. AWS will become unprofitable due to abundance of capacity...

DeathArrow5• 8 months ago

That's sounds nice. I can run FLUX or SDXL on all those NVIDIAs and fill the Internet with porn.

surgical_fire• 8 months ago

Google, Meta, Microsoft, and Amazon will get through easily. They don't have excessive debt. They can afford to lose their investments into AI.

Survive, yes. I don't think anybody ever questioned this.

I wonder if they will be able to remain as "growth stocks", however. These companies are allergic to be seen as nature companies, with more modest growth profiles, share profits, etc.

Balgair• 8 months ago

OpenAI, Anthropic, and others will be bought for cents on the dollar.

And just like 23andme, so will all that data be sold for dimes.

ribosometronome2• 8 months ago

If it's just like 23andme, that sale would be to Sam Altman.

tim3335• 8 months ago

Debt-to-Equity ratio D/E is 520

It's actually 520% or 5.2 - still high but 520 would be crazy.

throwawayffffas2• 8 months ago

Obviously, at least in the US the AI bubble is the only thing keeping the economy afloat. If it wasn't for the bubble the US would be in a recession.

Not sure how the situation is in Europe and Asia, but I would guess about the same.

mr_toad2• 8 months ago

Is there any significant AI investment outside the US?

(I know of a few companies, but they’re tiny tiny minnows compared to the big AI companies listed in the US).

clickety_clack• 8 months ago

Sounds like something an extortionist would say in a movie. “We’re all dirty here!”

project2501a2• 8 months ago

Yeah, exactly: it is an implied threat: "If I go, I am taking you down with me"

SpicyLemonZest• 8 months ago

The context makes it clear that it's not any sort of implied threat. Pichai made his statement in response to an interview question about whether Google might be so well positioned that they're immune to the impact of an AI bubble. (But I don't blame you for being misled - like most headlines these days, this would have been intensely optimized for virality over accuracy, and making tech CEOs sound like supervillains is great for virality.)

pixl97• 8 months ago

I mean this commonly happens in business/economies. Businesses that are dirty can make more money, at least temporarily out competing those around them. If they play it right they can drive their good competitors out of business or buy them up. Moreso, the crash at the end of a bubble will just as likely drive the good businesses out as the bad.

lo_zamoyski• 8 months ago

"But everybody's doing it!"

jordanb• 8 months ago

They really are shameless aren't they?

Makes one think that this was the plan all along. I think they saw how SVB went down and realize that if they're reckless and irresponsible at a big enough scale they can get the government to just transfer money to them. It's almost like this is their new business model "we're selling exposure to the $XX trillion dollar bailout industry."

ignoramous• 8 months ago

They really are shameless aren't they? Makes one think that this was the plan all along.

Not really. Sundar is still pretty bullish on GenAI, just not the investor excitement around it (bubble).

  Pichai described AI as "the most profound technology" humankind has worked on. "We will have to work through societal disruptions," he said, adding that the technology would "create new opportunities" and "evolve and transition certain jobs." He said people who adapt to AI tools "will do better" in their professions, whatever field they work in.

estimator72922• 8 months ago

I don't think it's very difficult to imagine that the usgov is trying to put pressure on industry to make "number go up". Given the general competency level in usgov these days, I also wouldn't be particularly surprised if nobody knew or cared about whether the "up" of the number was real or meaningful, or whether there would be consequences.

Current admin really, really wants the number going up, and is also incapable of considering or is ignorant to any notion of consequence for any actions of any kind.

zdragnar2• 8 months ago

Hasn't it been pretty widely acknowledged that AI funding has created a whirlpool of money cycling between a few players- cloud / datacenter hosts / operators (oracle), GPU (nvidia) and model operators (openai).

To pile on, there's hardly a product being developed that doesn't integrate "ai" in some way. I was trying to figure out why my brand new laptop was running slowly, and (among other things) noticed 3 different services running- microsoft copilot, microsoft 365 copilot (not the same as the first, naturally) and the laptop manufacturer's "chat" service. That same day, I had no fewer than 5 other programs all begging me to try their AI integrations.

Job boards for startups are all filled with "using AI" fluff because that's the only thing investors seem to want to put money into.

We really are all dirty here.

lesuorac• 8 months ago

He told the BBC that the company owns what he called a “full stack” of technologies, from chips to YouTube data to models and frontier science research. This integrated approach, he suggested, would help the company weather any market turbulence better than competitors.

I guess but is it better for an investor to own 2 shares of Google or 1 share of OpenAI and 1 share of TSMC?

Like I have no doubt that being vertically integrated as a single company has lot of benefits but one can also create a trust that invests vertically as well.

jmalicki• 8 months ago

There may be firm specific risk etc., but there is also a concept of double marginalization, where monopolies that exist across the vertical layers of a production chain will be less efficient than a single monopoly, because you only get a single layer of dead weight loss rather than multiple.

https://en.wikipedia.org/wiki/Double_marginalization?wprov=s...

pphysch• 8 months ago

OpenAI going poof would have a negative impact on TSMC demand (revenue), right?

wmf• 8 months ago

Yeah, TSMC demand might go down from 300% to 100%.

nradov10• 8 months ago

OpenAI is privately held. Regular retail investors can't buy shares.

boringg2• 8 months ago

Well if AI goes poof - the equity markets take a really big bad hit. So I would probably move out of equity and into something more concrete and reinvest if you can time the market bottom.

Nvidia earnings tomorrow will be the litmus test if things are going to topple over.

paxys2• 8 months ago

With those 2 shares of Google you are also buying a piece of their money printer, i.e. the advertising business.

Quotation1898• 8 months ago

In more traditional industries investors seem to prefer less integration. One example being Siemens, who divested their Healthineers and Energy divisions and all their share values increased by a lot.

Maybe this is because these industries are better understood and there is less risk involved, but I wonder if the current big software companies will take similar paths in the future.

carefulfungi2• 8 months ago

Investors often prefer stocks that are not themselves a portfolio (like AWS and Amazon retail being bundled; or your Siemens example). Lots of people would like to buy into AWS's margins without also buying Amazon retail's margins. But this is different from vertical integration that creates competitive advantage.

ghostpepper• 8 months ago

Does anyone really think it’s “if” and not “when” ?

burnte4• 8 months ago

Agreed, it's when. They're hoping to stave it off or maybe stretch out the pop into a correction by all hedging together with all these incestuous deals, but you can't hold back the tide. They debuted this tech way too early, promised way too much, and now the market is wary about buying AI products until more noise settles out of the system.

ares623• 8 months ago

It’s going to pop as soon as they get confirmation the govt will bail them out. Until then they’re going to give it their all to keep it growing.

project2501a2• 8 months ago

They got enough slush money to make this go on for a couple of years.

I am shocked at the part they know it is a bubble and they are doing nothing to amortize it. Which means they expect the government to step in and save their butts.

... Well, not that shocked.

dylan604• 8 months ago

They debuted this tech way too early, promised way too much,

finally, some rational thought into the AI insanity. The entire 'fake it til you make it' aspect of this is ridiculous. sadly, the world we live in means that you can't build a product and hold its release until it works. you have to be first to release even if it's not working as advertised. you can keep brushing off critiques with "it's on the road map". those that are not as tuned in will just think it is working and nothing nefarious is going on. with as long as we've had paid for LLM apps, I'm still amazed at the number of people that do not know that the output is still not 100% accurate. there are also people that use phrases as thinking when referring to getting a response. there's also the misleading terms like "searching the web..." when on this forum we all know it's not a live search.

somewhereoutth2• 8 months ago

Yet another [1] AI winter [2]

[1] https://en.wikipedia.org/wiki/AI_winter#The_setbacks_of_1974

[2] https://en.wikipedia.org/wiki/AI_winter#AI_winter_of_the_199...

DeathArrow5• 8 months ago

promised way too much

Oh, you think we won't see AGI in 2026?

Zaskoda• 8 months ago

Sort of? My thoughts are that there's something of an AI arms race and the US doesn't want to lose that race to another country... so if the AI bubble pops too fiercely, there may likely be some form of intervention. And any time the government intervenes, all bets are off the table. Who knows what they will do and what the impact will be.

nitwit005• 8 months ago

I can see them intervening to preserve AI R&D of some sort, but many of the current companies are running consumer oriented products. Why care if some AI art generation website goes bust?

nicce• 8 months ago

More like that when it happens, how big the pop is.

tetris11• 8 months ago

It'll be fine. When the banks burst in 2008, they were gifted 7 trillion to make up the shortfall and life went on for the rich.

This time they'll be gifted 70 trillion to make up for the shortfall, and life shall continue on for the rich.

It's win-win for them, there's no risk at all

TulliusCicero4• 8 months ago

It's also possible it'll be more of a deflation than a pop.

That's what I'm personally hoping for anyway, would rather the economy avoid a big recession.

techblueberry3• 8 months ago

I've been trying to grok this idea of - when does a bubble pop. Like in theory if everyone knows it's a bubble, that should cause it to pop, because people should be making their way to the exists, playing music chairs to get their money out early.

But as I try to sort of narrative the ideas behind bubbles and bursts, one thing I realize, is that I think in order for a bubble to burst, people essentially have to want it to burst(or the opposite have to want to not keep it going).

But like Bernie Madoff got caught because he couldn't keep paying dividends in his ponzi scheme, and people started withdrawing money. But in theory, even if everyone knew, if no one withdrew their money (and told the FCC) and he was able to use the current deposits to pay dividends a few years. The ponzi scheme didn't _have_ to end, the bubble didn't have to pop.

So I've been wondering, like if everyone knows AI is a bubble, what has to happen to have it collapse? Like if a price is what people are willing to pay, in order for Tesla to collapse, people have to decide they no longer want to pay $400 for Tesla shares. If they keep paying $400 for tesla shares, then it will continue to be worth $400.

So I've been trying to think, in the most simple terms, what would have to happen to have the AI bubble pop, and basically, as long as people perceive AI companies to have the biggest returns, and they don't want to move their money to another place with higher returns (similar to TSLA bulls) then the bubble won't pop.

And I guess that can keep happening as long as the economy keeps growing. And if circular deals are causing the stock market to keep rising, can they just go on like this forever?

The downside of course being, the starvation of investments in other parts of the economy, and giving up what may be better gains. It's game theory, as long as no one decides to stop playing the game, and say pull out all their money and put it into I dunno, bonds or GME, the music keeps playing?

AstroBen2• 8 months ago

Eventually money to invest will run out. If earnings of the companies doesn't catch up we'll reach a situation where stock prices reach a peak, have limited future expected returns, and then it'll pop when there's a better opportunity for the money

Imagine if interest rates go up and you can get 5% from a savings account. One big player pulls out cash triggering a minor drop in AI stocks. Panic sells happen trying to not be the last one out of the door, margin calls etc.

You're assuming cash will never stop flowing in driving up prices. It will. The only way it goes on forever is if the companies end up being wildly profitable

JumpCrisscross7• 8 months ago

when does a bubble pop

This one? When China commits to subsidising and releasing cutting-edge open-source models. What BYD did to Tesla's FSD fee dreams, Beijing could do to American AI's export ambitions.

wavemode• 8 months ago

It's important to keep in mind the difference between the stock market and the economy.

Economically, AI is a bubble, and lots of startups whose current business model is "UI in front of the OpenAI API" are likely doomed. That's just economic reality - you can't run on investor money forever. Eventually you need actual revenue, and many of these companies aren't generating very much of it.

That being said, most of these companies aren't publicly traded right now, and their demise would currently be unlikely to significantly affect the stock market. Conversely, the publicly traded companies who are currently investing a lot in AI (Google, Apple, Microsoft, etc) aren't dependent on AI, and certainly wouldn't go out of business over it.

The problem with the dotcom bubble was that there were a lot of publicly traded companies that went bankrupt. This wiped out trillions of dollars in value from regular investors. Doesn't matter how much you may irrationally want a bubble to continue - you simply can't stay invested in a company that doesn't exist anymore.

On the other hand, the AI bubble bursting is probably going to cost private equity a lot of money, but not so much regular investors unless/until AI startups (startups dependent on AI for their core business model) start to go public in large numbers.

balder19913• 8 months ago

You’re over complicating something that is very simple. The stock market reflects people’s sentiments: greed, excitement, FOMO, despair…

A bubble doesn’t need a grand catalyst to collapse. It only needs prices to slip below the level where investors collectively decide the downside risk outweighs the upside hope. Once that threshold is crossed, selling accelerates, confidence unravels, and the fall feeds on itself.

octoberfranklin• 8 months ago

It's called "AI Winter" because it's a cycle that repeats. Just like the seasons.

See y'all in the spring!

burnte4• 8 months ago

And there we have the reason for all of these interdependent deals between all these firms, they're all hedging with each other they can keep this set of plates spinning.

They can't, not firever. Bubbles pop.

nickff• 8 months ago

How is what they’re doing a ‘hedge’? It seems more like alternative financing, or keiretsu.

burnte4• 8 months ago

Keiretsu are ways to hedge against loss, you form interlocking relationships that spread both risk and success around. In this case no one is sending actual money, they're sharing obligations with each other.

viccis2• 8 months ago

Very cool and healthy for the CEO of a company investing massive amounts into a given technology to casually refer to it as a "bubble" at the same time. I guess he softens the statement a bit by calling it "an AI bubble" instead of the "the AI bubble", but it's still interesting to see everyone involved in this economic mess start to acknowledge it.

TulliusCicero4• 8 months ago

Unironically agreed that it's good for a CEO to remain relatively level headed and clear eyed.

The comparison made to the dotcom bubble is apt. It was a bubble, but that didn't mean that all the internet and e-commerce ideas were wrong, it was more a matter of investing too much too early. When the AI bubble pops or deflates, progress on AI models will continue on.

viccis2• 8 months ago

Yeah but imagine being one of the dotcom CEOs, knowing it was gonna pop, and being like "hey guys this is a bubble, also, we're pivoting to it as much as possible". The smart ones cashed out like Mark Cuban did.

sgroppino• 8 months ago

It’s not a bubble until it bursts

barbazoo• 8 months ago

Gave our kids a bath last night, can confirm, a bubble is a bubble even before it pops.

jmount• 8 months ago

Tons of companies survived the dot com bubble pop. Corrections are when the market does some sorting.

estimator72922• 8 months ago

Wow, this is such a unique and beautiful insight literally nobody has ever heard before. Good job!

gizajob9• 8 months ago

10x more useful than your retort.

rl1987• 8 months ago

The strongest few did. The likes of pets.com did not.

lizknope6• 8 months ago

The company may survive but there are still thousands of layoffs. I just wrote in another comment that in 1999 I was getting 5 recruiter calls a week. In all of 2001 I got zero.

giancarlostoro2• 8 months ago

I think it will pop but not in the way everyone thinks it will pop. There's plenty that's not going to go away / anywhere, but I'm sure lots of startups will fail and close their doors.

hypeatei• 8 months ago

What way do you envision it popping? Nvidia has tons of investments on their books in smaller companies. If a couple of them start showing poor earnings, it could cause a death spiral for NVDA because 1) their investment just tanked, and 2) those companies are no longer buying chips from them therefore reducing revenue.

Nvidia also makes up ~7% of the S&P 500 so if their stock price falls substantially, that's a big chunk of capital just... gone for a lot of people.

lelanthran3• 8 months ago

I think it will pop but not in the way everyone thinks it will pop.

Everyone thinks it will pop the way the dotcom bubble popped

There's plenty that's not going to go away / anywhere, but I'm sure lots of startups will fail and close their doors.

Just like the dotcom bubble pop - IOW, just like the way everyone thinks it will pop.

giancarlostoro2• 8 months ago

I guess I was too young during that bubble to really have it as a point of reference, is there a solid write up of it somewhere?

scottLobster2• 8 months ago

Silicon Valley! Unprofitable debt and marketing all the way up until you get bailed out by the taxpayers, apparently.

Barrin92• 8 months ago

I'm not seeing that happening. Unlike banking and housing there's not much systemic or political risk in letting these companies crash. It's mostly going to hit a very small number of high net worth people who don't have a lot of clout and are oddly disconnected from the rest of the economy.

bogomipz• 8 months ago

This is incorrect. A lot of these companies are raising debt to pay for these datacenter build outs. And that debt has already been sold to pension funds. The risk has already been spread. See Blue Owl Capital and how Meta is financing its Hyperion datacenter. They raised 30 billion in debt. Main street is already exposed as those bonds are in funds offered by the usual players BlackRock, Invesco, Pimco etc.

scottLobster2• 8 months ago

Virtually everyone's 401k is overexposed to these companies due to their insane market caps and the hype around them. If they go every S&P 500 and total US market ETF goes with them, right as the Boomers start retiring en-masse.

Even Vanguard's Total World Index, VT, is roughly 15% MAG 7.

That's not even getting into who's financing whom for what and to whom that debt may be sold to.

rchaud2• 8 months ago

Most bubbles occur due to excessive levels of credit offered too cheaply, resulting in a whole bunch of defaults happening at the same time. All the major AI players have borrowed money to buy GPUs and build data centers and have used Special Purpose Vehicles to do it so the debt doesn't fall on their own balance sheet, probably using a certain amount of stock as collateral. If the SPV defaults, could that trigger a big sell-off?

vineyardmike• 8 months ago

The question is, a sell off for who?

If they’ve securitized and sold their data center buildout, will the big clouds and AI labs actually face any severe impact? While the sums are huge, most of these companies have the cash on hand to pay down the debt. The big AI labs have said their models earn enough to cover the cost to train themselves, just not the next one. This means they could at any time walk away from the compute spend for training.

With the heavy securitization of all these deals, will the “bubble pop” just hurt the financial industry?

If a company like CoreWeaver sees their SPV for a Microsoft-specific data center go bankrupt, that means MSFT decided to walk away from the deal. Red flag for the industry, but also a sign of fiscal restraint. Someone else can swoop in and buy the DC for cheap, while MSFT avoids the Opex hit. Seems like the losers will be whoever bought that SPV debt, which probably isn’t a tech company.

Irishsteve• 8 months ago

It’s an insurance company so basically pensions.

badgersnake• 8 months ago

Every CEO is reading from the same script right now. It might be a bubble but it’s just like the internet, it’s still going to be relevant and it’s just the crap companies and grifters who will die.

I wonder who’s writing the script.

partiallypro2• 8 months ago

I think AI is a bubble, but I don't think we're close to the peak yet.

hylaride2• 8 months ago

Ever literally blow bubbles? You never really know how big each one will be.

My biggest worry is that what will be left standing after all of this is the organizations that are quietly all the AI slop everywhere, be it the normal web or YouTube.

partiallypro2• 8 months ago

The biggest worry are companies taking on debt or issuing equity in order to build data centers. It's a massive gamble (they are very very expensive to build.) There is a backlog for now, but in 5 years? I don't know, you might end up just sitting on a pile of chips and buildings that no one can use or wants. That would massively reverberate through the economy, maybe not akin to housing but it would definitely blow up some companies. For now, I think the math works, but I can't see into the future and that's where the risk is.

helterskelter• 8 months ago

I'm curious what HN is doing with their portfolios right about now. I'd be dumping NVDA and reallocating to more bonds for the time being.

josefritzishere• 8 months ago

This sub is the most important question in the thread. Where do you put your money to hedge against an AI market crash?

hirako2000• 8 months ago

Commodities.

ajross2• 8 months ago

You can't hedge against a whole market. And you can't time bubble pop events anyway. You can dump NVDA today, sure, because it's overvalued at $180. And most of us agree. But that won't prevent it from going to $300 before it pops (which is totally reasonable too!), so dumping it today might hurt as much as it helps. Run-ups at the end of a speculative bubble are by definition irrational and produce in-hindsight-ridiculous numbers.

If you're young and invested for the long term, just leave all your junk in broad index securities. You can't do better than that, you just have to ride the bumps.

On the other hand, I'm approaching retirement and looking seriously at when to pull the trigger. The aggregate downside to me of a large market drop or whatever is much higher than it is to a 20-something, because losing out on (to make a number up) an extra 30% of net worth is minor when compared to "now you have to work another three years before retiring" (or alternate framings like "you have to retire in Houston and not Miami", etc...).

So most of my assets are moving out of volatiles entirely.

oulipo2• 8 months ago

Cash or bonds I assume

nradov10• 8 months ago

In a crash everything gets positively correlated for a while. You can go to cash temporarily but of course no one can consistently time the market.

coldpie• 8 months ago

Same thing as always. Stick with your plan and rebalance if you need to. If your plan is 80% stock 20% bond (or whatever ratios), and the increased stock prices are putting you significantly out of balance, then sell your stock funds and buy bonds to put it back to where it should be. If the crash happens, sell your now too-high bonds and buy stocks. Or just buy into one of those funds that does all this for you, or hire a fiduciary financial advisor to do it for you.

hylaride2• 8 months ago

With even the SP500 being super concentrated in AI-exposed companies, probably a combination of bonds and foreign equities. But hedging does mean being OK with watching any (perceived or real) bubble madness continue. I wanted to put all my wealth into Apple circa 2005, but chose not to because blah blah blah diversification. Obviously I wish I did, but I'm ok with the perfectly sensible decision I made - and I'd be retired many times over had I done it.

Personally speaking, as somebody that was 100% in equities until earlier this year (I'm in my early 40s and had most of my wealth in VOO), I shifted to a 60-40 portfolio - there are ETFs that maintain the balance for you. I did this knowing full well that this could attenuate my upside, but I figured it's worth it than being so concentrated in a single part of an industry (AI within tech) and so much upside was already acquired up until that point. Also, I figured the chances of the 2nd Trump term adding to volatility weren't going to help tamper volatility. On top of that, my income is tied to tech, so diversifying away further from it is sensible (especially the equity parts of my compensation).

But if you're in your 20s, your nest egg is likely small enough that I'd just continue plugging away in automatic contributions. Investing at all is far more important than anything else at that stage.

mrtesthah• 8 months ago

AAPL is chronically undervalued, and at the same time derives no revenue from generative AI.

ndriscoll2• 8 months ago

Do you live in a home you own with no mortgage? Do you have a fully electrified home, only EVs, and enough solar to run those things? You can make real concrete capital investments instead of abstract financial ones to reduce your required living/"operating" expenses, insulating you somewhat from the state of financial markets.

eqvinox2• 8 months ago

Land/housing/property, as directly as possible and reasonable. Just make sure you don't do it in an overheated place like New York.

TrainedMonkey• 8 months ago

It's more complex than that, a summary of my highly subjective understanding:

1. AI companies manage to build AGI and achieve takeoff. I have no idea on how to hedge against that.

2. The market is not allowed to crash. There will likely be some lag between economic weakness and money printing. Safer option is probably to buy split 50% SPY and 50% bonds. A riskier option is trying to time the market.

3. The market is allowed to crash. Bonds, cash, etc.

Depending on what you believe will happen and risk appetite you can blend between the strategies or add a short component. I am holding #2 with no short positions in post-tax accounts and full SPY in tax advantaged accounts.

dabockster• 8 months ago

US government bonds

nurettin2• 8 months ago

Why trade individual stocks anyway? Cost averaging ETFs is a proven way to building wealth. S&P goes down 20%, you average down, it recovers and you get another 2-3 years of growth. This goes on until civilization collapses.

gretch• 8 months ago

If you buy ETFs, you basically hold some stocks you don't want.

For example, stock from war profiteering companies (lockheed, raytheon).

Note that investing in war profiteers is a proven way to build wealth. I just don't want to do that.

This argument not only applies to evil companies, but also dumb ones. For example, I have no interest in investing in IBM or Oracle even those both of those are also money makers.

nradov10• 8 months ago

Buying index funds (either mutual funds or ETFs) has been an effective approach for retail investors. But the concern now is that some US stock index funds are so heavily weighted to the "Magnificent 7" stocks that much of the previous benefit of diversification has been lost. The Mag 7 are all highly correlated with each other so if one falls then usually the others do as well.

https://www.fidelity.com/learning-center/smart-money/magnifi...

There are other index funds which are equal weighted rather than market weighted. Those have underperformed lately but might be less volatile if the AI bubble pops.

AstroBen2• 8 months ago

Broad, global diversification with a long term time horizon. So I'm doing exactly nothing

I'm not able to predict what the overall market is going to do short or medium term

What makes you think your guess is better than the rest of the money in the market, most of it acting with better information than you?

boringg2• 8 months ago

Theres a really funny thing going on right now -- in that everyone is forecasting an AI bubble to pop. It feels like every single human is saying that from the heads of tech companies with comments that are veiled to bankers and everyone on the street.

It reminds me of the time that everyone said the economy was going to tank and somehow everyone had it wrong a couple years ago.

It feels implausible that it isn't overbuilt but it also feels really strange for everyone to be pushing this narrative that its a bubble - and people taking very public short bets. It feels like the contrarian bet is that its going to keep running hot. Nvidia earnings tommorrow big litmus test.

HarHarVeryFunny• 8 months ago

If it was the people actually investing in AI all saying it's a bubble, implying that they are holding back, not all-in, for fear of it crashing, then it'd have room to run further (until they were all-in, and leveraged to the eyeballs, cf subprime housing crash liar loans, dot-com crash investor margin accounts).

However, it seems more like the people pumping billions into AI are all still "this is going to the moon" gung-ho, and unless they are investing billions of CASH, then I guess they are borrowing to do so.

I don't know how this financing works - maybe no fear of having it pulled like a foreclosure on a subprime mortgage holder, or a broker margin call, but it's not going to end well if these investments start to fail and the investors start running for the door.

Peter Thiel's recent exit from NVidia should be a bit concerning given his good record on macro bets and timing.

officeplant4• 8 months ago

Currently? Wishing there was an S&P 500 that banned tech stocks.

cschmidt• 8 months ago

There are equal weight S&P ETFs, which avoid having a handful of stock dominating. However, they do have to do a lot more rebalancing to keep things in line.

MontyCarloHall2• 8 months ago

The SPXT [0]/XMAG [1] ETFs are exactly what you're looking for.

[0] https://www.proshares.com/our-etfs/strategic/spxt (S&P minus tech stocks)

[1] https://www.defianceetfs.com/xmag/ (S&P minus "Magnificent 7")

francisofascii• 8 months ago

VEU? It may have tech stocks, but not the American ones like NVDA, MSFT, GOOG, META, etc.

paxys2• 8 months ago

Same thing I've been doing for 15 years - VTI and chill.

binary132• 8 months ago

if only there were some way for THE ENTIRE MARKET to not have quite so much exposure to hype bubbles

OptionOfT• 8 months ago

Interestingly I think if the AI succeed at the level that a lot of these CEOs hope we're not much better off either.

And the sentiment that goes around is more: reduce the amount of people needed to do the same amount of work:

https://www.theregister.com/2025/10/09/mckinsey_ai_monetizat...

McKinsey says, while quoting an HR executive at a Fortune 100 company griping: "All of these copilots are supposed to make work more efficient with fewer people, but my business leaders are also saying they can't reduce head count yet."

The problem becomes that eventually all these people who are laid off are not going to find new roles.

Who is going to be buying the products and services if no-one has money to throw around?

jmkni• 8 months ago

There's a karma element too

Maybe I can make things more efficient by getting rid of you and replacing you with AI, but how long until my boss has the same idea?

thewebguyd5• 8 months ago

Who is going to be buying the products and services if no-one has money to throw around?

The same people who are buying products and services right now. Just 10% of the US population is responsible for nearly 50% of consumption.

We are just going to bifurcate even more into the haves and have-nots. Maybe that 10% now becomes responsible for 70+% of consumption and everyone else is fighting for scraps.

It won't be sustainable and we need UBI. A bunch of unemployed, hungry citizens with nothing left to lose is a combo that equals violent revolution.

Eisenstein2• 8 months ago

I posit that the consumption is the problem.

ben_w2• 8 months ago

The top 10% income bracket of the US is broad enough to include basically all US software developers, isn't it?

If all jobs evaporate, what does the economy look like when just based on interest and dividend payments?

tharne4• 8 months ago

Maybe that 10% now becomes responsible for 70+% of consumption and everyone else is fighting for scraps.

Or everyone else starts fighting that 10% once they get tired of scraps.

stocksinsmocks• 8 months ago

Or maybe the type of labor desired will be more comple, interesting, and valuable as it was when we gave up hunting and gathering for farms and as we mechanized farming and left for factories and factories and offices.

cedws2• 8 months ago

I don't even know what the selling point of AI is for regular people. In the 60s it was possible for a man to work an ordinary job, buy a house, settle down with a wife and support two or three children. That's completely out of the realm of reality for many young people now and the plummeting birth rates show it.

The middle class have financially benefited very little from the past 20+ years of productivity gains.

Social media is driving society apart, making people selfish, jealous, and angry.

Do people really think more technology is going to be the path to a better society? Because to me it looks like the opposite. It will just be used to stomp on ordinary people and create even more inequality.

Avicebron• 8 months ago

What's crazy is that people will jump all over themselves to say "well you could totally live like that at a 1960s level" like that's even a viable possibility today (in the US).

What's that about the falcon and the falconer? The center cannot hold..

FloorEgg4• 8 months ago

To me this all just looks like a big frothy chemical reaction playing out far beyond any one person's control.

With that view, many things oscillate over time, including game theory patterns (average interaction intentions of win-win, win-lose, lose-lose), and integration / mitosis (unions, international treaties, civil wars),etc.

So my optimistic view is that inevitably we will get more tech whether we want it or not, and it will probably make things worse many for a while, but then it will simultaneously enable and force a restructuring at some level that starts a new cycle of prosperity. On the other side it will be clear that all this tech directly enables a better (more free, more diverse, more rewarding, more sustainable) way of life.

I believe this because from studying history it seems this pattern plays out over and over and over again to varying degrees.

Demiurge• 8 months ago

In the 60s it was possible for a man to work an ordinary job, buy a house, settle down with a wife and support two or three children.

Every kind of a man, or woman?

Do people really think more technology is going to be the path to a better society? Because to me it looks like the opposite.

Well, this probably why statistics exist.

astura• 8 months ago

According to the census bureau median family income in 1960 was $5,600, which is $58,946.59 in Jan 2024 dollars. It's $83,730 in 2024.

For individual males, in 1960 it was $4,100 ($43,157.33 Jan 2024 dollars) and $71,090 in 2024.

Sources:

https://www.census.gov/library/publications/1962/demo/p60-03...

https://www.census.gov/library/publications/2025/demo/p60-28...

https://data.bls.gov/cgi-bin/cpicalc.pl

The thing is, a 1960s standard of living would be totally unacceptable by almost everyone today. Single car max, no air conditioning, small house or apartment, multiple children sharing bedrooms, no cellphones, no Internet, no cable, no streaming. Local calls only. Children allowed outside by themselves.

Terr_3• 8 months ago

Do people really think more technology is going to be the path to a better society? Because to me it looks like the opposite. It will just be used to stomp on ordinary people and create even more inequality.

The problem isn't "more technology" (nor is the solution "less) but rather a change in who controls it and benefits. We shouldn't surrender-in-advance to the idea that the stompers will definitely own it.

SrslyJosh• 8 months ago

The middle class have financially benefited very little from the past 20+ years of productivity gains.

More like the last 50 years.

https://www.pewresearch.org/short-reads/2018/08/07/for-most-...

"For most U.S. workers, real wages have barely budged in decades"

The TL;DR is that in 1964 the average hourly wage was $20.27. As of 2018, average hourly wage was $22.65.

ThrowawayR2• 8 months ago

"In the 60s it was possible for a man to work an ordinary job, buy a house, settle down with a wife and support two or three children."

In the 1930s, it wasn't possible so what's your point? (History time: What happened on October 24, 1929?) Choosing the 1960s as a baseline is artificially cherry-picking an era of economic growth (at the expense of the rest of post-WW2 Europe and Asia who were rebuilding) instead of an era of decline or normalcy.

xnx2• 8 months ago

Do people really think more technology is going to be the path to a better society?

It has been for the last few thousand years.

bananaflag• 8 months ago

I don't even know what the selling point of AI is for regular people.

AI healthcare, for example. Have an entity that can diagnose you in a week at most, instead of being sent from specialist to specialist for months, each one being utterly uninterested in your problem.

jaredklewis4• 8 months ago

That's completely out of the realm of reality for many young people now and the plummeting birth rates show it.

I'm skeptical of this explanation for falling birthrates just because birthrates are falling across the world and there seems to be no correlation between fertility and financial security. America has low birthrates. Scandinavia (usually considered to have generous welfare states) has low birthrates. Hungary, where the government gives massive tax breaks (IIRC they spend around ~6% of their GDP on child incentives), has low birthrates. Europe, East Asia, India, the Middle East, the Americas, basically the whole world except for central Asia and Sub-Saharan Africa (which are catching up) has low birth rates. Obviously the economic conditions between basically all the countries in the world varies wildly, but there isn't a consistent relationship between those conditions and fertility.

Also within countries, the number of children people have is not always correlated with wealth (and at times in the past 60 years it has been negatively correlated).

Anyway, I find your argument intuitive, but it doesn't seem to align with the data we have.

georgeecollins• 8 months ago

A lot of this stuff about baby boomers vs now is based on how remember things. The data is more complicated. Example: The average home in 1960 was like 1600 sq ft, now its like 2800 sq ft. Sometimes we are comparing apples to oranges.

I am not trying to blunt social criticism. The redistribution of wealth is a real thing that started in the tax policies of the 1980s that we just can't seem to back away from.

But a lot of people are pushing gambling, crypto, options that are telling people that they have no hope of getting ahead just by working and saving. That's not helpful.

rr8082• 8 months ago

In the 60s it was possible for a man to work an ordinary job, buy a house, settle down with a wife and support two or three children. That's completely out of the realm of reality for many young people now and the plummeting birth rates show it.

Most of the people I see working in tech can easily afford this. Maybe not private schools or McMansions but the basics are pretty easy. Sure if you're a humanities major with health problems its tough.

SchemaLoad2• 8 months ago

We will be able to build even bigger super yachts for billionaires now though. Bezos can have his own personal cruise ship.

rockemsockem7• 8 months ago

I'd say the most mundane thing I use chat GPT for is to tell me which deeply nested menu some option is in for software I don't use very often.

I feel like most people would get value out of that.

Most recent example from a few days ago 'How do I change settings around spacing for "heading 2" in a document?'

mittensc3• 8 months ago

In the 60s it was possible for a man to work an ordinary job, buy a house, settle down with a wife and support two or three children.

That wasn't true in the rest of the world.

The US had a unique position due to ww2 that was bound to errode.

I find it funny to compare horror stories from my parents/grandparents to this...

schnitzelstoat2• 8 months ago

The main problem there is soaring housing costs which have nothing to do with technology and everything to do with extremely restrictive planning regulations that make it impossible for the housing supply to keep up with population growth.

isoprophlex2• 8 months ago

We're disappearing up our own assholes made of misery, loneliness and consumerism.

If you want a picture of the future: imagine a robotic boot, stamping on a human face that's begging for more techno-stamping, forever.

andrepd2• 8 months ago

The middle class have financially benefited very little from the past 20+ years of productivity gains.

Make it 50 years https://fredblog.stlouisfed.org/2023/03/when-comparing-wages...

LtWorf6• 8 months ago

In the 60s it was possible for a man to work an ordinary job, buy a house, settle down with a wife and support two or three children.

And that was all because they needed to show to the communist countries how much better capitalism was.

Now communism is gone so there's no need to show off.

ahoka• 8 months ago

"work an ordinary job, buy a house, settle down with a wife and support two or three children"

Have you considered that there's more to human existence than to pay a mortgage and women are not something you keep in your house to watch after your offspring so they can do the very same when growing up?

lynx97• 8 months ago

In the 60s it was possible for a man ... with a wife and support two or three children.

This is borderline sexist.

and the plummeting birth rates show it

Those or, IMO, mostly due to the invention of the pill.

kiba• 8 months ago

The benefits of economic growth flows largely to people who owns land and non-reproducible privilege.

This the real reason why billionaire exists, not because they have a lot of money, though that help, but because they were able to build modern monopolies. The solution is to tax, dismantle, or regulate them, and that includes land.

Georgism and LVT proposals are starting to see a slow resurgence in the political landscape.

gorgoiler• 8 months ago

Why was it possible for a man in the 1960s to have an ordinary job, a family, and a house? Was there some hidden sector of society that suffered considerably more then now? Is there some sector of society now that prospers proportionally more at the expense of others?

The answer that immediately springs to mind is that women, ethnic minorities, and the urban poor all did relatively badly in the 1960s. With the latter two categories, for every apple pie home with a sedan and two kids there were umpteen other drafty tenement flats with malnourished families sharing a bedroom:

British tenements

https://www.theguardian.com/artanddesign/gallery/2021/feb/02...

NYC tenements

https://www.nypl.org/blog/2018/06/07/tenement-homes-new-york...

It’s not one thing or another — many factors have contributed to what feels like change this way or that over the years — but I try to never forget just how abominably crap life used to be for quite a lot of people, and just how much better it is these days.

tim3335• 8 months ago

The work an ordinary job and support a house, wife and two kids thing is down to economic policy rather than tech. Houses have been treated as financial assets where you have to restrict supply to keep the prices up.

You could build a manufatured house for ~$60000 or a couple or years salary like https://siphouse.co.uk/product/insulated-summer-house-with-v... if it wasn't for planning laws preventing it.

or https://www.claytonhomes.com/homes/36TRU28684RH/ Maybe 2x that for govt sponsored high rises like they have in Asia

That may look basic but is similar to what you could get in the 1960s. I mean what do you actually need?

I think we may need a return to slightly more lefty policies - still free enterprise but everyone has a right to a reasonable home and ok income (healthcare etc)

marcosdumay9• 8 months ago

Because to me it looks like the opposite.

It's neither. None of that is about technology, and it's not the first time in history that it happened either.

And if AI somehow replace a third of the workforce, it's still not enough of an structural change to make technology a cause. If it goes way above that, it can be different, but it's not right now.

satvikpendem5• 8 months ago

In the 60s it was possible for a man to work an ordinary job, buy a house, settle down with a wife and support two or three children.

The book Capital in the 21st Century comes to the conclusion that this is a historical anomaly due to World War II (and really only in the US, and really only for white families in the US). Don't take the anomaly of the past and treat it as the normality of what people in history experienced.

red-iron-pine• 8 months ago

In the 60s it was possible for a man to work an ordinary job, buy a house, settle down with a wife and support two or three children. That's completely out of the realm of reality for many young people now and the plummeting birth rates show it.

Wasn't like that in 1800s, or the 1910s, or the Great Depression, etc.

World Wars happened and all of the industrial nations got bombed to hell and lost a generation or two.

The US didn't have that happen and was able to provide unprecedented prosperity for the Greatest Generation and Boomers because it would take 30+ years to truly rebuild and grow their population.

Sure enough the wheels started falling off in the 70's and 80s, and only technological growth kept the US on top. And that's slipping.

RajT88• 8 months ago

The problem becomes that eventually all these people who are laid off are not going to find new roles.

At least one sci-fi author has gamed this out:

https://marshallbrain.com/manna1

JumpCrisscross7• 8 months ago

Who is going to be buying the products and services if no-one has money to throw around?

We have no basis for seriously considering this hypothetical when it comes to LLMs.

ben_w2• 8 months ago

Depends how absolute one takes the statement "no-one has money to throw around".

Taken loosely, we have seen previous developments which make a large fraction of a population redundant in short periods, and it goes really badly, even though the examples I know of are nowhere near the entire population.

I'm not at all sure how much LLMs or other GenAI are "it" for any given profession: while they impress me a lot, they are fragile and weird and I assume that if all development stopped today the current shinyness would tarnish fast enough.

But on the other hand, I just vibe coded 95% of a game that would have taken me a few months back when I was a fresh graduate, in a few days, using free credit. Similar for the art assets.

How much money can I keep earning for that last 5% the LLM sucks at?

rozap• 8 months ago

Realistically I think there are two outcomes:

AGI succeeds and there are mass layoffs, money is concentrated further in the hands of those who own compute.

AI bubble pops and there are mass layoffs, with bailouts going to the largest players to prevent a larger collapse, which drives inflation and further marginalizes asset-less people.

I honestly don't see a third option unless there is government intervention, which seems extremely far fetched given it's owned by the group of people who would benefit from either scenario presented above.

jimbokun11• 8 months ago

If the AI bubble pops it's just another bubble like the many ones that have occurred throughout history and the market eventually recovers.

In the AGI Succeeds scenario, the situation is unprecedented and it's not clear how it ever gets better.

throwacct3• 8 months ago

Third option: no bailouts of any type. Don't socialize losses. The board resets itself again, and let entrepreneurs, small businesses flourish again.

goalieca2• 8 months ago

Bailouts for chip fabicration and nothing else.

lemoncookiechip• 8 months ago

Does the USA even have enough money to rescue the tech giants at this point? We could be talking multiple trillion dollars at worst. And the AI only companies like OpenAI and Anthropic would be the most vulnerable in comparison to say Google or Microsoft, because they have no fallback and no sustainability without investor money.

And Nvidia would be left in a weird place where the vast majority of their profits are coming from AI cards and demand would potentially dry up entirely.

JoshTriplett3• 8 months ago

with bailouts going to the largest players
I honestly don't see a third option unless there is government intervention

Bailouts are government intervention. The third option is an absence of government intervention, at least at the business level. By all means intervene in the form of support for impacted individuals, e.g. making sure people have food on the table. Stop intervening to save businesses that fail.

johnnyanmac5• 8 months ago

It's slim but the 3rd option is the administration falling apart Nixon-style. Be it by death, conviction, or resignation.

The slimmer part is any potential successors suddenly responding to the people, but maybe that happens in congress in 2027. Still up in the air.

nostrademons• 8 months ago

"All of these copilots are supposed to make work more efficient with fewer people, but my business leaders are also saying they can't reduce head count yet."

Duh, if they reduce headcount then they will have fewer people in their department, which will negatively affect their chances for promotion and desirability of their resume. That's why they actually offshore the jobs to India and Southeast Asia; it lets them have 3x+ the headcount for the same budget.

If you want to have them actually reduce headcount, make org size the denominator in their performance reviews, so a director with 150 people needs to be 15x more productive than a manager with 10, who needs to be 10x more productive than the engineer IC. I guarantee that you will see companies collapse from ~150,000 employees to ~150, and profit/employee numbers in the millions (and very likely, 90% unemployment and social revolution). This is an incentive issue, not a productivity issue. Most employees and their employers are woefully unproductive because of Parkinson's Law.

You'll never see a manager or even a managing-CEO propose this, though, because it'll destroy their own marketability in the management job market. Only an owner-CEO would do it - which some have, eg. Valve, Nintendo, Renaissance Technologies. But by definition, these are minority employers that are hard to get into, because their business model is to employ only a few hundred people and pay them each millions of dollars.

tharne4• 8 months ago

The problem becomes that eventually all these people who are laid off are not going to find new roles.
Who is going to be buying the products and services if no-one has money to throw around?

I've wondered about this myself. People keep talking about the trades as a good path in the post-AI world, but I just don't see it. If huge swaths of office workers are suddenly and permanently unemployed, who's going to be hiring all these tradesmen?

If I were unemployed long-term, the one upside is that I would suddenly have the time to a do a lot of the home repairs that I've been hiring contractors to take care of.

The other thing I worry about is the level of violence we're likely to see if a significant chunk of the population is made permanently unemployed. People bring up Universal Basic Income as a potential, but I think that only address a part of the issue. Despite the bluster and complaints you might hear at the office, most want to have the opportunity to earn a living; they want to feel like they're useful to their fellow man and woman. I worry about a world in which large numbers of young people are looking at a future with no job prospects and no real place for them other than to be made comfortable by government money and consumer goods. To me that seems like the perfect recruiting ground for all manner of extremist organizations.

janalsncm4• 8 months ago

UBI correctly identifies the problem (people can’t afford housing/clothing/food without money) but is an inefficient solution imo. If we want people to have those things, we should simply give them to them.

JumpCrisscross7• 8 months ago

If huge swaths of office workers are suddenly and permanently unemployed, who's going to be hiring all these tradesmen?

"Professionals were 57.8 percent of the total workforce in 2023, with 93 million people working across a wide variety of occupations" [1]. A reasonable worst-case scenario leaves about half of the workforce intact as is. We'd have to assume AI creates zero new jobs or industries, and that none of these people can pivot into doing anything socially useful, to expect them to be rendered unemployable.

if a significant chunk of the population is made permanently unemployed

They won't. They never have. We'd have years to debate this in the form of unemployment insurance extensions.

[1] https://www.dpeaflcio.org/factsheets/the-professional-and-te...

DenisM2• 8 months ago

I heard Spain has 20% unemployment among the young and the violence problem did not happen. Didn’t check it though.

Bilal_io• 8 months ago

The other thing I worry about is the level of violence we're likely to see if a significant chunk of the population is made permanently unemployed.

No worries, they'll just make AI robots to shoot people.

janalsncm4• 8 months ago

Intuitively, the whole economy cannot be B2B SAAS companies funded by VCs. At some point you need to provide value to consumers or the government. If those consumers don’t have any money and/or aren’t willing to spend a paycheck making studio ghibli profile pics, you have a problem. I guess Sam Altman has been asking for a government bailout so maybe he is going for the b2g option in a backwards sort of way.

saxenaabhi9• 8 months ago

These consumers will have to stop being entitled salaryman and show some entrepreneurship to survive.

I think that's good thing.

tim3335• 8 months ago

problem ... laid off are not going to find new roles

Not necessarily. If AI improves productivity, which it hasn't very much yet, there is the option to make more stuff rather than the same output with less people.

The Luddites led on to Britain being the workshop of the world, not to everyone sitting around unemployed, at least not for a while.

bluefirebrand• 8 months ago

Who is going to be buying the products and services if no-one has money to throw around?

Here's hoping we figure that out soon otherwise we're going to see how long it takes the poor to reinvent the guillotine

Personally I'm kind of hoping for sooner than later. The greed and vice of the upper stratosphere in society is wildly out of control and needs to be brought to heel

amy_petrik2• 8 months ago

Who is going to be buying the products and services if no-one has money to throw around?

Let me answer your question with another question - if the population pyramid is inverted and birth rate is like 1.1 babbies per 2 adults.. then how is any market going to grow? Seems to me all markets with halve. On top of what you pointed out. Or I suppose it's a happy accident if our workforce halves as our work halves - but still the consumer market has halved. It does make me wonder under what reality one would fathom that the stock market would go up long term.

corv• 8 months ago

When AI and robots take care of everything there is more time to make babbies

Ferret74462• 8 months ago

The same could be said for the nuclear arms race. The problem is that you can't afford to let a competitor/foreign country own this technology. You must invest. The problems have to be figured out later.

kjkjadksj2• 8 months ago

Its not even about reducing headcount but offshoring too. I see that in my industry. Major orgs are all hiring in bangalore now. Life is good if you are in bangalore or hyderabad. Ai is seen as something to smooth over the previous language/skill/culture gaps that may have been plugging the dam so far.

WhyOhWhyQ• 8 months ago

The narrative going around in AI skeptic circles at least is that these layoffs are not tied to AI but to covid-era over-hiring, and that companies have an incentive to blame the layoffs on AI rather than admit underperformance/bad planning.

popcorncowboy• 8 months ago

Tax AI.

cm2187• 8 months ago

The economy has never worked like that. When you increase productivity, you create wealth and you enable other industries to appear. We have gone through numbers of those cycles. The industrialisation of agriculture, then machines in manufacturing, then introduction of computers (think of all the secretarial jobs, computers - as in engineers making calculations, accountants that have disappeared), then outsourcing of the industry to China. But somehow unemployment is low in most western countries. So what makes you think this time it will be different?

Pingk• 8 months ago

Western employment has survived because automating and outsourcing labour has pushed people to take up knowledge/services work.

If AI is somewhat successful at automating knowledge work, what feasible job could exist that doesn't require your mind or body?

Services like healthcare and plumbing aren't going away of course, but there's not enough demand to support an economy on those jobs.

In my opinion the whole economy needs a rethink regarding what our actual goals are as a society, and maybe AI will force that conversation to happen, but I'm sceptical if it'll be a well-considered consensus.

croes2• 8 months ago

AI and robots have the same problem.

If they work they will ruin a any society where income is based on labor.

So AI either destroys capitalism or society.

pessimizer• 8 months ago

Who is going to be buying the products and services if no-one has money to throw around?

Nobody. It's a joke. The reason China could do this is because they were selling to the world. Our idiot elites don't even believe that it's bad to run massive trade deficits every year, while watching the gradually increasing strength of every exporting country.

A great movie about this that I watched recently is Der VW-Komplex (https://www.youtube.com/watch?v=pBRIzhbTFUA), where I learned that in the late 80s fully 10% of Volkswagen's output was purchased by Volkswagen's employees. Bitomsky was already asking "what will the robots buy?" And watching a management that seemed to think of human needs and desires as an annoying complication of machine and product design.

The problem becomes that eventually all these people who are laid off are not going to find new roles.

I will note again that middle class people are completely unsympathetic to this problem until it affects them. They're like "Just learn Spanish!" "Just become programmers!" i.e. just be like me, who planned ahead and was quiet in class and is exactly where I belong. Complete idiot answers given by somebody who isn't worried about their own position in society at all.

Almost every independent retail business closed down because the US wouldn't tax imports or Amazon purchases, every small town in the US was wrecked and every Front Street filled with boarded up storefronts or rotating unprofitable boutiques run by the wives and children of rich men, and the upper middle class just laughed, looked down their noses and complained about their taxes.

I suggest gig work. The people who own the machines will send you tips through your phone if you pick up the leaves and trash around the gates of their homes.

wongarsu• 8 months ago

In the magical fairy land of Economics 101 a lower headcount reduces costs, and because both their and their competitors' costs are reduced market forces drive the price of their products down by an equivalent amount. That leaves people with more spending power. Which leads to either more consumption of existing products and services, or creation of new types of products or services. Either way making those will employ additional people

Of course in reality this does not work like that for large parts of the economy. But even if it was true companies woulnd't gain anything from AI beyond the ability to be briefly more competitive by being ahead of the curve in AI adoption

ceroxylon• 8 months ago

The top 10% is already propping up half of consumer spending[0]. People will have money to throw around, but the amount of people doing so is shrinking until we figure out a way to balance the income disparity and reverse that trend.

[0]https://www.morningbrew.com/stories/wealthy-americans-accoun...

lumost• 8 months ago

Many industries are stuck in either prisoner dilemmas, all payer auctions, or other game theoretic environments that make it impossible to pull back spend.

If the army was 1000x more “productive” on a dollar basis- would you cut back military spending? No, because everyone else will be 1000x as productive soon. Spend may even rise with efficiency gains unlocking new capabilities/risks.

guytv• 8 months ago

Every cent poured into this boom is building Google’s future competitors.

Of course he’s nervous - what else would you expect him to say?

mtrovo• 8 months ago

Assuming this is irrational and must come back to reality at some point, I'm not convinced this is connected to the common man economy as other bubbles in the past were. This round of investment is mostly being funded by exuberant cash flow accumulated over the years that was otherwise used as stock buybacks by a small number of stocks and some private credit deals that are not that accessible to the general public. This is looking more like a crypto crash kind of effect rather than a 2008 one.

somewhereoutth2• 8 months ago

However 'normal people' buying into the stock market via 401ks or otherwise likely (and arguably sensibly) will be in index funds, that of course are exposed to the bubble via (grossly?) inflated tech stocks. Effectively their current pension/savings contributions are being clipped by whatever the delta is between now and post bubble. Time in the market and all that, but still it might be a hefty haircut.

beanjuiceII• 8 months ago

will gamers be eatin' good?

s1mplicissimus2• 8 months ago

i hope so, its been a while

HardwareLust• 8 months ago

...says the man guilty of said irrationality.

outside1234• 8 months ago

About twice a day I think about how I am basically reinforcement learning my replacement. Thank goodness I am 53.

avadodin• 8 months ago

People predicting a crash and pulling back due to a bubble indicates the beginning of the bubble.

If I were the gambling man, I would grab my PETS.AI stock and sit tight.

aurareturn21• 8 months ago

I'm inclined to agree.

I don't think we're anywhere near the 2000 peak.

At least let OpenAI IPO, and then a few of the LLM wrapper companies to IPO with a ton of hype first.

We're calling the top without an OpenAI IPO first? That seems crazy to me.

bryanrasmussen• 8 months ago

isn't that basically the definition of a bubble, a boom with elements of irrationality?

willis9364• 8 months ago

Forget the talk about bubbles and corrections. Can someone explain to me the rationale of investing in a product, marketing it, seeing that it drives consumers away from your product and erodes trust, and then you continue to invest at an accelerating rate? Good business would have driven us very far away from this point years ago. This is very deep in the "because we can" territory. It's not FOMO.

voidfunc• 8 months ago

Because the investor class is drunk on their own wine.

Ancapistani5• 8 months ago

Can someone explain to me the rationale of investing in a product, marketing it, seeing that it drives consumers away from your product and erodes trust, and then you continue to invest at an accelerating rate?

Sure!

Google began investing heavily in AI (LLMs, actually) to catch up to the other frontier labs, which had already produced a product that was going to eviscerate Google Search (and therefore, Google ad revenue). They recognized this, and set about becoming a leader in the emerging field.

Is it not better to be a leader in the nascent industry that is poised to kill your profitability?

This is the same approach that Google took with smartphones. They saw Apple as a threat not because they had a product that was directly competing, but because they recognized that allowing Apple to monopolize mobile computing would put them in a position to take Google’s ad revenue — or allow them to extract rent in the form of payments to ensure Apple didn’t direct their users to a competing service. Android was not initially intended to be a revenue source, at least not most importantly. It was intended to limit the problem that Apple represented. Later, once Google had a large part of the market, they found ways to monetize the platform via both their ad network and an app store.

AI is no different. If Google does nothing, they lose. If they catch up and take the lead, they limit the size of the future threat and if all goes well, will be able to monetize their newfound market share down the road - but monetization is a problem for future Google. Today’s Google’s problem is getting the market share.

m463• 8 months ago

I like the duck duck go AI summaries...

schnitzelstoat2• 8 months ago

Yeah, like imagine if the LLM's don't advance that much, the agentic stuff doesn't really take off etc.

Even in this conservative case, ChatGPT could seriously erode Google Search revenues. That alone would be a massive disruption and Google wants to ensure they end up as the Google in that scenario and not the Lycos, AltaVista, AskJeeves etc. etc.

jcgrillo11• 8 months ago

frontier labs, which had already produced a product that was going to eviscerate Google Search (and therefore, Google ad revenue)
If Google does nothing, they lose.

Is any of that actually true though? In retrospect, had google done nothing their search product would still work. Currently it's pretty profoundly broken, at least from a functional standpoint--no idea how that impacts revenue if at all. To me it seems like google in particular took the bait and went after a paper tiger, and in doing so damaged their product.

rifty• 8 months ago

This has been how I've framed a lot of the expenditure despite lack of immediate substantial new revenues. Everyone including Google is driven to protecting current revenues from prospective disruption. But the vulnerability AI created for Google is to other companies worth positioning themselves to take advantage of if Google falls behind and loses chunks of marketshare.

willis9364• 8 months ago

This makes sense, but if the goal was to avoid business failure from disruption / losing customers, then why would the companies not be behaving in ways that maximize their customers? Intermediate value theorem applies here. There is no number of net negative customer base that can be spun in a good way. There is no path to recouping their lost customers. These fundamentals must be seen by the decision makers.

i386• 8 months ago

This is very revisionist. While they have been catching up quickly there was no master 4D chess strategy here. Google was incredibly late to this game - Sergey had to come back from retirement because most of the research team had a Sarah Connor complex and couldn’t ship. The saving grace is that AdWords picked up the tab again and founders shook the place up when it became clear the golden goose was being cooked.

Octoth0rpe• 8 months ago

Can someone explain to me the rationale of investing in a product, marketing it, seeing that it drives consumers away from your product and erodes trust, and then you continue to invest at an accelerating rate?

I'll take a stab at this. It's not 100% clear to me which product you're referring to, so I'll try to answer as if the product is something that already has customers, and the maker of the product is shoving AI into it. The rationale is that the group you're trying to convince that you're doing a good job is your shareholders or investors, not your actual customers. You can justify some limited customer attrition by noting that your competitors are doing the same thing, and that maybe if you shove the _right_ AI features into the product, you'll win those customers back.

I'm not saying it's a _good_ rationale, but that seems to be what's at play in many cases.

strange_quark• 8 months ago

Correct. More succinctly, this what happens when the share price becomes the product.

globalnode• 8 months ago

i like this reason, and the 'dont do nothing' sibling comment. both make sense to me.

willis9364• 8 months ago

This is what I feel is the case. That is putting a lot of customers on the table. Valve / GabeN get it. In 2025 they make a marketing point about how their hardware runs arch and you can put whatever software you want on it. Valve is positioned to eat Microsoft's and Google's lunch if they're not careful. While chasing the fear of losing customers they are actively losing customers.

rockemsockem7• 8 months ago

If you're talking about all of AI with your statement I think you may need to reconcile that opinion with the fact that chat GPT alone has almost 1 billion daily users. Clearly lots of people derive enormous value from AI.

If there's something more specific and different you were referring to I'd love to hear what it is.

eCa• 8 months ago

I’m probably an outlier: I use chatgpt/gemini for specific purposes, but ai summaries on eg google search or youtube gives me negative value (I never read them and they take up space).

kergonath• 8 months ago

Clearly lots of people derive enormous value from AI.

I don’t really see this. Lots of people like freebies, but the value aspect is less clear. AFAIK, none of these chatbots are profitable. You would not see nearly as many users if they had to actually pay for the thing.

kjkjadksj2• 8 months ago

The golden goose is not you or I. It is our boss who will buy this junk for us and expect us to integrate it into our workflows or be shown the door. It is the broccoli headed kids who don’t even have to crack open cliffnotes to shirk their academic responsibilities anymore. It is universities that are trying to “keep up” by forcing an AI prompting class as a prerequisite for most majors. These groups represent a lot of people and a lot of money.

It doesn’t have to work. It just has to sell and become entrenched enough. And by all metrics that is what is happening. A self fulfilling prophecy, no different than your org buying redundant enterprise software from all the major vendors today.

isoprophlex2• 8 months ago

broccoli headed kids

now that there's a prime quality rare insult

anyway i totally agree with your reasoning. one might as well ask "why is MS Teams so bad? it's bloated, slow, buggy, nasty to use from a UX pov... yet it's everywhere"

this shitware -- ms teams, llm slopguns, whatever -- never had to work, they just have to sell.

macNchz• 8 months ago

There are at least a few stories from the 90s where companies that readily could have invested in “getting online” instead decided that it would only harm their existing business. The hype at the time was extraordinary to be sure, but after the dust settled the internet did change the shape of the world.

Nobody can really know what things will look like in 10 years, but if you have the capital to deploy and any conviction at all that this might be a sea-change moment, it seems foolish to not pursue it.

boxerab2• 8 months ago

Pascal's Wager for tech.

Frieren• 8 months ago

Nobody can really know what things will look like in 10 years,

100% true. Do not invest trillions on such an uncertainty in the long term is always a bad investment.

but if you have the capital to deploy and any conviction at all that this might be a sea-change moment, it seems foolish to not pursue it.

Gamblers argument: "But what if this is the winning ticket?"

shalmanese2• 8 months ago

What evidence do you have that it's driving consumers away from the product? The people who bother to say anything on the internet are the extreme dedicated minority and are often not representative of a silent majority. Unless you have access to analytics, you can't make this inference.

frm887• 8 months ago

https://www.pewresearch.org/science/2025/09/17/how-americans...

That's only one article and with only a small focus: Americans only.

U.S. adults are generally pessimistic about AI’s effect on people’s ability to think creatively and form meaningful relationships: 53% say AI will worsen people’s ability to think creatively, compared with 16% who say it will improve this....

Regarding your skepticism about the loss of trust: https://publicpolicy.cornell.edu/masters-blog/what-americans...

One of the most consistent themes in the research is fear of misinformation. In an era where AI-generated content can be nearly indistinguishable from authentic material, the potential for deception is enormous, and people know it. A full 76% of Americans say they are concerned about AI tools producing false or misleading information.

raincole2• 8 months ago

I don't know which product you're even talking about.

If you mean AI Overview, you really need to cite the source of this claim:

seeing that it drives consumers away from your product

Because every single source I can find claims that Google search grew in 2024[0]. HN is not a good focus group for a product that targets billions of people.

[0]: For example https://www.seroundtable.com/google-search-growth-39040.html but feel free to provide a more credible source that claims the opposite.

devsda• 8 months ago

One can also interpret the growth as a failure from product p.o.v though it drives views.

With AI summaries being hit or miss, we may say users now need to do 20% more searches to find what they are looking for.

Numbers aren't always a good proxy for customer satisfaction.

tammer• 8 months ago

While you & I may find shoehorning LLMs into every nook & cranny distasteful, I worry Marl may think differently

https://open.substack.com/pub/nothinghuman/p/the-tyranny-of-...

elif• 8 months ago

People are scared of change which threatens their occupation, hobbies, and sense of human purpose.

Even if that change is wildly profitable for megacorps in the long run.

tdeck2• 8 months ago

Can someone explain to me the rationale of investing in a product, marketing it, seeing that it drives consumers away from your product and erodes trust, and then you continue to invest at an accelerating rate?

Hey now, Google Plus was more than a decade ago. I didn't like it either, but maybe it's time to move on? I think they learned their lesson.

philipallstar5• 8 months ago

Stadia was pretty recent, though.

moi2388• 8 months ago

What I think:

- get customers used to using AI by “gently” cough nudging them towards this in all products.

- get experience and data for your LLMs and AI dev teams regarding what works and what doesn’t

- Bet on AI becoming good enough that people will use this as their entry to the Web, Media and software

- become the largest player of these AI apps, so that you can inject ads again

brainwad• 8 months ago

Eastman Kodak tried your implied proposed strategy, of ignoring technological developments that undermine their core product. It didn't go so well. Naturally technology companies have learned from this and other past mistakes.

DeathArrow5• 8 months ago

Kodak developed a prototype digital camera in 1975. In 1990 they started selling digital cameras. They manufactured their own sensors.

How did they ignore technological advancements?

pfannkuchen2• 8 months ago

I’m not sure this is the whole story.

Kodak operated in a region that was a manufacturing and technology hub until the mid 1900s. The region started to decline significantly in the 1960s. By the 1990s it was basically a ruins compared to the 1950s.

So by the time Kodak made this strategic mistake, I imagine they already would have had a hard time recruiting talent into that obviously dying region for a decade or so, and many people who were there already were actively leaving the region by that time.

I suspect that in the counterfactual where the region stayed as it was in the 1950s in terms of economic prosperity, Kodak probably could have successfully played catch up once it was clear where the game was going.

So yes they made a strategic mistake, but they did so while simultaneously “brain drain” bleeding out due to other unrelated factors.

terminalshort• 8 months ago

seeing that it drives consumers away from your product and erodes trust

Where is your evidence for this part of your claim?

satvikpendem5• 8 months ago

If you don't cannibalize yourself, someone else will.

- Steve Jobs

marcosdumay9• 8 months ago

Eh... That's only worth anything if the new version of "you" is better than the original.

I'm certain Jobs thought there's no need to point that detail, because nobody still living¹ would be dumb enough not to understand it implicitly. Too bad that we have evidence otherwise.

1 - At the worst case, selection bias should make it true.

zeruch• 8 months ago

That language feels like it came from a fever dream of Alan Greenspan.

rockemsockem7• 8 months ago

There's a weird gleefulness about AI being a bubble that'll pop any day now both in this thread and in the world at large. It's kinda weird and I find most of the predictions about the result of such a bubble popping to sound highly exaggerated.

stingraycharles• 8 months ago

I think it’s because a lot of people feel like AI is being pushed from the top a lot with all kinds of spectacular claims / expectations, while it’s actually still difficult to apply to a lot of problems.

The AI bubble bursting would be somewhat of an “I told you so!” moment for a lot of people.

And there’s also a large group that’s genuinely afraid to lose their job because of it, so for that group it’s very much understandable.

Whether or not the predictions of the bubble popping are exaggerated or not, I cannot tell; it feels like most companies investing in AI know that the expectations are huge and potentially unrealistic (AGI/ASI in the next few years), but they have money to burn and the cost of missing out on this opportunity would be tremendous. I know that this is the position that both Meta and Google shared with their investors.

So it all seems to be a very well calculated risk.

rockemsockem7• 8 months ago

I do agree that there seems to be a bubble, imo it's largely in the application space with the likes of cursor being valued at $23B+, but I don't see GPU purchases going down anytime soon and I don't even see usage going down. If these overhyped apps fail then it seems like something else will take their place. The power that LLMs provide is just too promising. It seems like those predicting things like a global economic crisis or the new big model-providers like OpenAI going to 0 just think that AI is like NFTs with no real intrinsic value.

5d41402abc4b• 8 months ago

There's a weird gleefulness about AI being a bubble that'll pop any day now both in this thread and in the world at large

All i want is some cheap RAM for my PC.

lizknope6• 8 months ago

I work for a company making AI related products. I've asked multiple Executive VP's if we are in an AI bubble. They all dance around the question.

I started working in 1997 and saw the dot com bubble and collapse. If you had asked me in 1999 I thought it would go on forever. I used to get 5 recruiter calls a day. In 2001 I got zero recruiter calls the entire year and it took me 10 months to find a new job.

I saw people at Cisco that had exercised stock options and held on to it at $80 and then it dropped to $20 and they had huge AMT tax bills that they couldn't pay even if they sold everything they had including their house.

My warnings of the AI bubble popping are not just an "I told you so" but also a warning to people to diversify out of their company stock and diversify in general.

captainkrtek3• 8 months ago

It feels like AI investment and product focus is now a religion or cult. You have to be so fully invested, blind from any data, and throwing billions of dollars at it, otherwise you’re not “in”.

Meanwhile, no one in my sphere of tech and non tech people is wanting “more AI” and sees the pros/cons of chatgpt, using it as kinda fancy google search..

Where’s the “killer app” that’ll generate literally trillions in revenue to offset the costs? How do the economics work, especially when GPUs are depreciating?

jennyholzer4• 8 months ago

the killer app is "kinda fancy google search"

now go produce 300% as much as you did last year, slave

captainkrtek3• 8 months ago

It feels as if every CEO used ChatGPT once and said “wow this is incredible, pivot hard to make our product use AI”, and that’s about all the thought has matured to.

an0malous• 8 months ago

Maybe even moreso VCs who advised their startups to become AI native products even if customers weren’t asking for or using those features.

jcgrillo11• 8 months ago

The problem is entitled, lazy, sociopathic bastards who think everyone else is an idiot who should be killed and replaced with a robot. They're seeing a thing which confirms these biases, and reacting predictably. Unfortunately people like this are found in higher concentrations the further up the class hierarchy you go.

LarsDu88• 8 months ago

Investor in leading frontier LLM that automates software production says stuff to try to reduce funding for LLM startups...

donperignon• 8 months ago

Google cannot ignore LLMs, I don’t remember last time I used Google to search instead of using ChatGPT.maybe a combination of factors, one being Google destroying their own search engine in order to milk advertisers money, the other the LLMs being so good at synthesizing information. Anyways either they improve or surf the AI wave, otherwise they are doomed

1970-01-012• 8 months ago

Why? Google has killed so many, many other working and successful ideas. Why are LLMs to be considered safe from the graveyard? I bet they can ignore them just as soon as they become yesterday's technology.

zerosizedweasle3• 8 months ago

I don't think people in tech and AI have any idea, just how viciously politics is going to turn on them in 2026 going forward. AI is going to be politically orphaned.

fragmede2• 8 months ago

I mean, I want to walk away from it all and go live in the woods too, but AI creates newspaper articles and videos, so I'm not sure how it's going to become an orphan except to become boring and commonplace eg the Xerox copy machine became a boring ole business. One that's gotten fucked by private equity and greed and capitalism. Hey you want it tomorrow on special paper that we already have? That'll be a handling fee of $29.99 plus $3.99 per page to load that paper and hit print tomorrow. Extra special rush fee if it's in the morning if I'm already at work fee of $59.99.

zerosizedweasle3• 8 months ago

Don't have to take my word for it. https://www.bloomberg.com/news/audio/2025-11-19/odd-lots-the... This is going to a backlash like no other. Better prepare.

https://www.bloomberg.com/news/articles/2025-11-19/how-the-p...

A tsunami of rage.

p1dda• 8 months ago

Oh, an article from the BBC, I won't read it because they are liars.

Ylpertnodi• 8 months ago

And paedo's.

(Won't someone think of the children).

v3xro• 8 months ago

Just like the digits of PI...

jacquesm2• 8 months ago

No shit. But it works, if you're stupid.

If you're not then you will end up frustrated because it will be as if you have an over-eager trainee that is only slightly less dumb than a box of rocks when it comes to actual thinking but that has near perfect recall about a massive amount of information. A sort of idiot-savant.

I gave it a try for a practical problem to see how long it would take to converge on a solution. It did not, because its reasoning powers simply are not that strong. But it gave me an endless runaround about solutions that this time really would work and never mind all the previous times we did the same thing and it did not work. Between the over enthusiastic tone, the ridiculous confidence level and the jumping-to-conclusions mode that you just simply can't switch off I found the whole exercise more than a little bit frustrating. It never, for even a second expressed any doubt. It never warned when what it responded with was at best extremely low confidence and possibly very wrong (or even dangerous). And this was for a problem where I already knew the solution, it was in some ways entertaining to see the AI blunder about while in full possession of all of the information to see the solution.

'Great, that narrows it down'

'Now I see the problem'

'Got it'

'Ah - perfect'

etc, etc...

If your job involves actual thinking I don't believe you are in danger just yet.

carefulfungi2• 8 months ago

Having experienced plenty of this but also having regularly experienced Claude Code writing correct, useful programs - it is reasonably possible that coding agents are the beginning of a disruption in how we code. They'll continue to improve (and we'll continue to surround them with tools and languages that feed that improvement cycle).

Combining early, faulty "worse is better" technology with a change in cost structure (tokens vs. programers) and capability (programs in minutes not days) often wins. Even when it sucks at first.

jacquesm2• 8 months ago

Yes, but who will write the code that trains the AI on future stuff? Someone somewhere will have to write original code, and without writing a lot of code that new original code will be of lesser quality than what went before. Once that cycle starts there will be less money to be made in programming, so fewer high grade programmers (and we already have too little of those as it is).

lateforwork• 8 months ago

Says the CEO of the company that is most threatened by AI chat.

notepad0x90• 8 months ago

They're betting on squeezing more dollars out of the ordinary person's wallet when B2B should have been their main focus. They lay off because of interest rates but gamble like there is still ZIRP.

Their anti-social tendency is the core problem, remember when they were laying off everyone in tech just because it was a trend? here too, they want to reduce head count instead of increase the value of their products and services to generate more revenue. AI has lots of value for sure. Monetizing that without increasing head count would have been sensible. Instead of getting rid of people, they could focus on freeing up the time of existing people so they can do more work and generate value/wealth for the company. Of course, companies like Google are doing exactly what I'm suggesting to the most part (that I know of), but the vast majority on the ai bandwagon are just there to see if they can make more revenue by having less people.

I don't doubt some big companies in this space will fail, but will that trigger a panic/sell-off? And can the US, after cutting off its allies and alienating the whole world recover? What are the social and geopolitical implications of not recovering?

1970-01-012• 8 months ago

Nothing would make me happier than seeing all this AI investing go bust, followed by no bailout whatsoever. I don't want to watch the world burn, but I do wish for a cleansing fire to reshape the landscape.

strikefo• 8 months ago

Man who helped inspire irrational people says people are irrational

Google boss says AI investment boom has 'elements of irrationality'

Related Stories