I like it how morningstar provides a graph of the stock price and morningstar's target price for the past few years, and the target price always closely follows the stock price, even as the stock price fluctuates wildly. All that genius analysis somehow concludes that the company is worth exactly what the market says it is, right up to the point that it doubles/halves in price.

> By the time you have read this article, the professionals and their computers will have digested that material a thousand times over and have priced it in.

I think you overestimate traders. What we call smart money is very often really, really dumb from a macro perspective. Professional traders believe hype and follow trends. There is still at least 2 thesis playing out at the moment for the AI trade, and you don’t need to be a professional trader to take part: one is the AI impact on saas (the market has been very bearish on SaaS companies, and still hasn’t corrected meaningfully), and the ai infrastructure (hardware companies + hyperscalers)

I wonder with the spacex thing if this should be revised. “Smart money” have figured out what you are doing and they are at the gates.

I think there is now so much passive investing that wall street and tech bros are gaming it, and it's no longer based in reality (fundamentals). I mean Elon's deal to get SPCX short listed with NASDAQ was directly targeted at 401(k)s.

Not sure how it's all going to play out, but this ginormous increase in passive investing over the past decade or so, mainly in S&P 500, seems like a vulnerability. Small cap might be a better (non-sexy) target long term.

> As a retail investor, you should buy an index fund and then forget about it.

That definitely was true.

I am unsure it is still true. Index funds have taken so much of the trade volume the are becoming momentum strategies

So long as you are happy following the market wherever it goes, and if the recent past is a guide then up is the direction, then yes.

But given the nepotism and corruption in the highest reaches of USAnian society (e.g. Trump's crypto currency scams and the blatant inside dealing and rule ignoring of the Space X float) the future looks much less certain than the past

That's the financial stakes here. That's why it's all or nothing. You're spending on a level that is only justified by the bonafide machine god being ushered into existence, not productivity or coding tools (and on relatively short time horizon). So if this doesn't change the near term trajectory of humanity to a parabolic move upward there is going to be a lot of economic pain. It's not just the spending, it's that the expectations for the returns to justify them are in a relatively short period of time.

What’s weird is how emotional people get on this. I told publicly (because I was asked, not out of an obligation to have an opinion), that the prices we pay for LLMs are likely to go up because that’s what happens when the ratio of operational assets to foreign capital drops due to the capital having been turned into heat rather than operational assets. The grief I got from people, dear Lord…

I feel obliged to step in here to say there is a grey area where these are useful tools for some applications but not on the path to AGI.

Unfortunately the hype machine has far outstripped their capabilities so far, and the amount of money spent doesn’t look like being recouped, so somebody is going to lose money, as people lost money on the overpriced spacex ipo (overpriced because of AI).

> The dotcom bust took a decade to grow and collapse

I'm inclined to think the collapse has already started but nobody wants to see it yet.

In the last few weeks SP500 is down, kospi is down, nikkei is down, US inflation is still high and growth is softer than expected. Hyper inflated stocks (Tesla, Nvidia, SpaceX) are deflating. US bonds are at a 20 year high.

Interesting times ahead.

> there is a constant pressure for everyone to have an opinion on how this is going to end while hoping it ends tomorrow so they can be vindicated

In what bubble does this pressure exist?

How do you stay out of it all, if at all?

This is the way. You can jump in and out at any time and let everybody else wear the pain of working it out.

Instead of starting with the top 500 American stocks, and then adding international and small caps, you can start with a global all-market stock index--and then remove AI from that.

>I can time a bubble

What do you mean? Selling everything before this bubble pops?

> There's no spare money to extract from the airline industry but it's still very useful. The same could be true for AI in the long term.

Of course it could, let’s start with making the models open weight and entirely open source. Fully publicly owned and not shaped to maximise profits for the shareholders.

Oh wait, Scam Altman entered the chat and turned a non-profit lab into the next biggest IPO vehicle the world has ever seen.

OpenAI launched as a nonprofit research institution. Its announcement explicitly said it wanted to pursue AI “unconstrained by a need to generate financial return,” produce value for everyone rather than shareholders, publish research and share patents broadly.

in the case of airplanes the only thing thats the private market is the planes and the ticket, the entire system of airports, safety, navigation is state subsidized and when the market fails it gets bailed out. the oil is subsidized by constant warfare. it's just an illusion for reganomics so a few rich ppl can make a buck off of a public utility.

Yep, and similar to airlines, the real money is in suppliers

But who needs SOTA models, really? It was necessary 10 months ago, but now?

There is literally no moat…

> every technical profession getting disrupted to oblivion

Where is this disruption? The longer we go, the more people report that the supposed net-gain of easily 100s of percents is not visible.

I do strongly believe "It's just a tool" - A powerful one, but not one like the invention of the steam machine.

Tell me you weren't around during the dot com boom without etc, etc.

The benefit is neither here nor there - it's whether the borrowed money will ever be repaid on the lenders' terms.

I don't doubt that AI has benefits, but I do doubt that the major AI providers will be able to make back their investments. They've spent trillions of dollars, and yet they've barely created a moat. We're seeing open weight models being released that are only months behind them, that can run for way cheaper. This makes the future of OpenAI and Anthropic suddenly look rather bleak.

A simple analogy: If you have kids, you love them and want to give them whatever makes them happy. But on the other hand, you run a household, you pay for bills, healthcare, heating, education, and heavy overhead. You must keep things under control. You don't hand a blank check to an immature child who doesn't even know how to manage that money yet, right? So, even if your child wants to push forward at an extraordinary pace, you have to keep a level head, manage spending, and ensure everything doesn't end in ruin.

That’s the point: making growth sustainable over time.

Not seeing any significant disruption showing up in revenue etc from inside the industry, there’s growing skepticism about these tools and the claims made for them. They can be useful but are not world changing or actually replacing jobs.

We’ll see how they develop but so far they are not capable of operating independently.

> How can people in Hacker News still doubt AI's benefit

The internet and railroads were highly beneficial, still crashed the economy.

I know many companies are spending quite a bit of money, I don’t know if it bears out that the increased spend has resulted in increased profits, even if there has been some increase in productivity. I think this is the tough situation many orgs are facing right now, drastic adoption without material economic gains.

I use AI a lot but my final output isn’t drastically different

Writing a lot of code doesn’t mean much when the moat was never “writing a lot of code”

disruption != benefit.

I was called quite disruptive in class when I was young. I'm sure my teachers never meant it as a compliment.

How can people not trust in anecdotes and vibes while avoiding studies, do you mean?

Isn't that the point here? That everyone thinks massive disruption is happening and everyone is 100xing their productivity, but it's not actually showing up in the numbers anywhere?

> How can people in Hacker News still doubt AI's benefit

Because what many of us are seeing is meaningless “productivity” improvements.

If at the end of the day you don’t have more users paying for your product or the same users and paying more, then what’s the point of being more productive?

Stop projecting.

It’s just coding. It’s not every technical profession at all.

People aren't doubting the benefit.

Lenders are doubting their return. People's benefits have nothing to do with it. The benefits would go in a minute, if doing so yielded a better return.

People are being a little unfair to you here, I think. I think there no chance of AI not being by far the biggest technological shift in our lifetimes. BUT that doesn’t mean any of the current companies leading the charge have sustainable business models, or that the current financing around it makes sense. Other commenters have pointed out both the railroads and dot-com boom as analogies, which holds up well. Generative AI is here to stay, but that in no way means that Anthropic and OpenAI are

The Internet was hugely disruptive. The dot-com bubble burst and tech stocks flatlined for years afterward.

Don’t they all have mostly the same data, with a small / negligible delta between each other?

I would be delighted to see a glut of compute. I'm not optimistic, though.

The payback time for a GPU running 24/7 inference is ridiculously short though. As little as 6 months according to some calculations. Most of that 5 year lifespan it will be earning well in excess of its replacement cost.

Yep, a friend recently told me that he remembers working somewhere that gave away old empty server racks - they were unnecessary, and expensive to store, so why keep them?

We are in odd times however - I for one am sitting on paper profits on the consumer gpu I bought 2 years ago. If anyone goes down before the supply side is fixed - the first to fall will probably be able to liquidate their gpus at a profit.

And I'm sure Anthropic would be immensely profitable if they stopped investing their inference profits into training newer models.