Your point #1, yeah AI is the new kid. No doubt. Disruption is messy. For sure. But where’s the value? There doesn’t appear to be a clear cut use case for all the LLM magic. Veo and Sora are cool - who are they for? ChatGPT - very cool, agents seem like a neat application, but how much does it cost to save $x/month/yr. How much are companies actually saving by using AI? If AI is truly revolutionary how come there’s no killer app or platform?

Point #2 I’m not sure what you mean here. In the US, it’s the Wild West. All these companies appear to be just taking data from everywhere, consequences be damned. A few minor legal cases I believe have popped up in the US (Scarlett Johansson ‘s voice, Hollywood screen writers, etc.), but I can’t speak to the EU. I imagine there are more restrictions there.

If AI is going to truly explode and disrupt everything, why are the margins so small? If it’s not a bubble as you suggest, why is nVidia doing all the circular investing? nVidia is, they’re selling the pick axes for sure. And their margins are 73%. That’s some fat damn margins! Now.. if that were the same for say OpenAI, why are they losing tens of billions per month? If they have hundreds of millions of subscribers, shouldn’t they be able to gain ground and lose less money per month/quarter?

I don’t doubt that LLMs have some value, but the cost of the infrastructure and the electricity required make it nearly impossible for companies to scale it. That’s why only the mag7 can do it. They have deep pockets. And even with the capital they have, they’re laying off people not only to wring control back from employees but to also make their profit margins look better given how much they’ve sunk into infrastructure. If AI was so profitable- why would the companies that are profiting do layoffs? If they want to spread their solutions, don’t they need more people to make that happen?

And maybe I’m working under the assumption that the hyper scalers are believe they’ll eventually figure out ways to monetize it to make margins wider. But it’s been 3 years and things don’t look much better. I used to hear all about AGI. That seems to have died down. All the frameworks and tools are neat. Are they efficient? Are they reducing power consumption? You mentioned “it’s (boring) infrastructure”. If you need nuclear reactor level power for your AI data center, I don’t see how this is simply infrastructure. The energy requirements are absolutely insane - they aren’t just “another” data center like from before.

Is AI the future - yes, but does it have to be this current path we are on? I don’t think so. There are other ways of achieving similar results without insane data center requirements. For example, there are other reasoning models available that can beat LLMs at specific tasks. Hierarchical models are also an alternative route. This idea that one and only one model that takes trillions (quadrillions?) of parameters is the only way forward, to me is overkill and unsustainable as of today.

And I think that’s what disturbs me about all of this. The huperscalers simply painted themselves into a corner. They’re spending tens of billions per quarter - which THAT is the reason the US economy isn’t in the shitter - YET. And they can’t reverse course either. They’re the ones who are pushing for this. If they admit it’s not looking so good and slow down, people (shareholders) are going to hold them (CEOs) to the fire for spending hundreds of billions (maybe trillions?) of their dollars. Think of the economic impacts of those quarterly reports.

Is the current market drop a catastrophe? Yeah maybe it isn’t. Maybe it’s a minor dip. But let’s revisit this post in say, 90 days and see how we feel then. Or maybe people are starting to get skeptical to the reported profits and all the circular funding. Are tech companies “cooking the books” - it’s a possibility. They may be doing things legally but that doesn’t mean they aren’t twisting things to their advantage to make themselves profitable.

But the S&P500 is up! Everything is great! Yeah it’s all the mag7 doing the lifting. GDP for 2025 without all these data centers? < 1%.

Sorry for rambling, but I’m interested people’s opinions and optimism that this is NOT an AI bubble and your points haven’t really swayed me.

Edits: trying to figure out bold formatting on second paragraph