- cross-posted to:
- usa@lemmy.ml
- cross-posted to:
- usa@lemmy.ml
cross-posted from: https://lemmy.ml/post/54396848
If you want to know whether artificial intelligence is a gigantic economic bubble, don’t just take pundits’ word for it. Major investors are now moving their money to try to protect themselves from the AI bubble popping.
For an industry that we’re told is central to our collective future, the artificial intelligence (AI) industry increasingly seems to be built on a combination of artificially inflated hopes and bad accounting.
The industry’s critics have been raising concerns about its finances for a while: the fact that most of its flagship firms are grossly unprofitable, that they’ve had to jack up their prices to try break even (leading their business customers to pump the brakes on using their products), or that many of the eye-popping investment announcements that are meant to show demand for AI is strong have actually been circular financing — meaning different AI firms cycling money to and from each other.
But none of it has seemed to slow the industry’s boom or the relentless hype machine behind it. Until now, anyway. It used to be that you mostly heard concerns about the industry’s underlying economics in newspapers, blogs, social media posts, and podcasts, and that those concerns went completely unreflected in the markets. But these concerns seem now to have finally bled over into investors’ thinking.
https://isaiprofitable.com/
Even that chart is unintentionally misleadingly optimistic for AI, since it’s showing nearly a trillion dollars in revenue. Nearly all of that, however, is from hardware suppliers like Nvidia, Micron and AMD. That number should be revenue for the final AI services only and hardware suppliers should be a different category.
You can’t claim digging for gold in a gold rush is a profitable profession by counting the money you pay for a shovel as income.
Looks like selling razor blades is profitable while the others are still trying to improve their brand of razor.
I think with that metaphor it’s selling steel, and what everyone’s trying to desperately forget is that revenue is peaking and the steel they spent so much buying is, by design, disposable.