The conversation in a lot of wealth management offices has shifted dramatically in the last few month from “how do I get in on this AI thing?” to “how do I protect my assets when this AI stuff blows up.”
There’s little question now if this will all implode, just when and who’s going to lose their shirt and be left without chairs when the music stops.
What’s playing out now is the scene from The Big Short where the banks wouldn’t mark down the value of bonds until they secured a short position. Once the big money has their helmets on it will stop providing fuel for the bubble and then look out below!
Well, OpenAI and Anthropic are racing to IPO for a reason.
They will need every bagholder they can get their hands on.
Due to the fact that we’ve already done this before (Enron, Global Crossing) -
I’m willing to bet that there are contracts in place ALREADY, that define what happens in the event of a default.
In particular, I’ll bet that the buildings, the GPUs, the patents, etc…
All of these have probably been accounted for.
I worked at a data center that closed during the WorldCom era, and when they put the padlocks on the door, there were still websites “hosted” from the building.
I don’t know if they killed the power or what. I’d cleared out my desk long before they locked it all up. I wouldn’t be surprised to learn that these websites couldn’t get their own servers, since ownership was tied up in the courts.
In the Bay Area during that time, there were row upon row of empty office buildings.
All depends on who is holding the bag, and how big the bag is.
The banks aren't has exposed this time, as in 2008, most of it is tied up in private credit, its more akin to the fiber buildout in the 90s.
A wealth transfer from the working class to a handful of billionaires bigger than any the world has ever seen (and the world has seen a lot of wealth transfer from the working class to billionaires).
> [Ratio of per-token cost to subscription cost] means Anthropic is subsidizing their enterprise customers by up to 40 times, and OpenAI up to 70 times
Actually, they could be subsidizing by more (if they are taking a loss on API), or not at all (if they are soaking API customers by a massive margin).
Separately, these subscriptions get sold to large groups with varying usage, so it's crazy to model assuming every subscription is maxed out. Banks, gyms, and many other businesses work this way, offering consumers flexible access to services that they will realistically use in bursts. It's not always worth the complexity to prevent overuse by a small minority. You can feel like this kind of business model isn't as transparent, but it's silly to pretend it can't work.
> OpenAI spent 44% of their revenue [$5.3B] on sales and marketing! The hype needed to keep the AI bubble inflated is incredibly expensive.
Over that same period (2025), OpenAI added $10B in realized revenue and $14B in run-rate. Sounds like they're getting >2X return within 12 months of those go-to-market dollars. Compare that to like, any other business.
> Thus in recent weeks the idea that Generative AI (LLMs for short) is too expensive has been all over mainstream business media.
Would it be smarter for these companies never to test customers' price tolerance? The quotes following this make it seem like the companies are getting important information about the nature of that price tolerance, and preparing to react. This is the work markets do on both sides to understand the value of a new product.
There are lots of good arguments about AI overinflation, but in order for them to be useful, they have to be rigorous and targeted.
Vendor lock-in is the current goal. Consumer prices are a drop in the bucket comparatively.
Cheap, but gave them a massive user base they can claim is using AI
Lump of labour fallacy spotted.
"a return on these invetment"
It does remind me of the time a chef told me when he puts lemon juice over a dish, he would intentionally not remove any seeds that went on it because it was a signal of quality. I wonder if future slop chefs will intentionally place seeds on dishes that came from a box...
I'm actually curious if this works, haven't tried but I assume it would.
I didn't get the sense this was LLM-written, but typo-signalling is... I donno a bit weird. Firefox is underlining some of the words as I write. I'm leaving "donno" unchanged even though it's flagging it as a misspelling but I suppose I'd still opt to fix something like "maiinstream" even at the risk of potentially seeming more LLM-ish!
It seems like this ideology has been corrupted into a short-sighted "Establish a monopoly position as soon as possible at all costs, don't worry about tomorrow."
It's ironic because monopolizing a sector by investing heavily and suppressing profits used to be a long term move but it has become a short term move.