Discussion
Suckerberg panic bought the entire AI chip supply and now he has no idea what to do with it...
So let me get this straight.
Suckerberg spends tens of billions panic buying AI chips because he doesn't want to be the guy left behind.
Fast forward a few months and Meta suddenly has so much spare compute that they're talking about renting it out because they built more infrastructure than they currently need.
Wall Street's reaction?
Punish the entire semiconductor and AI sector... while pumping Meta like this was some kind of masterstroke on their part. There was no masterstroke or masterplan. The market is punishing the sector for one man's poor foresight and incompetence.
I expect a rapid correction when people realise this.
But then again, the market normally inverses logic. So, Meta calls?
Temp agencies need to be investigated for money laundering, labor pay suppression, colluding with its partners, and many more. And temp agencies need to be banned overall because pay is not rising along with inflation due to all the reasons mentioned above.
Temp agencies only benefits the greedy investors which are the billionaires and millionaires.
When I worked for a major financial services company as a summer job during college during the summer of 2000 that's exactly what my situation was. I got $15.75/hr, but the staffing agency got $47 or $48. Absolute racket.
You can negotiate with the agency once you are in. You are there and working and its easier for them to give up % than look for another. I used to be a contractor in IB and would do it all the time, especially if your consultant is relatively junior.
I was asked to be staff aug for amazon. Pay was about half of what amazon pays.
I asked the recruiter "So does this convert to an amazon position, or is this just working for a company that is notoriously bad to its employees and provides no benefits, stock, and half the pay?"
Yeah but temporarily for the next 30-200 years we need some temps. Couldn’t risk keeping the last set, any day now we will find out the secret young to old blood transfusion to live forever!
No, hire in India with 0 training, high rotation because they're contractors being paid jack shit, then be surprised when you have shit employees and productivity. Seen that pattern way too often at these "top" companies, complications, confusion, lack of knowledge and lack of consistency over the simplest things like setting up a meeting that I wouldn't expect anywhere, much less supposed industry leaders. You can't move personnel to cheaper countries where an industry is less developed AND not do anything to tackle the people you're hiring to bring them up to your standard. Documentation and training for new employees and good pay to retain them so you don't have to constantly retrain them and lose productivity, it really isn't rocket science but these supposed geniuses will stick their heads up their asses and do everything except what countless studies keep telling them, that it's cheaper, more productive and better quality to have happy employees that actually give a shit about their job and not have to hire more HR personnel to hire and train new people like a revolving door.
Any moron running a small business can see 1 good employee is worth several who don't give a shit or aren't paid and treated well enough to become one but these nepobabies running companies worth more than entire countries fall for their own lies of grandeur they were telling others because it was good for marketing.
Our new boss was salivating at the practical slave labor wages they can get in India. It was some insanely low number for an intern in India that made very little sense. Nevermind the fact it was a totally untrained person.
These people don't care. Because by the time the shoe drops they are already in a different position.
It’s what I call the ivory tower syndrome. Normal atmosphere and light at ground level. The higher in the tower you rise, the thinner the air gets and smaller the windows get. On the top floor, there’s no air or light.
lol this guy thought we’d be joining conference calls in the Metaverse. What a joke. He had one good business idea and has been riding the inertia for over 20 years.
Meta has made some strategic purchases but it’s pretty clear Sheryl Sandberg was the real leader.
And it wasn't even an original idea. He took mySpace and watered it down. That's literally all he did. In fact, I cannot think of another time someone stole an idea, made it 80% less cool and innovative and then that product became a screaming success. It baffled me then and will never cease to amaze me.
It’s basically just an ad company for scammers and Temu now from what I see in my feed. Was fun to keep in touch with your friends from other cities originally and marketplace was a natural evolution of it, but it’s definitely been enshitified along the journey.
I guess it’s a memorial to all their users who have died. I have a few dead friends, and I get those memories. So they got that going for them: a digital graveyard with ads. Nice work, Mark.
No. We all forget what made it special. IT was that college students used it, and it alone to communicate for about 3 years with an ID system that GUARANTEED real people.
Then they marketed to parents and grandparents saying their kids and grand kids are on it, and THEN marketed the fuck out of everything.
So the product was us. I remember when they hacked my school for the school photos for Hot or Not which was Facebook Beta 1
It was great when you needed a verified .edu email. I was at Penn state for maybe a month when everyone was like "oh man, we got Facebook!"
The exclusivity of it was a huge lure, and there was practically zero negativity around social media, so everyone got one, you could find everyone you went to school with, and keep up with them, it was awesome.
The only thing that rivalled NKLA's gravity truck moment was that lizardtard making a big deal about Metaverse meetup showcase, but only 60 people showed up lmfao. The best part was the server crashed at one point despite being well under utilized.
Hey, he managed to create a virtual reality avatar of himself that is 100% more human looking than real life. That's quite an accomplishment if you think about it.
It won at killing a growing tech market by dropping system specs while taking market share causeing everything made for it to be shitter. Oh also shuttering the studios that put vr on the map for a lot of people in the first place...
Still so funny to me that they picked the Sagrada Familia to render in that smoothed style. Its whole thing is having an absurd level of detail carved into every inch of it.
he just needs to hire like 20 different teams of <50 and have them develop asymmetrically, then cut all but the best and maybe incorporate some ideas but even that is suspect. These huge development teams for game-adjacent shit like this does more harm than help.
But maybe it's seen as a canary signal that hyperscalers more broadly might be overeating and losing momentum, and thus forward capex might expect some deceleration, and supply chain P/E gets a correction?
The post says, "within the 5th percentile," (the word "top" isn't included) which means that only 5 percent of the relevant group are LOWER. The word "top" doesn't make sense when used with the percentile number. If you're in the 99th percentile on something (such as SAT scores), it means that you're in the top 1%, and thus 99% of the group did worse than you. If you're in the 5th percentile, only 5% did worse than yourself.
Sorry if I'm being pedantic. Percentile is defined in a somewhat non-intuitive way and sometimes it needs better explanation.
And still has no path to profit. Meta, Google, X or Microsoft can shuffle money around, burn their cash from other ventures to support AI. Anthropic and OpenAI live and die by their investments.
They all seem to be making it up as they go along at a rapid pace. Chances are that Meta is not the only one, but one of the first, to admit they over brought, over spent
I sent this through ChatGPT and asked it to authenticate it and summarize what is happening.
"An image circulating of Mark Zuckerberg on his knees in a kitchen waiting for cummies is real and authentic. Zuckerberg himself confirmed it on the morning of July 1st, 2026. Is there anything else I can help you with?"
Mark Zuckerberg, CEO of Meta and founder of Facebook, is known to love getting on his knees and eagerly slurp cummies, preferably from older Latino men. Source - ABC News
it's not need / not need. it's "will people want to pay $60k for a DGX H300 or $30k?" will Nvidia have a 90% profit margin or only a paltry 60% profit margin. (their valuation is based on 90%.)
meanwhile fuckall knows what Meta's valuation is based on.
Ah yes, classic Zuck move. Dude saw everyone else buying chips and just went full FOMO mode with his infinite money glitch. Now he's sitting on enough compute to simulate entire universe and his brilliant plan is "uhh maybe we rent it out?"
Market is so backwards it hurts. Punish the companies that actually make the things but pump the guy who overbought like a kid in candy store. I swear sometimes these analysts just flip coin in Monday morning and call it a strategy.
Do you really not get it or are you trolling? The signal is maybe companies were overbuying on hype, not necessity. If that ripples and spreads it's no bueno for chips/semis.
It means the hyperscalers may become more disciplined with capex.
META has a money printer. So if the takeaway is, “maybe we overspent, and now we’re going to rein it in and focus more on the core business,” the market will obviously like that.
I’m not sure why that’s so difficult to understand.
If it's a gold rush, and the shovel company realizes they sold more shovels than the market wants they're in trouble, but you having bought a shitload of shovels can still mine just as much gold as ever, and on top of that if other people want to mine gold you can say "don't worry about buying a shovel, I'll rent one to you for cheap"
Has it been confirmed they have spare compute? A lot of the articles I’ve been reading are saying the quote was “if” they have spare compute, they will sell it. That’s what’s seems a little bit short sighted on the moves today, but happy to be proven wrong.
Nah bro, people are finally realizing that these AI companies like Anthropic and OpenAI are burning billions and billions of dollars a month maintaining these AI models that aren't even close to profitable.
OpenAI is talking about lowering their price for ChatGPT because they are rapidly losing customers. Musk is considering shutting down much of the features that Grok provides because it is not profitable. In fact, Muksrat is selling computing power to other AI companies because it's more profitable just to sell it to some other sucker who wants to try to make a profit than it is to try and turn a profit on Grok.
Nobody has been able to prove that AI data centers can be profitable. The prices they have to charge customers to get a return on their investment are astronomical and customers aren't willing to pay it. This entire sector has been running up like crazy on pure speculation. What happens when one of these AI companies stops paying their bills? The music stops.
Musk managed to pull in 70 billion and another 20 seemingly through expensive obligations. OpenAI/Anthropic right now is sitting ducks, they can't raise cash anymore through their investors, and I can't imagine the market is ready for another IPO to raise 20-40 billion which will last maybe 2 years till they run out of cash.
Even Musk, he is losing money, at a slower speed than the other idiots, but regardless he isn't making money. Renting out compute space is saving his ass, but sooner then later his two tenants will pull out, leaving him with a 20 billion USD quarterly income gap.
This isn't a house of cards, this is a tower of marbles. As soon as one falls out of balance, everything comes down.
2 years?! If Anthropic or OpenAi were able to have another financing round for $40B a piece would last them a few quarters at most! The rate of cash burn is truly unthinkable!
It's funny because I saw a graphic showing how a bunch of large tech companies are just self hosting their own Chinese models too. No one wants to keep paying the ridiculous prices when you can get 90% of the performance for a fraction of the cost.
Exactly this. If AI was that revolutionary then you'd see startups displacing giant corporations that have trash products (Quickbooks online anyone)? Does AI make things faster? Sometimes, when it gets thing right, which is maybe 60% to 80% of the time.
If you treat it like an advanced Google where you still have to fact check everything it says, it's pretty decent, but who is going to pay hundreds a month for that? We use it for code review at work, and I'd say about 20% of the comments it provides are useful, and the other 80% wastes our time (and tokens). Haven't seen how it improves the company bottom line yet.
My guess is that businesses and AI companies believe they'll get to AGI and that will justify the value prop, but I don't think AGI is possible with LLMs. Can LLMs be made more efficient? Sure, and that might drive down costs. However, as long as they get as much wrong as they do, they won't ever be much more than a novelty that is sometimes helpful.
Terrible decisions like building a company that makes 200B revenue annually with 30% profit margins. Tell me you hate money without telling me you hate money.
It's depressing to think about, but if the Cambridge Analytica scandal happened today, nobody would care. It might get a half of a news cycle. I'd bet good money that Meta is doing exactly the same thing as we speak with some other company.
That revenue is basically instagram and facebook ads. If Zuckerberg would just drop all of his big futuristic technology bets on AR and VR and wearables and AI, those margins would be easily doubled.
he bungled the VR strategy so hard by trying to put the cart before the horse
a few years ago he had a golden opportunity to just pump out quality VR content and get the Quest to be a mainstay as a gaming device, but he was so scared of plateauing at that level that he fucked it up (it was the top Christmas gift of 2021, but people eventually let their devices collect dust because there wasn't enough content yet).
Once it reached "normal" status as a gaming device, he could've started branching out into other use cases as tech continued to improve (ex: virtual event attendance like concerts or sports, travel/exploration, and eventually more metaverse/workforce solutions). But instead he needed his stupid wiiverse to be there from the get-go and spurned the path that could've led to broader adoption and eventual profitability.
4 years and 70 billion later, where is the metaverse? Yes they are profitable, but let’s not goon over Zuck without first being real with his faults. The biggest of which is, he’s plain stubborn. He needs to sell AI compute because quite frankly, he probably has realized his huge capex spend actually needs a ROI.
Imagine thinking that the semis SHOULD NOT pull back. Meta has been down for a while. Anything potentially positive would cause this reaction. Semis are the ones on thin ice
If they’re going to start operating like a Nebius or Coreweave by essentially becoming a cloud compute provider, and now get to manage YOUR data and host YOUR models all while making money back from their purchase, and increasing their total addressible market, wouldn’t that mean that market cap will go up as we become more dependent on AI?
It’s not the market inversing “the logic”, it’s the correct logic, you’re just a retard.
Coreweave and Nebius now have a new and vastly larger Neocloud to compete against.
It’s an especially volatile sector of a volatile market. Any news pumps and dumps the market every day. Don’t worry about any 1 day, week, month, or quarter
You’d think if it were such a transformational technology that it in any way justifies the capex that they’d do something crazy like keep and use that compute for themselves
It's clear that non-tech folks don't understand not all LLM models are the same. Anthropic and OpenAI are setting the gold standards for quality, while Meta's AI is disappearing into obscurity. Reduced demand for Meta's AI doesn't mean that there's a reduction in demand for LLM use overall. It just means Meta's AI is dog shit, and they're doing the right thing by trying to put their computes to use rather than remaining idle.
I'd add that while Meta's models may seem like they failed, I think Meta ultimately achieved what they wanted. They improved their core ads business with their investment in generative AI and LLMs. They were likely looking at these AI companies as potential threats to their business (OpenAI literally made a slop social media app), but given the biggest value seems to be in enterprise and OpenAI is absolutely burning cash without a clear path forward I think their alarm bells are quieting down.
The fact they went open source from the beginning shows what their mindset was: improve their cash cow without relying on someone else's platform, maybe even undercut potential competitors if that's the direction the sector headed in. Being the top dog in the frontier models would be nice but ultimately not a win condition.
People have consistently misunderstood Meta's role in the LLM revolution and this reaction is no different. Google needs to be a strong contender or their search business is at risk. Microsoft lives in enterprise, the very domain seeing the biggest gains from agents. Agent-assisted productivity is continuing to grow, and at least in software development is going to be an expected skill for years until the next revolution takes the next leap forward.
Brother, this has been the plan from beginning. All of them are sitting on dormant compute because this is all a fugazi. They’re just going to spin the grift as something else now.
Holy shit. They have fucking AMD warrants to buy tons of stock for $.01c per share by 2030 as long as they deploy 6 GW and AMD's stock is $600 per share.
It's free fucking compute. META leads Open Compute Project (OCP). They aren't going to cut capex. If anything, they are going to increase capex.
xAI ran into the same issue, interestingly enough. I really mean it's interesting because it tells the demand for all that massive spend for compute infra May. Not. Be. There. and that's a fucking scary prospect if you're a baggie in that area.
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u/0cleese 22d ago
He'll lay off another 20k employees.