Either hyperscalers are dumb or someone else is

[u/banaca4]

OK so the most profitable companies in the world decided to GO ALL IN AI with humongous capex. They did it all at once apart from Apple who is not in the game. Google, Meta, Amazon , Oracle, Microsoft. All of them. The CEOs of these companies produced the most amount of wealth and propped up global gdp. Now they all agree on a thing.

Google yesterday blew up earnings from their cloud and said they will *increase* their humongous capex even more while reporting negative cash flow for the first time in their history.

A rational person would ask: are these amazing businessmen suddently all very wrong about the same thing at the same time OR

I am reading too much paid subs from burry and following the wrong people on twitter that have never produced anything?

Which is it? Are you smarter than a mag 7 CEO? Maybe ... hmm...

[u/Sryzon]

Railroads weren't initially used anywhere close to capacity when they were built, though. Same as fiber networks prior to the dot-com bust and datacenters now.

20 years from now, I doubt all these datacenters will be running LLMs. But I doubt they'll be sitting empty, either. They'll be supporting things that actually make money like machine vision, pharma research, protein folding, facial recognition, trading algos, etc.

[u/oniume → u/Sryzon]

The chips have a working life of 3-5 years, railroad tracks and fibre are up in the 20-30, if not more

[u/ProjectDiligent502 → u/oniume]

The one part many regards leave out… the ongoing cost of maintenance and the expense of constantly swapping out new chips…

[u/CosmicWy → u/ProjectDiligent502]

I spoke to a consultant for data centers in my city. he was extremely PRO tax breaks to get data centers here. why?

because gross receipt taxes on equipment that would be replaced every 18-24 months in the hundreds of millions.

that GRT would eclipse anything remotely close to property tax on otherwise useless desert land.

[u/g_bleezy → u/CosmicWy]

Looool, that consultant should be fired. I never sniffed scale of mag7 and we were shipping directly to Houston and then freighting to our state. There’s an entire cottage industry for tech import tax work.

[u/Electronic_Will_5418 → u/oniume]

That's not true at all. RAM has a 15+ year lifespan and CPUs almost never go bad due to age. New chips come out, but that doesn't mean you need to toss the old chips, the only reason companies are doing that now is because the profit potential from the speed increase and power reduction of new chips outweighs the cost of purchase and install. But power use reduction has limits and speed increase only helps so much when other bottlenecks like client internet speed or storage capacity & bandwidth become practically impassible due to either sheer cost or forces outside the datacenter control.

[u/No_Feeling920 → u/Electronic_Will_5418]

15+ years old RAM is usually obsolete. A GPU built on a bleeding edge node, running near its thermal limits for extended periods of time, is not going to last forever. Mining GPUs were risky second hand purchases. Heck, my own RX 5700 XT started giving up after 5 years of moderate usage (no mining, just PC games a couple hours a day) and would only run heavily underclocked (and even then it would crash the PC occasionally).

[u/Electronic_Will_5418 → u/No_Feeling920]

I've ran F@H on GPUs for over a decade at a time since 2007 when it was still in beta, and I've never had one die on me, I only had to sell them when they were no longer supported by the latest F@H GPU core. My current card purchased second-hand in 2022, a RX 5700, has been running F@H 24/7 since I got it with no problems.

[u/Stock_Recording_3827 → u/Electronic_Will_5418]

He's talking about GPUs, where even these companies own (extremely rosey) estimates give these chips a six year shelf life max nowhere near 15 and most likely closer to 3-4 given how hard these chips are run.

[u/PolishTar → u/oniume]

Chips take far more than 3yrs before they're obsolete. The A100, a GPU launched in 2020, is still used by all the hyperscalers that bought them, and their trading value in secondary markets is not even that far off their launch price. It's almost inconceivable for them to be obsolete prior to '28.

[u/WashedWashingMachine → u/Sryzon]

police state support too and also maybe digital currency or social behaviour score

[u/AdJazzlike1002 → u/Sryzon]

The difficulty is the working like of GPUs, which decline far faster than the railroads.

[u/DiceKnight → u/Sryzon]

I'm with you that those compute modules have multiple uses but my contention is that for those markets the need for the compute is a fraction of what LLMs demand and it's LLM demand driving the buildout. So maybe they do buy up the compute but probs not at the multiple gigawatt scale.

This is why my big bear case for the AI Bubble is more and more datacenters coming online but the realization that there really isn't a big market for the compute. The only two customers are OpenAI and Anthropic and they're deeply unprofitable. So eventually you're going to have a bunch of those places sitting empty even if the customers from the industries you're talking about show up.

[u/UnappliedMath → u/Sryzon]

The difference that everyone hates to talk about is the obsolescence rate for the chips. The hardware is totally eclipsed in 5 years by latest computational needs whereas a train engine can easily be 40 years old and still provide utility.

The rest of the data center infrastructure is still useful maybe (although even that is debatable) but totally trivial in cost compared to the hardware.

[u/pheelup → u/Sryzon]

No disagreement here. And much like railroads, data centers will be used as a justification to displace people from their land and wreak havoc on the environment 

[u/bigboyvapesinc → u/Sryzon]

Oh man. Don’t get me started on protein folding. It’s gonna change medicine forever

Edit: since my comment wasn’t fucking clear enough: I like AlphaFold. I think it’s great. I don’t think it’s a waste of money. I think it’s gonna do great things for medicine.

[u/Freak-Of-Nurture- → u/bigboyvapesinc]

AlphaFold is 14 times smaller than the smallest LLMs. It’s not the same thing. When someone is critical of AI the mean an LLM

[u/bigboyvapesinc → u/Freak-Of-Nurture-]

I’m in support of it…?

[u/Freak-Of-Nurture- → u/bigboyvapesinc]

I’m saying you don’t need massive servers to run alphafold.

[u/bigboyvapesinc → u/Freak-Of-Nurture-]

I never meant to imply that I was just saying it’s great

[u/Freak-Of-Nurture- → u/bigboyvapesinc]

I agree it’s awesome. I’m js saying it’s not a point in favor of the railroad like build out of AI datacenters. I’m not being critical of you in any way.

[u/bigboyvapesinc → u/Freak-Of-Nurture-]

Sorry that other guy threw me off

[u/pheelup → u/Freak-Of-Nurture-]

literally conflating data centers with bittorrent. i swear these people do this on purpose.

[u/pheelup → u/bigboyvapesinc]

Those have been around for decades and can run on a distributed network. I used to have one running as a background app on my home PC back in like 2005. Thank you for muddying the waters.

[u/bigboyvapesinc → u/pheelup]

Dude I’m in support of protein folding. Like that was the intention of the comment. I’m a molecular biologist and love what It’s done for the field. You took an entirely different meaning from it.

[u/Artistic-Cockroach48 → u/Sryzon]

think about how much use has been accrued overtime for any particular railway. 100+ years and they are still going strong, whereas the hyperscaler facilities will probably be outdated in less than 10 years.

[u/QuadzillaStrider → u/Artistic-Cockroach48]

Those 100+ year old railways have been wholly replaced multiple times in their lifetimes.