Technology

Hey, before I say anything else, I just wanted to tell you I've been enjoying this conversation. It's nice to be able to disagree with someone on something without it becoming a religious war. :)

I’d say they’re the ones most likely to get screwed on this but I just don’t see how a tech titan drawdown causes the whole world go into a great depression

I don't think it will cause a great depression, but I do think it will cause a massive recession. If you look at the S&P 500, 35% of it is tied up in AI-related stocks. If AI crashes out, that's a truly massive hit to the domestic economy, and there are certainly going to be ripple effects throughout the world.

Honestly, the best thing the world could do right now is something a lot of countries are already scrambling to do because of Trump: Decouple their economies from the United States.

Maybe I’m just too optimistic but if captain dickfingers giving the world a tariff hit, a global pandemic and “the worst oil crisis ever” can’t put a dent in things, I just don’t think a pullback on AI spend is going to do it (unless there’s a ton of other structural problems in the global economy that bloggers will point out how obvious it was only once it fails)

Dickfingers! Excellent nickname for the orange sack of shit. But I'll remind you of the old saying: The market can remain irrational for longer than you can remain solvent. And right now, the market is unbelievably irrational.

The valuations and market caps of these companies are completely disconnected from their profitability (or extreme lack thereof). Among all of them, only NVIDIA seems to be making actual money, and even with them there are some indications of very esoteric math being involved, too. They're "investing" money into the AI model providers and then having the AI model providers use that money to buy NVIDIA GPUs. Then they book those sales as profit, even though it's the same money they just invested.

It's not something that can continue indefinitely. Either the model providers have to show that their unit economics works - by putting actual profit into actual bank accounts - or they will eventually hit a point where no matter what the funny math on their books says, they don't have the cold, hard cash to pay their bills.

Remember how Uber was about to go broke? Not going to lie, this literally feels like just more circlejerking about companies that are spending a lot and will go broke any day now…

Maybe. But there's a material difference between Uber / Spotify, and the AI companies. Did you ever look at the SEC filings to go public for either of them? I actually did. They had detailed plans for how to eventually achieve profitability. Uber went public in 2019, and wasn't profitable until 2023, but they had a solid roadmap for getting to that point, and now they're consistently profitable.

Our ability to look at profit plans is limited at the moment. The only publicly traded AI company right now is SpaceX, and their filing is... hilarious. Grok will never be profitable. Not remotely. And their filing is full of WeWork-style insanity. They don't have anything remotely like a roadmap to profitability. Their stock price is 100% speculation. Yet it keeps managing to tick up over $170, at least for the time being.

Speaking of WeWork, I think they're the model SpaceX, OpenAI, and Anthropic are following. The company raised $12.8 billion in financing, and ultimately reached a valuation $47 billion, mostly from investment by SoftBank - the same bank funding a lot of AI companies now, and which owns 11% of OpenAI.

But it never made profit. It never had a roadmap for profit. It never had any means of bringing in income higher than its operating costs. WeWork declared bankruptcy a few years ago.

Reddit and Lemmy were right about WeWork. So the question now is if the AI model providers are as economically unviable as WeWork always was, or if there's somehow a path to profitability like Uber or Spotify. SpaceX's filing doesn't fill me with hope on that, and the fact that both OpenAI and Anthropic are delaying their own moves to go public doesn't fill me with hope, either. It's not the behavior of a company with unit economics that work.

Side note: None of this is to say that Claude Code or Codex or any of their coding tools are bad. I just don't see how they can operate them profitably. If you've got a good product, but the only way to get companies to adopt it is to sell it at a loss, you will eventually fold.

Sorry if I hold a grudge and you are not as dim-witted and not good with computers as the average lemmy user, it’s hard to shake hearing the same prophecies I’ve been hearing about other high spending companies for decades

That's fine. It's actually why I mentioned WeWork as a counter-example. Because you're right, the group-think on both sites (Reddit and Lemmy) can blind people.

On inference alone, both companies project profitability

https://aiafterhours.substack.com/p/openai-vs-anthropic-the-121-billion

https://www.tradingkey.com/analysis/stocks/us-stocks/261756528-anthropic-openai-ipo-tradingkey

That's true. They project it. Using non-GAAP accounting, and without letting anyone know in detail how much computing for inference costs. Their claims resemble WeWork's claims, pre-bankruptcy. Bluntly, I don't believe them.

And I really have to emphasize this: Focusing on the cost of computing for inference all by itself and excluding all the other costs of the business is just crazy, even if inference when looked at by itself can be theoretically profitable.

They are very clearly in the business segment, I’ve heard nothing like this for Qwen or GLM or local hosted models, in fact when self hosting was bought up the dev’s mentioned “??? you can’t self host claude ??”

No argument on Claude being in the business segment, that is absolutely true. But at my company at least (again, this is admittedly an anecdote), the skyrocketing cost of tokens has us working on implementing local models and models on the network edge. We're also severely restricting token budgets and having devs do as much as they can by hand.

Maybe your company hasn't reached the point where tokenmaxxing with Claude is frowned on, but the costs are enormous. And the thing is, they have to be enormous for Anthropic to have any hope of ever recouping their losses. It's not like Claude is a loss-leader, it's their only product.

This is like saying I work with actual system admins, they say that Windows is terrible and that it’ll be the year of the linux desktop any day now

You need to vibe check the office and devs vs the engineers

The vibe in the office (and what I’m reading) is that claude is gold

I do. I am one of the devs in the office. My boss currently loves me, because my token cost is $0 and I still get my code written. I do most of it by hand, and some of it with Qwen running on my local system (I have a workstation with a good enough GPU to run it). I have it wired up so GitHub Copilot uses it. And I've been teaching other developers how to do it. Once our current hardware refresh cycle is complete, our token budget is predicted to drop to almost nothing. We'll probably still use Claude here and there, but the bulk of our work will be doable without it.

In terms of quality, Qwen 3.6 is at about the same level Claude Opus was a few months ago. I don't see how Anthropic can compete with that over the long term.

That said I spoke to a normal person the other day and they hadn’t heard of claude at all, blew my mind

That doesn't actually surprise me. Claude is still a niche product when it comes to general consumers. As far as the public is concerned, AI = ChatGPT (and the annoying Google AI summary).