AI Is Worse Than The Dot Com Bubble: Part Four

I don't enjoy being right here. Sure I get the satisfaction, Sure I get the clicks and all that, but like it sucks, It sucks. I'm really fucking worried. I'm not doing this to be contrarian. I'm seeing these things and I'm worried more people aren't seeing them, and I'm worried that the after effects will be so much worse than the dot com bubble. So this Foe part was somewhat drawn from a premium piece I did a few weeks ago called Inventively. This is worse than the dot com bubble.

I really suggest you subscribe to my premium newsletter or be in there. But if you don't. I've had a little mustard on it and truncated it for this because you needed to be different in voice. Nevertheless, you should subscribe. But when I was writing that, I actually went into

it trying to prove myself wrong. I spent hours and hours reading old articles through broken paywalls and archive dot org links, in the hopes that I'd find some sort of positive spin, a way that the AI bubble wasn't as bad, some sliver or nugget of joy, some shread of hope. And everything I've read has made me more worried, not less. The real problem is that there are similarities, but only with the worst parts of both bubbles. We've got stupid amounts of money being sunk into stuff. We've

got stupid companies that want to ypo. We've got hopeless startups duced up by edulous venture capitalists and marketed by even more credulous journalists. Except this time we have the worst margins this side of a vineyard planted in Las Vegas, Nevada, and despicable boosters that will go to war with you to try and improve You're wrong. Using ghost stories, fairy tales, and Bixie dust, I realize I'm being a little cavalier and colloquial about this, and that's because I feel emotionally drained,

is the way i'd put in. Things are so much worse than I thought. I really thought i'd find something good. I'd dig into the past and find that there were direct, obvious similarities that would say, Okay, these GPUs will be useful. There will be something we've built here. I can't find it. I'm actually now convinced that things are going to be much worse. The dot com bubble was relatively distributed and

created useful infrastructure. The ideas of some of the most prominent dot com startups were valid, but based on stupid hypergrowth business models that didn't make sense and were only

sustained through mass hysteria and ignorance. By comparison, AI startups fundamentally illogical or selling unreliable software that's best known for its consistent mistakes and active harms, backed by the corrosive and ever worsening infrastructural costs of GPUs, and they're the customers of the largest company on the stock market that can only keep its valuation on which the markets depend by selling more of it. An expensive to buy and more expensive to install item that only appears to lose

its customers money. There is no squaring in Vidia's circle. It is inevitable even if AI somehow worked out that companies will have to stop buying as many GPUs, and in Vidia cannot afford for them to slow down at all. They must speed up, and they must do so forever. There's also no other business model for GPUs that scales none. There is no use case. This is not useful infrastructure.

Once the AI bubble bursts, these data centers cannot be used for other things, at least not things that are going to make more than a couple of single digit millions in total. They will have to be emptied out and replaced with useful gear. They will be those that are finished, and I think going to be a bunch of undone construction. They're going to be powered shells, which are just empty buildings with power attached. And really, I don't think that's gonna be. That's gonna be across the board.

I think we're gonna have a lot of failed construction. And throughout all of this bullshit, the rest of them, Magnificent seven has seen their stock values saw off the back of pure hype because they weren't making a dime of profit from selling artificial intelligence services, and they've done so by it acquiring hundreds of billions of dollars of physical assets. The whole point of these fucking companies was that they were asset light and cash heavy. Now they're

full of fucking GPUs to depreciate. This is a fucking calamity. I am fucking terrified because everything I've read about the past makes me certain that this will be worse. The hands will be longer, and nobody seems to want to accept the true logical endpoint of my arguments, So I'm gonna kind of lay them out depending on how right

I am. I'm worrying about the following things. And Nvidia will lose anywhere between forty percent and night besore and of its revenue in a relatively short amount of time, a couple of quarters maybe, which will annihilate the value of the S and P five hundred because the stock will go down because the market will go Ah, Microsoft, Google and Amazon will face massive multi billion dollar impairments within the next few years. For God to say, meta,

but they are included too. Now, this one is funny

but will still be bad. Oracle will potentially face bankruptcy or at least a severe horrendous series of layoffs and restructuring efforts to try and write the shift after agreeing to two hundred and forty eight billion dollars in lease obligations and fifty six billion dollars in debt primarily to build data centers to get the revenue from its three hundred billion dollar five year long deal with open Ai, a company that's going to run out of money in

the next year. Venture Capital is going to take such a severe haircut from the AI bubble that it will effectively kill any chances of raising a round off the Series B for many, many years. I'm really worried about the reported one hundred and seventy eight point five billion

dollars in US date center deals going underwater. I don't think they're going to be paid, and it's going to lead to massive losses with private equity and banks, which will lead to a chill in effectively all debt markets and massive job losses across the many many construction projects that have started as a result of the AI bubble, and if open Ai and Anthropic can actually manage to

go public. I think every investor is going to lose out as they collapse under the weight of their bullshit assumptions. Every partner, every company relying on them, every infrastructure partner, every AI starter built on their tech will be burned. I also believe that we as a society will face a violent paradigm shift as the result of the AI bubble bursting, because it revealed how many people just don't

understand stuff. The amount of bosses, influencers, movie stars, politicians, and other individuals of note that have fallen behind generative AI and claimed again and again that it can do things that it can't have effatuated myths that will lead to massive ciple harms both day and in the future,

have revealed themselves to be fucking frauds. It's been obvious since twenty twenty three that generative AI flat out does not do what many people say it does or will do, and obvious since twenty twenty four that the economics didn't work. Yet still, every single goddamn day, we are surrounded by people screaming in our faces the AI is the future, that AI will replace us, that AI is the panacea to every fucking problem, even though it only seems to

create new ones. I also believe that AI psychosis is a prevalent thing on a scale that few people want to discuss. There's something about the process of using a large language model that convinces people that AI is powerful because they managed to bunk it on the head enough

times to make something useful come out seemingly intelligent. People will spend hours and hours making clawed code burb out quasi useful, quasi functional software, claiming that the productivity gains are obvious, even when if you sat down and worked out how long it took them and how much the API rates for the software would be. If they weren't being subsidized, they could probably have just learned to code in the first place, or paid someone else to do it.

And no, please stop this thing of oh it's cheaper than hiring a developer. Did you go out and ask a developer? Did you actually get a quote? Do you actually know what you're talking about? Do you know a

fucking thing about you're talking about? You see, I think large language models that are a global gas lighting experiment, where the test is to see whether inefficient and questionably functional software can convince you that it works because you managed to manipulate its handles with the right prompts, explaining away failures as you go, and getting increasingly agitated with those who don't agree with you that you're living in

the future. This series forced me to live in the past for hours and hours and hours, and all it taught me is that people are desperate to compare this era to another as a means of explaining away the bad habits and specious ideas of a tech industry run by fucking influences and management consoles. By comparison, the dot com bubble is relatively sensible, built on good ideas execut by greedy people rushing to do things based on ideas

they didn't understand, and analyzes that were utter bullshit. The AI bubble is happening in a remarkable era of digital information and connectivity that allows us to process and analyze details at scale and with speed, And everybody who inflated this era should, and, by my fucking sword, will be made to experience inextricable, permanent shame for the horrors that follow as a result. And believe me, even if I'm half right, things will likely be so much worse than

when the dot com bubble burst. I don't see a scenario where anything survives the collapse of core we've let alone the collapse of open AI. I don't see a scenario where any more than a few AI starts survive, if any and if that happens, there won't be any customers for those GPUs, not that anywhere near enough existed to fill even a tiny percentile of the demand that currently exists, or for the capacity we've already built. On some level. I hope I'm wrong. I just don't know

how anymore. I really don't thank you so much for listening. It's been in intense January with this, with CES, with the inchittaphone ential crisis. I'm probably going to take the week off next week and run a call zone media rewind to give my aching brain and lungs a break. Thank you so much for listening. Who knows, though, some bullshit will probably happen because it's earning season when this runs, some crazy shit will happen, or maybe it'll be normal.

I could just rest, and if that happens, I'll probably end up pinking and squawking into the micros. I always though, regardless, you'll hear my voice one way or another. Thank you so much everyone, This has been bubble week. Thank you for listening to Better Offline.