Techcrunch reports that AI coding tools have "very negative" gross margins. In other words, they are losing money on every user.
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Yep, the only thing I'm 100% confident about in this whole mess is that Trump will find some heretofore unimagined way to make it worse.
the shitwad is consistent I guess...
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pretty sure someone here linked it, it's a long read and worth it.
Any chance you have a link,?
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I'm skeptical of AI coding as it exists today, and while I'm bullish on long-term prospects for AI writing software, am very dubious that simply using LLMs is going to be the answer.
However.
Startups typically do lose money. They'll burn money as they acquire a userbase --- their growth phase --- and transition to profitability later. I don't think "startups in area X tend to be losing money" is terribly surprising.
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The electrical industry is going to have a real bad time.
yeah secondary knockon effects - once nvidia realizes it's not going to actually sell 5 gpus per human being, the datacenters for them evaporate, then the power production to feed those datacenters becomes pointless....
an effective administration would mandate all renewable energy for this purpose, so when it implodes they could at least derive a benefit from the expanded production... but no, trump will have them build coal plants for it all. or like grok, methane powered generators fml
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Any chance you have a link,?
AI Is A Money Trap
In the last week, we’ve had no less than three different pieces asking whether the massive proliferation of data centers is a massive bubble, and though they, at times, seem to take the default position of AI’s inevitable value, they’ve begun to sour on the idea that
Ed Zitron's Where's Your Ed At (www.wheresyoured.at)
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I doubt it, LLMs have already become significantly more efficient and powerful in just the last couple months.
In a year or two we will be able to run something like Gemini 2.5 Pro on a gaming PC which right now requires a server farm.
Current gen models got less accurate and hallucinated at a higher rate compared to the last ones, from experience and from openai. I think it's either because they're trying to see how far they can squeeze the models, or because it's starting to eat its own slop found while crawling.
https://cdn.openai.com/pdf/2221c875-02dc-4789-800b-e7758f3722c1/o3-and-o4-mini-system-card.pdf
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good point, it's all been artificially priced to get users onboard then dedicated.
Yep it's blitzscaling. Run it at a loss until it's a necessity, then charge whatever the hell you want.
They're blitzscaling our right to intellectual property and our right to work. -
It's something that literally exists as a first-party plugin for VSCode. The Copilot Chat extension has an Agent mode for vibe coding for half the price of Cursor.
Cursor has cursor agent.
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You disrupt the market and wait until someone buy you out for huge woads of cash
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I didn't say they couldn't be resold, they simply won't have as wide a potential user market like an generic GPU would. But think about it for a sec, you've got thousands of AI dedicated gpu's going stale whenever a datacenter gets overhauled or a datacenter goes bust.
that's gonna put a lot more product on the market that other datacenters aren't going to touch - no one puts used hardware in their racks - so who's gonna gobble up all this stuff?
not the gamers. who else needs this kind of stuff?
I'm not sure that they're even going to be useful for gamers. Datacenter GPUs require a substantial external cooling solution to stop them from just melting. Believe NVidia's new stuff is liquid-only, so even if you've got an HVAC next to your l33t gaming PC, that won't be sufficient.
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Cursor has cursor agent.
Copilot has Copilot coding agent too (as distinct from Agent mode in Copilot Chat. Yes, they're different things and yes, I had to look up what the difference was)
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Copilot has Copilot coding agent too (as distinct from Agent mode in Copilot Chat. Yes, they're different things and yes, I had to look up what the difference was)
Is copilot agent consume based or flat priced?
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In capitalism, everything is a bubble, even capitalism itself. The AI one is going to burst at some point. Then AI becomes a normal thing in the background like everything else we have gone through in this dumbass of a timeline.
Selling grain for coal, coal for iron and iron for paper is capitalism, but not a bubble.
Whether it becomes a normal thing depends on the cost.
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I'm skeptical of AI coding as it exists today, and while I'm bullish on long-term prospects for AI writing software, am very dubious that simply using LLMs is going to be the answer.
However.
Startups typically do lose money. They'll burn money as they acquire a userbase --- their growth phase --- and transition to profitability later. I don't think "startups in area X tend to be losing money" is terribly surprising.
The issue is mostly energy costs though. Startups do lose money; to hiring new people, marketing, etc... But in this case the entire business case loses money a the moment, and without any significant breakthroughs they likely will keep losing money like that.
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first truly positive use for ai
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I'm not sure that they're even going to be useful for gamers. Datacenter GPUs require a substantial external cooling solution to stop them from just melting. Believe NVidia's new stuff is liquid-only, so even if you've got an HVAC next to your l33t gaming PC, that won't be sufficient.
not just those constraints, good luck getting a fucking video signal out of 'em when they literally don't have hdmi/dp or any other connectors.
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Yep it's blitzscaling. Run it at a loss until it's a necessity, then charge whatever the hell you want.
They're blitzscaling our right to intellectual property and our right to work.blitzscaling
TIL there's a word for it. Thanks
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Yep it's blitzscaling. Run it at a loss until it's a necessity, then charge whatever the hell you want.
They're blitzscaling our right to intellectual property and our right to work.How does it impact your right to work?
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I'm skeptical of AI coding as it exists today, and while I'm bullish on long-term prospects for AI writing software, am very dubious that simply using LLMs is going to be the answer.
However.
Startups typically do lose money. They'll burn money as they acquire a userbase --- their growth phase --- and transition to profitability later. I don't think "startups in area X tend to be losing money" is terribly surprising.
Ed Ziltron has a good piece regarding whether the losses are “just another startup” or something more. I am very much leaning towards “burning money at an insane rate just to give the impression of growth”.
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Yes, it does, but at the price needed to make it profitable, it’s not desirable.
LLMs are not useless; they serve a purpose. They just are nowhere near as clever as we expect them to be based on calling them AI. However, body is investing billions for an email writing assistant.
Price is essentially zero if you just run it locally
