It feels like we are just at the beginning of the worm turning with AI. The biggest players are becoming even bigger and now firing up old nuclear power plants to help offset the new power requirements, while the smaller players get eaten up or die off.
The investing world has started asking more questions about the future potential earnings and path forward for what is turning out to be just a really great auto complete.
The money is still flowing in but has it peaked for the blindly throwing money into these schemes? It takes a lot of capital to support the infrastructure needed and the payoff could be years away for investors.
It’s really bold to assume there will ever be a payoff for this. More than likely there will be an AI bust where every firm that invested in AI is screwed over.
What I don’t understand is what’s the game plan for all of this. The oligarchs are not the type to just burn their money for fun. Altman and Altman-wannabes, I can understand. They have an incentive to execute what is essentially a pump and dump and leverage other people’s money for personal benefit.
But companies like microsoft? Is their plan to keep plowing tens of billions of dollars into “AI” in hopes of eventually discovering/creating the “next IT revolution”?
They have to want a return. Even Zuck eventually stopped burning billions on his metaverse fetish (and he has full cart blanch on FB’s shareholders money).
It feels as though there’s a cycle with waves of this kind of junk. Stuff that consumers really don’t want but companies are so convinced are revolutionary they try to shove it everywhere
3D TV’s were pushed, but not that hard. Cryptocurrency had a brief moment in the sun where it looked like it might be viable. There’s smaller things like physical buttons being replaced by capacitive and eventually touch screens on everything from phones to appliances to cars (it seems Apple might be reversing that). There’s been a huge push away from digital media, but 80% of PS5’s sold have been the disc drive version and the markets for DVD’s and Blu-Rays seems to be heating up despite stores saying they are going to stop carrying them. There’s probably a lot more I can’t remember.
Companies have been shifting away from meeting consumer demand and towards trying to shape consumer demand themselves instead. I blame the Marketing industry- with the rise of the Internet, TV, and even cheap printed materials over the past couple hundred years. It’s so easy to make a new brand that there’s no incentive to maintain a reputation anymore. Craftsman is a famous example.
The power has shifted to investors. Announcing AI integration makes the stock price go up. We saw the same thing with crypto a few years ago- the most famous example is probably the Long Island Iced Tea Corporation changing it’s name to Long Blockchain Corporation and getting a stock price boost without actually changing their operations or products at all.
We will buy what our oligarch overlords decide to sell us and we will be grateful to them for the privilege.
But companies like microsoft? Is their plan to keep plowing tens of billions of dollars into “AI” in hopes of eventually discovering/creating the “next IT revolution”?
Microsoft has roughly a market cap of 3.2 trillion dollar, so while tens of billions certainly isn’t cheap, it also isn’t going all in. I think one has to approach it from a betting perspective. Burning a few billion dollar is certainly not great, but also doesn’t fundamentally hurt the company. Missing out on a major trend on the other hand is something even large companies can’t afford. So it is at least as much about risk management as it is about returns.
Even Zuck eventually stopped burning billions on his metaverse fetish
He hasn’t given up on it though, just maybe scaled back a bit. And honestly in theory i can see the appeal of what he is trying to do. Seems like he is trying to stay ahead and eventually become the default platform for ar/vr devices, similar to microsoft with windows and google with android. So while the costs are huge (and i still don’t quite understand where all that money goes), the reward could be worth it in retrospective, if he succeeds.
Market cap is one thing. It’s not like they have $3.2 trillion in cash. I understand that they don’t want to potentially miss out, but they have to expect a return and have at least modicum accountability on such initiatives. Moreso that Microsoft management doesn’t have a dual layer share structure like Zuck that essentially enables them to not be responsible to shareholders.
Have you read about some of the internal discussions on metaverse in FB? They didn’t want to use their own products for meetings because it was a hassle and it was easier to just do a video/audio conference call.
They’ve spent over $46 billion on metaverse initiatives - can you point to any promising products or viable use cases that have come out of this initiative? Surely there has to be something, I understand it takes time, but after 3 years and $46 billion, I don’t think it’s unreasonable to have something to show.
Market cap is one thing. It’s not like they have $3.2 trillion in cash. I understand that they don’t want to potentially miss out, but they have to expect a return and have at least modicum accountability on such initiatives. Moreso that Microsoft management doesn’t have a dual layer share structure like Zuck that essentially enables them to not be responsible to shareholders.
True, i guess we could also look at other numbers instead of market cap. here are their most recent results: In the last quarter alone they had 22 billion net income. If this article for example is correct with their $13.75 billion that microsoft invested, then we are talking less than 2 months of profit.
However i am not sure if that is the right metric either. If i remember correctly they didn’t use cash to pay for their stake either, but instead gave openAI compute credits to train their model on Microsofts cloud. At least for some of it.
In any case as the article above also mentions the whole ownership structure is pretty complicated, but unless the AI bubble bursts and openAI’s valuation drops, their investment so far has grown on paper.
Have you read about some of the internal discussions on metaverse in FB? They didn’t want to use their own products for meetings because it was a hassle and it was easier to just do a video/audio conference call.
They’ve spent over $46 billion on metaverse initiatives - can you point to any promising products or viable use cases that have come out of this initiative? Surely there has to be something, I understand it takes time, but after 3 years and $46 billion, I don’t think it’s unreasonable to have something to show.
Yeah, i’ve read some articles on the topic. Their quest headsets are pretty solid and the Orion glasses they recently showcased seem like a step in the right direction. But i do share your criticism that it is hard to see where all that money went. Which i also tried to convey above by qualifying my opinion with “in theory i can see the appeal " and " (and i still don’t quite understand where all that money goes)”
To the surprise of everyone but the engineers and the consumer.
This is fucking ridiculous.
It feels like we are just at the beginning of the worm turning with AI. The biggest players are becoming even bigger and now firing up old nuclear power plants to help offset the new power requirements, while the smaller players get eaten up or die off.
The investing world has started asking more questions about the future potential earnings and path forward for what is turning out to be just a really great auto complete.
The money is still flowing in but has it peaked for the blindly throwing money into these schemes? It takes a lot of capital to support the infrastructure needed and the payoff could be years away for investors.
It’s really bold to assume there will ever be a payoff for this. More than likely there will be an AI bust where every firm that invested in AI is screwed over.
What I don’t understand is what’s the game plan for all of this. The oligarchs are not the type to just burn their money for fun. Altman and Altman-wannabes, I can understand. They have an incentive to execute what is essentially a pump and dump and leverage other people’s money for personal benefit.
But companies like microsoft? Is their plan to keep plowing tens of billions of dollars into “AI” in hopes of eventually discovering/creating the “next IT revolution”?
They have to want a return. Even Zuck eventually stopped burning billions on his metaverse fetish (and he has full cart blanch on FB’s shareholders money).
It feels as though there’s a cycle with waves of this kind of junk. Stuff that consumers really don’t want but companies are so convinced are revolutionary they try to shove it everywhere
3D TV’s were pushed, but not that hard. Cryptocurrency had a brief moment in the sun where it looked like it might be viable. There’s smaller things like physical buttons being replaced by capacitive and eventually touch screens on everything from phones to appliances to cars (it seems Apple might be reversing that). There’s been a huge push away from digital media, but 80% of PS5’s sold have been the disc drive version and the markets for DVD’s and Blu-Rays seems to be heating up despite stores saying they are going to stop carrying them. There’s probably a lot more I can’t remember.
Companies have been shifting away from meeting consumer demand and towards trying to shape consumer demand themselves instead. I blame the Marketing industry- with the rise of the Internet, TV, and even cheap printed materials over the past couple hundred years. It’s so easy to make a new brand that there’s no incentive to maintain a reputation anymore. Craftsman is a famous example.
The power has shifted to investors. Announcing AI integration makes the stock price go up. We saw the same thing with crypto a few years ago- the most famous example is probably the Long Island Iced Tea Corporation changing it’s name to Long Blockchain Corporation and getting a stock price boost without actually changing their operations or products at all.
We will buy what our oligarch overlords decide to sell us and we will be grateful to them for the privilege.
Microsoft has roughly a market cap of 3.2 trillion dollar, so while tens of billions certainly isn’t cheap, it also isn’t going all in. I think one has to approach it from a betting perspective. Burning a few billion dollar is certainly not great, but also doesn’t fundamentally hurt the company. Missing out on a major trend on the other hand is something even large companies can’t afford. So it is at least as much about risk management as it is about returns.
He hasn’t given up on it though, just maybe scaled back a bit. And honestly in theory i can see the appeal of what he is trying to do. Seems like he is trying to stay ahead and eventually become the default platform for ar/vr devices, similar to microsoft with windows and google with android. So while the costs are huge (and i still don’t quite understand where all that money goes), the reward could be worth it in retrospective, if he succeeds.
Market cap is one thing. It’s not like they have $3.2 trillion in cash. I understand that they don’t want to potentially miss out, but they have to expect a return and have at least modicum accountability on such initiatives. Moreso that Microsoft management doesn’t have a dual layer share structure like Zuck that essentially enables them to not be responsible to shareholders.
Have you read about some of the internal discussions on metaverse in FB? They didn’t want to use their own products for meetings because it was a hassle and it was easier to just do a video/audio conference call.
They’ve spent over $46 billion on metaverse initiatives - can you point to any promising products or viable use cases that have come out of this initiative? Surely there has to be something, I understand it takes time, but after 3 years and $46 billion, I don’t think it’s unreasonable to have something to show.
True, i guess we could also look at other numbers instead of market cap. here are their most recent results: In the last quarter alone they had 22 billion net income. If this article for example is correct with their $13.75 billion that microsoft invested, then we are talking less than 2 months of profit.
However i am not sure if that is the right metric either. If i remember correctly they didn’t use cash to pay for their stake either, but instead gave openAI compute credits to train their model on Microsofts cloud. At least for some of it.
In any case as the article above also mentions the whole ownership structure is pretty complicated, but unless the AI bubble bursts and openAI’s valuation drops, their investment so far has grown on paper.
Yeah, i’ve read some articles on the topic. Their quest headsets are pretty solid and the Orion glasses they recently showcased seem like a step in the right direction. But i do share your criticism that it is hard to see where all that money went. Which i also tried to convey above by qualifying my opinion with “in theory i can see the appeal " and " (and i still don’t quite understand where all that money goes)”