I'm not sure the comparison is apples to apples, but this article claims the current AI investment boom pales compared to the railroad investment boom in the 19th century.
> Next, Kedrosky bestows a 2x multiplier to this imputed AI CapEx level, which equates to a $624 billion positive impact on the US GDP. Based on an estimated US GDP figure of $30 trillion, AI CapEx is expected to amount to 2.08 percent of the US GDP!
Do note that peak spending on rail roads eventually amounted to ~20 percent of the US GDP in the 19th century. This means that the ongoing AI CapEx boom has lots of legroom to run before it reaches parity with the rail road boom of that bygone era.
> Do note that peak spending on rail roads eventually amounted to ~20 percent of the US GDP in the 19th century.
Has anyone found the source for that 20%? Here's a paper I found:
> Between 1848 and 1854, railroad investment, in these and in preceding years, contributed to 4.31% of GDP. Overall, the 1850s are the period in which railroad investment had the most substantial contribution to economic conditions, 2.93% of GDP, relative to 2.51% during the 1840s and 2.49% during the 1830s, driven by the much larger investment volumes during the period.
The first sentence isn't clear to me. Is 4.31 > 2.93 because the average was higher from 1848-1854 than from 1850-1859, or because the "preceding years" part means they lumped earlier investment into the former range so it's not actually an average? Regardless, we're nowhere near 20%.
I'm wondering if the claim was actually something like "total investment over x years was 20% of GDP for one year". For example, a paper about the UK says:
> At that time, £170 million was close to 20% of GDP, and most of it was spent in about four years.
> Do note that peak spending on rail roads eventually amounted to ~20 percent of the US GDP in the 19th century.
When you go so far back in time you run into the problem where GDP only counts the market economy. When you count people farming for their own consumption, making their own clothes, etc, spending on railroads was a much smaller fraction of the US economy than you'd estimate from that statistic (maybe 5-10%?)
Isn't the US economy far more varied than it was in the 19th century? More dense? And therefore wouldn't be more difficult for one industry to dominate the US economy today than it was in the 19th century?
People should keep in mind that there was no such thing as a GDP before the 1980's.
All that has been back-calculated, and the further back you go the more ridiculous it gets.
Excuses sounded plausible at the time but killed two birds with one stone.
Less rapid increase in government benefits which had become based on GNP for survival to cope with inflation, and further obscuring the ongoing poor economic performance of the 1980's going forward compared to how it was before 1970 numerically.
The people who were numerically smart before that and saw what things were like first hand were not fooled so easily.
Even using GDP back in the 1980's when it first came out, you couldn't get a good picture of the 1960's which were not that much earlier.
I wonder about actual effectiveness of spending on railroads vs AI... Even if railroads were somewhat waste, did the investment spread much wider? At least geographically it must have as there were workers that moved around and needed services. That is it was mostly spend in economy. Thus had actual change to trickle down.
Where as AI, who actually gets the investment? Nvidia? TMSC? Are people who are employed some that would have anyway been employed? Do they actually spend much more? Any Nvidia profits likely go just back to the market propping it up even higher.
How much efficiency from use of LLMs have actually increased proctiveness?
Consider other infrastructure such as the US highway system. There may be an expansive bubble, but infrastructure such as the increase in base power production needs to be factored as well.
One way to think about it is what if we’d done it the other way around? If we’d had AI first at 20% GDP investment levels, would the subsequent railroad boom have been an order of magnitude smaller at 2% GDP?
For me, that’s enough of a thought experiment — as implausible as it might be to have AI in 1901 — to be skeptical that the difference is simply that the first tech step-change was a pre-war uplift to build the post-war US success story, and the latter builds on it.
I have started to notice this as well over the past several months, in-fact, I would say it is orders of magnitude larger than the Crypto bubble and when it bursts will be significantly more impactful. Right now, everything is propped up on the premise the hyperscalers will grow EPS proportionately to their investment and that ROA is being priced in as a best case scenario (hope) in their share price. Maybe its not ROA at all, maybe its simply FOMO, we keep citing this 'AI Race' as if there is some end objective to 'win' drawing parallels to the nuclear arms race that only resulted in massive wasted CAPEX in decaying nukes sitting in unused bunkers since the cold war. (Not to mention it isn't even clear this arms race played a direct factor in the war beside depleting resources) Everyone is happy right now. Execs get stock bonuses, investors get returns, vendors get contracts. Once this is questioned, and history demonstrates it undoubtedly will be, it will cause a cascading collapse. History is a mathematical truth.
Over the last six months, capital expenditures on AI—counting just information processing equipment and software, by the way—added more to the growth of the US economy than all consumer spending combined. You can just pull any of those quotes out—spending on IT for AI is so big it might be making up for economic losses from the tariffs, serving as a private sector stimulus program.
It's not as bad as the alarmist phrasing would suggest. Consider a toy example: suppose consumer spending was $100 and grew by $1, but AI spending was $10 and grew by $1.5, then you can rightly claim that "AI added more to the grow of the US economy than all consumer spending combined"[1]. But it's not as if the economy consists mostly of AI, or that if AI spending stopped the economy will collapse. It just means AI is a major contributor to the economy's growth right now. It's not even certain that the AI bubble popping would lead to all of that growth evaporating. Much of the AI boom involves infrastructure build out for data centers. That can be reallocated to building houses if datacenters are no longer needed.
[1] Things get even spicier if consumer growth was zero. Then what would the comparison? That AI added infinitely more to growth than consumer spending? What if it was negative? All this shows how ridiculous the framing is.
So, non-seasonally adjusted consumer spending is flat. In that sense, yes, anything where spend increased contributed more to GDP growth than consumer spending.
If you look at seasonally-adjusted rates, consumer spending has grown ~$400 billion, which might outstrips total AI CapEx in that time period, let alone growth. (To be fair the WSJ graph only shows the spending from Meta, Google, Microsoft, and Amazon. But it also says that Apple, Nvidia, and Tesla combined "only" spent $6.7 billion in Q2 2025 vs the $96 billion from the other four. So it's hard to believe that spend coming from elsewhere is contributing a ton.)
If you click through the the tweet that is the source for the WSJ article where the original quote comes from (https://x.com/RenMacLLC/status/1950544075989377196) it's very unclear what it's showing...it only shows percentage change, and it doesn't even show anything about consumer spending.
So, at best this quote is very misleadingly worded. It also seems possible that the original source was wrong.
That's bad because you just know at some point the bell is getting rung and then the bubble bursts. It was the same thing with office space in the late 1990s--they overbuilt like crazy predicting huge demand that never appeared and then the dot-com bubble burst and that was that.
Althought we know that there is no empirical evidence for trickle down economy, a worst case scenario was that some of the profit would be allocated to be cost of labor and through great economy expansion and regardless of rising inequality and some reskilling, innovation and its effect on the rise of the economy was at least somewhat positive for everybody.
This will not be the case anymore. There is no labor restructuring to be made, the lists for the future safe jobs are humorous to say the least. There has been a difficulty in finding skilled labor in sustainable wages for the companies and that has been highlighted as a key blocker for growth. Econony will rise by removing this blocker by AI. Rise of the economy due to AI invalidates old models and trickle down spurious correlations. Rise of the economy through AI directly enables the most extreme inequality and no reflexes or economics experience exists to manage it.
There have been many theories for revolutions, social financial ideological and others. I will not comnent on those but I will make a practical observation: It boils down to the ratio of controlers vs controlled. AI also enables an extremely minimal number of controllers through the AI managment of the flow information and later a large number of drones can keep everyone at bay. Cheaply, so good for the economy.
"Over the last six months, capital expenditures on AI—counting just information processing equipment and software, by the way—added more to the growth of the US economy than all consumer spending combined."
If this isn't the Singularity, there's going to be a big crash. What we have now is semi-useful, but too limited. It has to get a lot better to justify multiple companies with US $4 trillion valuations. Total US consumer spending is about $16 trillion / yr.
Remember the Metaverse/VR/AR boom? Facebook/Meta did somehow lose upwards of US$20 billion on that. That was tiny compared to the AI boom.
Look at the induced demand due to Claude code. I mean, they wildly underestimated average token usage by users. There's high willingness to pay. There's literally not enough inference infra available.
I was working on crypto during the NFT mania, and THAT felt like a bubble at the time. I'd spend my days writing smart contracts and related infra, but I was doing a genuine wallet transaction at most once a week, and that was on speculation, not work.
My adoption rate of AI has been rapid, not for toy tasks, but for meaningful complex work. Easily send 50 prompts per day to various AI tools, use LLM-driven auto-complete continuously, etc.
That's where AI is different from the dot com bubble (not enough folks materially transaction on the web at the time), or the crypto mania (speculation and not utility).
Could I use a smarter model today? Yes, I would love that and use the hell out of it.
Could I use a model with 10x the tokens/second today? Yes, I would use it immediately and get substantial gains from a faster iteration cycle.
* Even with all this infra buildout all the hyperscalers are constantly capacity constrained, especially for GPUs.
* Surveys are showing that most people are only using AI for a fraction of the time at work, and still reporting significant productivity benefits, even with current models.
The AGI/ASI hype is a distraction, potentially only relevant to the frontier model labs. Even if all model development froze today, there is tremendous untapped demand to be met.
The Metaverse/VR/AR boom was never a boom, with only 2 big companies (Meta, Apple) plowing any "real" money into it. Similarly with crypto, another thing that AI is unjustifiably compared to. I think because people were trying to make it happen.
With the AI boom, however, the largest companies, major governments and VCs are all investing feverishly because it is already happening and they want in on it.
Everything I have worked on as a fullstack developer for multiple large companies over the past 25 years tells me that AI isn't just going to replace a bunch of workers. The complexity of those places is crazy and it takes teamwork to keep them running. Just look what happens internally over a long holiday weekend at most big companies, they are often just barely meeting their uptime guarantees.
I was recently at a big, three-letter pharmacy company and I can't be specific, but just let me say this: They're always on the edge of having the main websites going down for this or that reason. It's a constant battle.
How is adding more AI complexity going to help any of that when they don't even have a competent enough workforce to manage the complexity as it is today?
You mention VR--that's another huge flop. I got my son a VR headset for Christmas in like 2022. It was cool, but he couldn't use it long or he got nauseaus. I was like "okay, this is problematic." I really liked it in some ways, but sitting around with that goofy thing on your head wasn't a strong selling point at all. It just wasn't.
If AI can't start doing things with accuracy and cleverness, then it's not useful.
I honestly disagree (mostly). Sure, we might see some adjustments to valuations to better account for the expected profit margins; those might have been overblown. But if you had access to any dashboard inside these companies ([1]) all you'd see is numbers going up and to the right. Every day is a mad struggle to find capacity to serve people who want what they're selling.
The average response to that is "its just fake demand from other businesses also trying to make AI work". Then why are the same trends all but certainly happening at Cursor, for Claude Code, Midjourney, entities that generally serve customers outside of the fake money bubble? Talk to anyone under the age of 21 and ask them when they used Chat last. McDonalds wants to deploy Gemini in 43,000 US locations to help "enhance" employees (and you know they won't stop there) [2]. Students use it to cheat at school, while their professors use it to grade their generated papers. Developers on /r/ClaudeAI are funding triple $200/mo claude max subscriptions and swapping between them because the limits aren't high enough.
You can not like the world that this technology is hurtling us toward, but you need to separate that from the recognition that this is real, everyone wants this, today its the worst it'll ever be, and people still really want it. This isn't like the metaverse.
> There could be a crash that exceeds the dot com bust, at a time when the political situation through which such a crash would be navigated would be nightmarish.
If the general theme of this article is right (that it's a bubble soon to burst), I'm less concerned about the political environment and more concerned about the insane levels of debt.
If AI is indeed the thing propping up the economy, when that busts, unless there are some seriously unpopular moves made (Volcker level interest rates, another bailout leading to higher taxes, etc), then we're heading towards another depression. Likely one that makes the first look like a sideshow.
The only thing preventing that from coming true IMO is dollar hegemony (and keeping the world convinced that the world's super power having $37T of debt and growing is totally normal if you'd just accept MMT).
Correction ... Nvidia is propping up the economy. its like 24% of the tech sector and is the only source of gpus for most companies. This is really , really bad. Talk about all eggs in one basket. If that company was to take a shit, the domino effect would cripple the whole sector and have unimaginable ramifications to the US economy.
From a few weeks ago, see "Honey, AI Capex is Eating the Economy" / "AI capex is so big that it's affecting economic statistics" (365 points by throw0101c 18 days ago | hide | past | favorite | 355 comments):
The article's comparison to the 19th century railroad boom is pretty spot on for how big it all feels, but maybe not so much for what actually happened.
Back then, the money poured into building real stuff like actual railroads and factories and making tangible products.
That kind of investment really grew the value of companies and was more about creating actual economic value than just making shareholders rich super fast.
While some of the investment in railroads (and canals before it, and shipping before that) was going into physical assets of economic value, there were widespread instances of speculation, land "rights" fraud, and straight up fraud without any economic value added.
I'm genuinely scared of what the crash will do to society. As much as I loathe AI boosterism, I'm starting to think my personal desire for schadenfreude may not outweigh the fear that I and everyone else I care about will get swept under the tsunami of the bubble burst.
> These are not railroads—we aren’t building century-long infrastructure. AI datacenters are short-lived, asset-intensive facilities riding declining-cost technology curves, requiring frequent hardware replacement to preserve margins.
Neglects the most important benefit of large semiconductor spending: we are riding the Learning Curve up Moore's Law. We are not much better at building railroads today than we were in 1950. We are way better at building computers today. The GPUs may depreciate but the knowledge of how to build, connect, and use them does not - that knowledge compounds over time. Where else do you see decades of exponential efficiency improvements?
AI isn't propping up the economy. The BELIEF that AI will replace almost all labor (employees) is what's propping up the economy. Or rather, propping up the stock market. I'm not sure what kind of economy we're going to have when 99% of the income flows to 0.001% of the population.
The AI bubble is so big that it's draining useful investment from the rest of the economy. Hundreds of thousands of people are getting fired so billionaires can try to add a few more zeros to their bank account.
The best investment we can make would be to send the billionaires and AI researchers to an island somewhere and not let them leave until they develop an AI that's actually useful. In the meanwhile, the rest of us get to live productive lives.
If AI gets us into orbit ( https://news.ycombinator.com/item?id=44800051#44804687 ) or revitalizes nuclear, I'm fine with those things. It's true that AI usage can scale with availability better than most things but that's not a path to world domination.
Is the linked post referring to literal orbit? Hell will freeze over before orbital datacenters make sense (assuming no antigrav etc gets invented tomorrow).
There has to be give and take to this as well. The AI increase is going to cost jobs. I see it in my work flow and our company. We used to pay artists to do artwork and editors to post content. Now we use AI to generate the artwork and AI to write the content. It's verified by a human, but it's still done by AI and saves a ton of time and money.
These are jobs that normally would have gone to a human and now go to AI. We haven't paid a cent for AI mind you -- it's all on the ChatGPT free tier or using this tool for the graphics: https://labs.google/fx/tools/image-fx
I could be wrong, but I think we are at the start of a major bloodbath as far as employment goes.... in tech mostly but also in anything that can be replaced by AI?
I'm worried. Does this mean there will be a boom in needing people for tradeskills and stuff? I honestly don't know what to think about the prospects moving forward.
I'm wondering what kind of technological change would be large enough to force the popping of this bubble, as opposed to the likely economic or other triggers?
Would another order of magnitude decrease in the amount of compute for a model do it?
Would the cost of compute falling by an order of magnitude in a black swan event?
Or, perhaps Jevan's paradox[1] kicks in, and we just eat up the extra capacity in new uses.
[+] [-] jackcosgrove|7 months ago|reply
https://wccftech.com/ai-capex-might-equal-2-percent-of-us-gd...
> Next, Kedrosky bestows a 2x multiplier to this imputed AI CapEx level, which equates to a $624 billion positive impact on the US GDP. Based on an estimated US GDP figure of $30 trillion, AI CapEx is expected to amount to 2.08 percent of the US GDP!
Do note that peak spending on rail roads eventually amounted to ~20 percent of the US GDP in the 19th century. This means that the ongoing AI CapEx boom has lots of legroom to run before it reaches parity with the rail road boom of that bygone era.
[+] [-] tripletao|7 months ago|reply
Has anyone found the source for that 20%? Here's a paper I found:
> Between 1848 and 1854, railroad investment, in these and in preceding years, contributed to 4.31% of GDP. Overall, the 1850s are the period in which railroad investment had the most substantial contribution to economic conditions, 2.93% of GDP, relative to 2.51% during the 1840s and 2.49% during the 1830s, driven by the much larger investment volumes during the period.
https://economics.wm.edu/wp/cwm_wp153.pdf
The first sentence isn't clear to me. Is 4.31 > 2.93 because the average was higher from 1848-1854 than from 1850-1859, or because the "preceding years" part means they lumped earlier investment into the former range so it's not actually an average? Regardless, we're nowhere near 20%.
I'm wondering if the claim was actually something like "total investment over x years was 20% of GDP for one year". For example, a paper about the UK says:
> At that time, £170 million was close to 20% of GDP, and most of it was spent in about four years.
https://www-users.cse.umn.edu/~odlyzko/doc/mania18.pdf
That would be more believable, but the comparison with AI spending in a single year would not be meaningful.
[+] [-] jefftk|7 months ago|reply
When you go so far back in time you run into the problem where GDP only counts the market economy. When you count people farming for their own consumption, making their own clothes, etc, spending on railroads was a much smaller fraction of the US economy than you'd estimate from that statistic (maybe 5-10%?)
[+] [-] onlyrealcuzzo|7 months ago|reply
What's good for one class is often bad for another.
Is it a "good" economy if real GDP is up 4%, the S&P 500 is up 40%, and unemployment is up 10%?
For some people that's great. For others, not so great.
Maybe some economies are great for everyone, but this is definitely not one of those.
This economy is great for some people and bad for others.
[+] [-] decimalenough|7 months ago|reply
The net utility of AI is far more debatable.
[+] [-] tharmas|7 months ago|reply
[+] [-] fuzzfactor|7 months ago|reply
More like apples to octopus.
People should keep in mind that there was no such thing as a GDP before the 1980's.
All that has been back-calculated, and the further back you go the more ridiculous it gets.
Excuses sounded plausible at the time but killed two birds with one stone.
Less rapid increase in government benefits which had become based on GNP for survival to cope with inflation, and further obscuring the ongoing poor economic performance of the 1980's going forward compared to how it was before 1970 numerically.
The people who were numerically smart before that and saw what things were like first hand were not fooled so easily.
Even using GDP back in the 1980's when it first came out, you couldn't get a good picture of the 1960's which were not that much earlier.
Don't make me laugh trying for the 1860's :)
[+] [-] Ekaros|7 months ago|reply
Where as AI, who actually gets the investment? Nvidia? TMSC? Are people who are employed some that would have anyway been employed? Do they actually spend much more? Any Nvidia profits likely go just back to the market propping it up even higher.
How much efficiency from use of LLMs have actually increased proctiveness?
[+] [-] esseph|7 months ago|reply
https://sherwood.news/markets/the-ai-spending-boom-is-eating...
[+] [-] tagami|7 months ago|reply
[+] [-] gorgoiler|7 months ago|reply
For me, that’s enough of a thought experiment — as implausible as it might be to have AI in 1901 — to be skeptical that the difference is simply that the first tech step-change was a pre-war uplift to build the post-war US success story, and the latter builds on it.
[+] [-] digitcatphd|7 months ago|reply
[+] [-] 0cf8612b2e1e|7 months ago|reply
[+] [-] gruez|7 months ago|reply
[1] Things get even spicier if consumer growth was zero. Then what would the comparison? That AI added infinitely more to growth than consumer spending? What if it was negative? All this shows how ridiculous the framing is.
[+] [-] raincole|7 months ago|reply
Is the keyword here. US consumers have been spending so much so of course that sector doesn't have that much room to grow.
[+] [-] troyastorino|7 months ago|reply
Using non-seasonally adjusted St. Louis FRED data (https://fred.stlouisfed.org/series/NA000349Q), and the AI CapEx spending for Meta, Alphabet, Microsoft, and Amazon from the WSJ article (https://www.wsj.com/tech/ai/silicon-valley-ai-infrastructure...):
-------------------------------------------------
Q4 2025 consumer spending: ~$5.2 trillion
Q4 2025 AI CapEx spending: ~$75 billion
-------------------------------------------------
Q1 2025 consumer spending: ~$5 trillion
Q1 2025 AI CapEx spending: ~$75 billion
-------------------------------------------------
Q2 2025 consumer spending: ~$5.2 trillion
Q2 2025 AI CapEx spending: ~$100 billion
-------------------------------------------------
So, non-seasonally adjusted consumer spending is flat. In that sense, yes, anything where spend increased contributed more to GDP growth than consumer spending.
If you look at seasonally-adjusted rates, consumer spending has grown ~$400 billion, which might outstrips total AI CapEx in that time period, let alone growth. (To be fair the WSJ graph only shows the spending from Meta, Google, Microsoft, and Amazon. But it also says that Apple, Nvidia, and Tesla combined "only" spent $6.7 billion in Q2 2025 vs the $96 billion from the other four. So it's hard to believe that spend coming from elsewhere is contributing a ton.)
If you click through the the tweet that is the source for the WSJ article where the original quote comes from (https://x.com/RenMacLLC/status/1950544075989377196) it's very unclear what it's showing...it only shows percentage change, and it doesn't even show anything about consumer spending.
So, at best this quote is very misleadingly worded. It also seems possible that the original source was wrong.
[+] [-] bravetraveler|7 months ago|reply
[+] [-] electrondood|7 months ago|reply
[+] [-] lisbbb|7 months ago|reply
[+] [-] intended|7 months ago|reply
[+] [-] unknown|7 months ago|reply
[deleted]
[+] [-] antman|7 months ago|reply
This will not be the case anymore. There is no labor restructuring to be made, the lists for the future safe jobs are humorous to say the least. There has been a difficulty in finding skilled labor in sustainable wages for the companies and that has been highlighted as a key blocker for growth. Econony will rise by removing this blocker by AI. Rise of the economy due to AI invalidates old models and trickle down spurious correlations. Rise of the economy through AI directly enables the most extreme inequality and no reflexes or economics experience exists to manage it.
There have been many theories for revolutions, social financial ideological and others. I will not comnent on those but I will make a practical observation: It boils down to the ratio of controlers vs controlled. AI also enables an extremely minimal number of controllers through the AI managment of the flow information and later a large number of drones can keep everyone at bay. Cheaply, so good for the economy.
[+] [-] Animats|7 months ago|reply
If this isn't the Singularity, there's going to be a big crash. What we have now is semi-useful, but too limited. It has to get a lot better to justify multiple companies with US $4 trillion valuations. Total US consumer spending is about $16 trillion / yr.
Remember the Metaverse/VR/AR boom? Facebook/Meta did somehow lose upwards of US$20 billion on that. That was tiny compared to the AI boom.
[+] [-] brotchie|7 months ago|reply
I was working on crypto during the NFT mania, and THAT felt like a bubble at the time. I'd spend my days writing smart contracts and related infra, but I was doing a genuine wallet transaction at most once a week, and that was on speculation, not work.
My adoption rate of AI has been rapid, not for toy tasks, but for meaningful complex work. Easily send 50 prompts per day to various AI tools, use LLM-driven auto-complete continuously, etc.
That's where AI is different from the dot com bubble (not enough folks materially transaction on the web at the time), or the crypto mania (speculation and not utility).
Could I use a smarter model today? Yes, I would love that and use the hell out of it. Could I use a model with 10x the tokens/second today? Yes, I would use it immediately and get substantial gains from a faster iteration cycle.
[+] [-] keeda|7 months ago|reply
* Even with all this infra buildout all the hyperscalers are constantly capacity constrained, especially for GPUs.
* Surveys are showing that most people are only using AI for a fraction of the time at work, and still reporting significant productivity benefits, even with current models.
The AGI/ASI hype is a distraction, potentially only relevant to the frontier model labs. Even if all model development froze today, there is tremendous untapped demand to be met.
The Metaverse/VR/AR boom was never a boom, with only 2 big companies (Meta, Apple) plowing any "real" money into it. Similarly with crypto, another thing that AI is unjustifiably compared to. I think because people were trying to make it happen.
With the AI boom, however, the largest companies, major governments and VCs are all investing feverishly because it is already happening and they want in on it.
[+] [-] lisbbb|7 months ago|reply
I was recently at a big, three-letter pharmacy company and I can't be specific, but just let me say this: They're always on the edge of having the main websites going down for this or that reason. It's a constant battle.
How is adding more AI complexity going to help any of that when they don't even have a competent enough workforce to manage the complexity as it is today?
You mention VR--that's another huge flop. I got my son a VR headset for Christmas in like 2022. It was cool, but he couldn't use it long or he got nauseaus. I was like "okay, this is problematic." I really liked it in some ways, but sitting around with that goofy thing on your head wasn't a strong selling point at all. It just wasn't.
If AI can't start doing things with accuracy and cleverness, then it's not useful.
[+] [-] rockemsockem|7 months ago|reply
Edit: agree on the metaverse as implemented/demoed not being much, but that's literally one application
[+] [-] 827a|7 months ago|reply
The average response to that is "its just fake demand from other businesses also trying to make AI work". Then why are the same trends all but certainly happening at Cursor, for Claude Code, Midjourney, entities that generally serve customers outside of the fake money bubble? Talk to anyone under the age of 21 and ask them when they used Chat last. McDonalds wants to deploy Gemini in 43,000 US locations to help "enhance" employees (and you know they won't stop there) [2]. Students use it to cheat at school, while their professors use it to grade their generated papers. Developers on /r/ClaudeAI are funding triple $200/mo claude max subscriptions and swapping between them because the limits aren't high enough.
You can not like the world that this technology is hurtling us toward, but you need to separate that from the recognition that this is real, everyone wants this, today its the worst it'll ever be, and people still really want it. This isn't like the metaverse.
[1] https://openrouter.ai/rankings
[2] https://nypost.com/2025/03/06/lifestyle/mcdonalds-to-employ-...
[+] [-] rglover|7 months ago|reply
If the general theme of this article is right (that it's a bubble soon to burst), I'm less concerned about the political environment and more concerned about the insane levels of debt.
If AI is indeed the thing propping up the economy, when that busts, unless there are some seriously unpopular moves made (Volcker level interest rates, another bailout leading to higher taxes, etc), then we're heading towards another depression. Likely one that makes the first look like a sideshow.
The only thing preventing that from coming true IMO is dollar hegemony (and keeping the world convinced that the world's super power having $37T of debt and growing is totally normal if you'd just accept MMT).
[+] [-] throwmeaway222|7 months ago|reply
As someone in an AI company right now - Almost every company we work with is using Azure wrapped OpenAI. We're not sure why, but that is the case.
[+] [-] nowittyusername|7 months ago|reply
[+] [-] throw0101d|7 months ago|reply
* https://paulkedrosky.com/honey-ai-capex-ate-the-economy/
* https://news.ycombinator.com/item?id=44609130
[+] [-] jus3sixty|7 months ago|reply
Back then, the money poured into building real stuff like actual railroads and factories and making tangible products.
That kind of investment really grew the value of companies and was more about creating actual economic value than just making shareholders rich super fast.
[+] [-] johncole|7 months ago|reply
[+] [-] dehrmann|7 months ago|reply
Its limitations are well-documented, but cutting-edge AI right now is very much "real stuff."
[+] [-] GianFabien|7 months ago|reply
[+] [-] jaredcwhite|7 months ago|reply
[+] [-] rapsey|7 months ago|reply
Also because so many companies are staying private, a crash in private markets is relatively irrelevant for the overall economy.
[+] [-] highfrequency|7 months ago|reply
Neglects the most important benefit of large semiconductor spending: we are riding the Learning Curve up Moore's Law. We are not much better at building railroads today than we were in 1950. We are way better at building computers today. The GPUs may depreciate but the knowledge of how to build, connect, and use them does not - that knowledge compounds over time. Where else do you see decades of exponential efficiency improvements?
[+] [-] missingdays|7 months ago|reply
[+] [-] DebtDeflation|7 months ago|reply
[+] [-] ckocagil|7 months ago|reply
[+] [-] mrbluecoat|7 months ago|reply
[+] [-] lenerdenator|7 months ago|reply
Now, it does that at the expense of the average person, but it will definitely prop up the bubble just long enough for the next election cycle to hit.
[+] [-] gamblor956|7 months ago|reply
The AI bubble is so big that it's draining useful investment from the rest of the economy. Hundreds of thousands of people are getting fired so billionaires can try to add a few more zeros to their bank account.
The best investment we can make would be to send the billionaires and AI researchers to an island somewhere and not let them leave until they develop an AI that's actually useful. In the meanwhile, the rest of us get to live productive lives.
[+] [-] agent_turtle|7 months ago|reply
[+] [-] HocusLocus|7 months ago|reply
[+] [-] BriggyDwiggs42|7 months ago|reply
[+] [-] johng|7 months ago|reply
These are jobs that normally would have gone to a human and now go to AI. We haven't paid a cent for AI mind you -- it's all on the ChatGPT free tier or using this tool for the graphics: https://labs.google/fx/tools/image-fx
I could be wrong, but I think we are at the start of a major bloodbath as far as employment goes.... in tech mostly but also in anything that can be replaced by AI?
I'm worried. Does this mean there will be a boom in needing people for tradeskills and stuff? I honestly don't know what to think about the prospects moving forward.
[+] [-] mikewarot|7 months ago|reply
Would another order of magnitude decrease in the amount of compute for a model do it?
Would the cost of compute falling by an order of magnitude in a black swan event?
Or, perhaps Jevan's paradox[1] kicks in, and we just eat up the extra capacity in new uses.
[1] https://en.wikipedia.org/wiki/Jevons_paradox