Post #2849799

2026-05-18 11:42 UTC

AI has an interesting economic trait in that it’s very, very expensive to deploy, and made very fast progress from 2022 to 2024. That caused investors with money to believe that: Pushing the frontier was going to cost a lot of money. More than any other purported revolutionary tech. Extrapolation of past improvement meant that whoever was on the cutting edge may end up with a product with a huge paying market. So whoever wins this race would be rich, and the investment would have been worth it for them. But since 2024, we’ve seen that the cutting edge got even more expensive much faster than expected, and much of the improvements in performance now come from inference rather than training, which represents a high ongoing cost. Now, if we extrapolate from that trend line, we’ll see that the market will be much smaller for AI services at the cost it takes to provide that service, and the question then becomes whether the industry can make its operations cheaper, fast enough to profitably provide a service people will pay for. I have my doubts they’ll succeed, and we might just be looking at the industry like supersonic flight: conceptually interesting, technically feasible, but just a commercial dead end because it’s too expensive.

Replies (1)

@Aceticon@lemmy.dbzer0.com 2026-05-18 12:08

The economics of it don’t add up and the growth rate of the curve of improvement over time has already significativelly fallen which looking at the historical curves for other technologies is a very strong indication that it’s approaching the limits of how far it will go. So at both levels it all looks like a massive bet in the wrong horse that’s turning out not to be a winner. As I see it, the way Microsoft and other AI investors are going at it is to try and create a beach-head for it via hype, branding and lock-in in the expectation that something will come along at some point from the companies they invested in that is actually a genuine breakthrough that uses all the computing capacity created with their investment money. I think that the reason why from the point of view of the public the AI adoption feels wrong is because it’s almost entirelly top-down, driven by marketing techniques and against the current. Certainly to me this feel a lot like the hype part of the cycle for the Segway, only with 100x or 1000x more investment money behind it.

Open ##2849798