thanks, AI-boosting motherfuckers, thanks a lot
So they’re unwilling to spend on increasing capacity because they don’t expect this demand to last.
Yes, AI is nice, but I also like to be able to buy some RAM and drives…
There is one exception though. Open WebUI with a whopping 960 MB. It's literally a ChatGPT interface. I'm only using external API providers. No local models running.
Meanwhile my website that runs via my own Wordpress-like software written in Rust [1] requires only a few MB of RAM, so it's possible.
More likely a couple of big financing wobbles lead to a fire sale.
It isn't practical for HDD supply to be wedged because in 5 years the disks start failing.
The main reason I do not prioritise AI usage in my own life is to retain my skills and mental acuity. All of the forms of computing and opportunities that I value do not require AI to achieve. I can understand why people feel differently from me, though, because AI and AI-adjacent things are where all of the money is right now.
Well, at least they might still have a product to sell once the AI bubble pops, unlike with NVIDIA which does seem to kinda forgot to design new consumer GPUs after getting high on AI money.
That's either a typo, or NVidia has achieved some previously unheard of levels of innovation.
Spoiler from the future: it hasn't. Get your investments in while you have time.
I love modern world so much /s
I have a old WD small one that's kinda faulty (plugged it in then put it down heavily, it's not been right since), I should pop it open just to see what's inside, but it's older than the USBC models so could easily have changed. In any case, I don't think AI is eating the stock of slow laptop HDDs, so I'm not sure there's any need to buy these just for shucking.
Eventually the music will stop when the easy money runs out and we'll see how much people are truly willing to pay for AI.
Everything was cheap. Samsung sold SSDs at a loss that year.
TSMC and other suppliers did not invest as much in cap ex in 2022 and 2023 because of the crash.
Parts of the shortage today can be blamed by those years. Of course ChatGPT also launched in late 2022 and the rest is history.
[0]www.trendforce.com/presscenter/news/20221123-11467.html
Not to mention that without enough competition, you can just raise prices, which, uh (gestures at Nvidia GPU price trends...)
Thus far, we've not found that point.
Very good.
And if they were running 24/7, maybe setting up another factory or line will avoid some of the 24/7 scheduling.
I don’t quite follow the narrative like yours about nation states and investors. There is certainly an industrial bubble going on and lots of startups getting massive amounts of capital but I here is a strong signal that a good part of this demand is here to stay.
This will be one of those scenarios where some companies will look brilliant and others foolish.
These contracts are then transferrable. The manufacturer can start work on a factory knowing they'll get paid to produce the drives.
If the AI boom comes to an end, the manufacturer is still going to get paid for their factory, and if the AI company wants to recoup costs they could try to sell those contracts back to the manufacturer for pennies on the dollar, who might then decide (if it is more profitable) to halt work on the factory - and either way they make money.
This sounds like economic dogma based on pointing at some future equilibrium.
I like the saying that goes something like "life is what is happens when you are waiting for the future". In the same way, it seems to me that equilibrium is increasingly less common for many of us.
Markets are dynamic systems, and there are sub-fields of economics that recognize this. The message doesn't always get out unfortunately.
> But with AI being massively subsidized by nation-states and investors, there's no price that is too high for these supplies.
This feels like more dogma: find a convenient scape-goat: governments.
Time to wake up to what history has shown us! Markets naturally reflect boom and bust cycles, irrationality of people, and various other market failures. None of these are news to competent economists, by the way. Be careful from whence you get your economic "analysis".
.....
Cheap hard drives and ram, yay! Perhaps GPUs too!
Seeing the first mover succeed, every Tom, Dick and Harry wants to emulate. It distorts the price because people would pay premium for everything. Then there is surplus supply and no takers. People are caught with their pants down and things go for cheap.
This repeats ad nauseum. Whether it was building ISPs during early 2000s or the abundance of streaming service where every media company wanted one. Just because the corporate overlord doesn't want to look foolish for not following a trend.
So there is always use for more compute to solve problems.
Fiber installations can overshoot relatively easily. No matter how much fiber you have installed, that 4k movie isn't going to change. The 3 hours of watch time for consumers isn't going to change.
Hardware just depreciates much much faster than fiber
There's clearly easy/irrational money distorting the markets here.
AI will cause shortages in everything from GPUs to CPUs, RAM, storage, networking, fiber, etc because of real demand. The physical world can't keep up with AI progress. Hence, shortages.
AI simply increases computer use by magnitudes. Now you can suddenly use Seedance 2.0 to make CGI that would have cost tens of millions 5 years ago for $5.[0] Everyone is going to need more disk space to store all those video files. Someone in their basement can make a full length movie limited only by imagination. The output quality keeps getting better quicker.
AI agents also drastically increase storage demands. Imagine financial companies using AI agents to search, scrape, organize data on stocks that they wouldn't have been able to do prior. Suddenly, disk storage and CPUs are in high demand for tasks like these.
I think the demand for computer hardware and networking gear is real and is only the beginning.
As someone who is into AI, hardware, and investing, I've been investing in physical businesses based on the above hypothesis. The only durable moats will be compute, energy, and data.
"Compute" is capital investment; normal and comprehensible, but on a huge scale.
"Data" is .. stolen? That feels like a problem which has been dodged but will not remain solved forever, as everyone goes shields-up against the scrapers.
"Energy" was a serious global problem before AI. All economic growth is traded off against future global temperature increases to some extent, but this is even more acute in this electricity-intensive industry. How many degrees of temperature increase is worth one .. whatever the unit of AI gain-of-function is?
If AI will permanently cause an increase in hard drives over the current growth curve, then WD, et al will build new capacity, increasing supply (and reducing costs). But this really isn’t something that is known at this point.
Maybe now we will start to see the "optical" CPUs start to be a thing. Or the 3D disk storage,;or other ground breaking technology.
Real demand, sure, I agree, but maybe not retail or business demand; at the moment the "demand" is entirely VC demand.
It's a really distorted market which is to be expected in any bubble/hype phase. The current retail/business demand doesn't appear to exist at the price point these investments require - even at the low low cost of "free, gratis and for nothing", not enough consumers and businesses are signing up.
The ones really going all-in on AI are the slop-producers. I dunno if slop is enough to pay back the investment into AI - I mean, even the slop producers are going to realise that paying $200/m to produce something in 1/10th of the time is a race to the bottom because someone else on the same plan is going to do the same, but cheaper.
> The physical world can't keep up with AI progress. Hence, shortages.
I think the word "progress" is inaccurate there - the physical world supply product at the demand maintained by VC's money.
It's not "cannot keep up with progress", it's "cannot keep up with demand from VCs".
> The only durable moats will be compute, energy, and data.
That'll be a first :-) Physical commodities have never been moats on their own before.
Sounds right
> there's no price that is too high for these supplies.
Are you saying even higher prices won't increase supply? I don't understand.
Why gamers must be the most important group?
The problem with this AI stuff is we don't know how much we will be willing to pay for it, as individuals, as businesses, as nations. I guess we just don't know how far this stuff will be useful. The reasons for the high valuation is, in my guess, that there is more value here than what we have tapped so far, right?
The revenues that nVidia has reported is based on what we hope we will achieve in the future so I guess the whole thing is speculation?
What if in the near future it is simply too expensive to own "personal" computers? What if you can no longer buy used computers from official channels but have to find local shops or sharpen up on soldering skills and find parts from dumps? The big techs will conveniently "rent out" cloud computer for us to use, in exchange of all of your data.
"Don't you all have cellphones?"
I don't know if TSMC has anything to do with hard drive production, but the reliance on very few players is also a problem in that industry.
Is the profitability of these electronics manufacturers more likely than the companies that are buying up all their future inventory?
If AI has a bubble burst, you could see a lot of used hardware flood the market and then companies like WD could have a hard time selling against their previous inventory.
If it's long term, it would be better to be the front runner on additional capacity, but that's assuming continuous growth. If it all comes down, or even just plateaus, it's better to simply raise prices.
And if they produce lot of video, they might keep copies around.
I was toying with getting a 2T HDD for a BSD system I have, I guess not now :)
https://www.washingtonpost.com/technology/2026/01/27/anthrop...
6-7 years ago when GPU prices went up, I hoped nothing would break. Last year when RAM prices went up I did the same. Now with drive prices going up, it's the same thing.
It's interesting because I've always built mid-tier machines over the years and it was in the neighborhood of ~$700 at the time. Now the same thing is almost double that but the performance is no where near twice as good for general computer usage.
We're fucking doomed.
It’s building materials being in short supply when there’s obviously more houses than buyers. That’s just masked at the moment because of all the capital being pumped in to cover for the lack of actual revenue to pay for everything. The structural mismatch at the moment is gigantic, and the markets are getting increasingly impatient waiting for the revenue to materialize.
Mark this post… in a few years folks will be coming up with creative ideas for cheap storage and GPUs flooding the market after folks pick up the pieces of imploded AI companies.
(For the record, I’m a huge fan of AI, but that doesn’t mean I don’t also think a giant business and financial bubble is about to implode).
COVID was six years ago. In that time, GPU prices haven't gone down (and really have only increased). Count me skeptical that there will be a flood of cheap components.
> It’s building materials being in short supply when there’s obviously more houses than buyers.
That I think is a hard one to prove and is where folks are figuring it out. There is obvious continued demand and certainly a portion of it is from other startups spending money. I don’t think it’s obvious though where we are at.
One can only hope that that's the principle at work here, anyway. It could also be a critically damped system for all I know. Unfortunately I studied control systems too...
On other hand if there is bigger economic turmoil that might mean that the postponed demand does not realise as there is no purchasing power...
I would love if more non-traditional economists got involved in the public sphere by which I mean: writing about economic trends, public policy, regulation, rate-adjustment, etc.
Market says the more you buy the better pricing you get. Once you start capturing large market share of the product, the price should go up and not down; exponentially.
Example, a person that owns 10 houses means that they are restricting the ability of others to own a single home. By increasing the cost of excessive product ownership ... it will reduce the amount of product that people will hoard and allow others to gain access to it.
If you try to use government to force reality to conform to your idea of how things should work you're just going to get 1,000 companies buying 10,000 hard disks each rather than 10 companies buying 1,000,000 each. And if you try to outlaw that somehow then the market will just route around your new scheme in another way, creating even more unintended consequences in the process.
If you must meddle, you're much better off working with market forces rather than trying to fight against them.
Unfortunately, there are several such outlier entities which collectively control enough resources to price literally everyone else out.
I buy one hard disk, AI company busy 40% of global supply. Me not buying that one hard disk is not going to change anything.
>According to Western Digital, thanks to a surge in demand from its enterprise customers, the consumer market now accounts for just 5 percent of the company's revenue.
On the otherhand lots of people here are even more uncomfortable of the other option, which is quite possible: AI software algorithms may scale better than the capacity of companies that make the hardware. Personally I think hardware is the harder to scale from the two and this is just the beginning.
The replacement arrived also in a paper bag and went straight back, this time for a refund.
I guess I should have kept that one and hoped for the best.
Good alternatives? I’ve only recently been enlightened on how profoundly sh__ty SSD is for long-term storage and I have a whole lot of images my parents took traveling the last few years of their lives.
And I’m not keen on having anyone ship me one of these anymore.
Walmart sells what appears to be an older version of the drive and I might have to cross my fingers and just get one of those.
How does external compare to internal, if at all? Is 3.5" going to last longer than something smaller?
I'd have thought HDDs aren't at the top of the list for AI requirements, are other component manufacturers struggling even more to meet demand?
If we weren’t talking about AI, was there another high demand sector / customer for spinning platters?
And their margins get fat now that supply is relatively constant but AI demand has saturated their current production numbers.
The worry is that at some point the older hardware will stop working.
Once the phone makers realize that they can sell phones and docking stations to businesses because 90% of knowledge work seems to happen in a web browser through one SaaS or other I think personal computers will be cooked.
Also pulling and shredding hard drives is cheaper than paying someone to run DBAN or equivalent (which can take many hours to complete on a large drive), and there's no easy way to securely erase an SSD if it wasn't encrypted from the beginning.
I probably will only need to return newest laptop if I leave the company.
Indeed, investors left to their own devices act in this way. Underlying such a single point-of-failure is an implied but immense hope and thus pressure for stability. I wonder what the prediction markets saying about current levels of geopolitical stability in Taiwan?
Isn't this just taking the oft-proposed explore vs exploit dichotomy to the logical conclusion of the "exploit" side?
Every single arbitrarity-finely-divided thing "should" be handled by the single (group|process) that has the greatest relative advantage at that one thing.
And you end up with the total variety/detailedness of everything matching what the substrate of the economy (ie, people with specialized training or education) has capacity to support. So at the limit there is at most one person who knows how to do any one specific thing.
(And the global economic system becomes infinitely fragile, but eh who's counting.)
Turns out letting a bunch of MBAs plan your economy is extremely foolish.
And isn't it also in a seismically active region, also prone to eathquake and/or tsunami?
Stop getting your news from news.
> that has all of their important factories on a single island that's under constant threat of invasion.
Threat of invasion? Who would dare invade taiwan when it's protected by china?
> I don't know if TSMC has anything to do with hard drive production
Then why bother commenting here?
> but the reliance on very few players is also a problem in that industry.
Ah, you have a political agenda.
As for plagiarism, it is not something to even consider when writing code, unless your code is an art project. If someone else's code does the job better then yours, that's the code you should use, you are not trying to be original, you are trying to make a working product. There is the problem of intellectual property laws, but it is narrower than plagiarism. For instance, writing an open source drop-in replacement of some proprietary software is common practice, it is legal and often celebrated as long as it doesn't contain the original software code, in art, it would be plagiarism.
Copyright laundering is a problem though, and AI is very resource intensive for a result of dubious quality sometimes. But that just shows that it is not a good enough "plagiarism machine", not that using a "plagiarism machine" is wrong.
If I copy work from someone else, whether that be a paragraph of writing, a code block or art, and do not credit them, passing it off as my own creation, that's plagiarism. If the plagiarism machine can give proper attribution and context, it's not a plagiarism machine anymore, but given the incredibly lossy nature of LLMS, I don't foresee that happening. A search engine is different, as it provides attribution for the content it's giving you (ignoring the "ai summary" that is often included now). If you go to my website and copy code from me, you know where the code came from, because you got it from my website
The ones who spend billions on integrating public cloud LLM services are not the ones writing that function. They are managers who based on data pulled out of thin air say "your goal for this year is to increase productivity by X%. With AI, while staffing is going slightly down".
I have to watch AI generated avatars on the most boring topics imaginable, because the only "documentation" and link to actual answer is in a form of fake person talking. And this is encouraged!
Then the only measure of success is either AI services adoption (team count), or sales data.
That is the real tragedy and the real scale - big companies pushing (external!) AI services without even proof that it justifies the cost alone. Smooth talking around any other metric (or the lack of it).
So I'm getting tired of the argument that LLMs are "plagiarism machines" -- yes, they can be coaxed into repeating training material verbatim, but no, they don't do that unless you try.
Opus 4.6's C compiler? I've not looked at it, but I would bet it does not resemble GCC -- maybe some corners, but overall it must be new, and if the prompting was specific enough as to architecture and design then it might not resemble GCC or any other C compiler much at all.
Not only do LLMs mimic human thinking, but also they mimic human faults. Obviously one way in which they mimic human faults is that there are mistakes in the LLMs' training materials, so they will evince some imperfections, and even contradictions (since there will be contradictions in their training materials). Another way is that their context windows are limited, just like ours. I liken their hallucinations to crappy code written by a tired human at 3AM after a 20 hour day.
If they are so human-like, we really cannot ascribe their output to plagiarism except when prompted so as to plagiarize.
The solution is just a lot of redundancy for larger disk arrays whenever practical. I currently have a 15x1TB 7200 RPM zpool in raidz2 I use for "scratch space" for some automation projects. It writes about 500GB-1TB or so a day and has for... over 18 years. I have had exactly one drive fail from that pool, under heavy abuse. That one failed a year or two in. Prior to my personal use it was beat on (mostly reads) as backing storage for uploaded images for a large website where the drives operated at 90% or higher I/O utilization pretty much 24x7.
I have other pools of disks where I have replaced over 50% of them 6 years in, with batches of failures seemingly at random. You start to notice patterns with various drive models - but not until well after the point of purchase where it's far too late to predict based on anything like vendor reputation or whatnot. I've had batches of various WD, Seagate, Toshiba, and HGST all both be incredibly reliable and some incredibly not so. Some of the same model series just different drive sizes have wildly different reliability characteristics.
I don't bother pulling "old" drives out of production preemptively any more. The only thing I do preemptively now is pull drives with very critical SMART prefailure warnings such as a consistently growing number of unrecoverable sector errors. That one and a couple other attributes are worth watching trends for, but the rest are pretty pointless and really do not seem to correlate much. And again, it varies by drive model for which times to pay attention to a particular SMART attribute and which not to.
I simply treat drives as wear items that fail with little to no notice, and just make sure I can survive a number of simultaneous failures at once. Make sure to regularly test your monitoring!
Not power cycling drives is huge as well, as you note. For example these old 1TB spinners:
9 Power_On_Hours 0x0012 078 078 000 Old_age Always - 158328
12 Power_Cycle_Count 0x0032 100 100 000 Old_age Always - 13Looks like all the money reserves big companies have been sitting on are gone. Circular money deals are in full swing & now it looks like some companies are now looking for loans.
Not sure how much longer this can go on until it comes crashing down.
The premise here is that if we use more electricity then we burn more carbon. And the media hates AI, so if anybody restarts any coal-fired power plant to run a data center anywhere, that's the story. But then there's this:
https://electrek.co/2026/01/28/eia-99-of-new-us-capacity-in-...
Nobody actually wants coal because solar is cheaper.
And data centers are a pretty good combination for this because the biggest problem with solar and wind is what to do during multi-day periods of low generation, but data centers have backup generators and would be willing to turn them on whenever the cost of grid power is higher than the cost of operating them. Running some gas turbines for a week every two years in exchange for stabilizing the grid and being able to run on renewable power for the other 103 weeks is a pretty good outcome for everybody, not least because that amount of grid stabilization would exceed their consumption, i.e. allow more renewables to be added to the grid than they're using. If they can shed 1GW of load when a 2GW (long-term average) solar farm is generating at 50% of typical capacity for a week, you can add that 2GW of solar to the grid and remove 1GW of fossil fuels even while the data center is increasing consumption by 1GW.
Billionaire. And they are definitely willing to make the trade.
Besides, a 1080 had 8GB, a 5080 has 16GB. Double in 10 years isn't ground breaking. The industry put VRAM into industrial chips. It didn't make it to consumer hardware.
What games have had to deal with instead is inference based up-scaling solutions. IE using AI to sharpen a lower rest image in real time. It seems to be the only trick being worked on at the moment.
I can't think of anything useful crypto did.
My point is that directly or indirectly all hardware companies depend on memory and storage. If AI companies fall this could have repercussions to the whole industry.
> The problem with this AI stuff is we don't know how much we will be willing to pay for it, as individuals, as businesses, as nations. I guess we just don't know how far this stuff will be useful. The reasons for the high valuation is, in my guess, that there is more value here than what we have tapped so far, right?
I think the value now comes on how we make a product of it, for example, like OpenClaw. Whether we like or not, AI is really expensive to train, not only in monetary value but also in resources, and the gains have been diminishing with each “generation”. Let's not forget we heard promises that have not been fulfilled, for example AGI or “AI could potentially cure cancer, with enough power”.
And that's not even talking about the head spinning rate robotics is advancing. The hardware we use for LLMs is also being used in robot simulation for hardware training that gives results in hours that took weeks or months in the past.
But there was a window as recently as fall (3-5 months ago) where you could get most PC parts at MSRP. Granted it was a pretty short window, before the last dying whispers of crypto and COVID induced scarcity were overtaken by the surge of the AI bubble.
And yeah, fall is when I got my RTX 5080. It was still $1000 and I had no idea how lucky I was when I pulled the trigger. Still felt like I was trawling discord bots though to get a founders edition.
Isn't that what you're doing ordering off amazon with their comingled inventory?
Besides, there's a spectrum of sellers between "Amazon" and "anybody", you can even, perhaps, purchase directly from the manufacturer.
If it drops for a year, they're likely to start shedding capacity, one way or another.
This is not an equivalent situation. The vast, vast majority of what's being produced for this bubble is going to be waste once it pops.
Then you can leach precious metals from the PCB itself.
I mean, sure, yes, we can try to recycle waste products—but it's still less wasteful not to produce them unnecessarily in the first place.
Every year a few farmers realize they are contracted to deliver more grain than they have in their bins and so have to buy some grain from someone else (often at a loss) just to deliver it. This isn't a common problem but it happens (most often the farmer is using their insurance payout to buy the grain - snip a very large essay on the complexities of this)
But the AI companies are flush with cash and trying to buy everything, right? Why wouldn't they buy up as many futures contracts as the fab company needs to justify more fabs?
> Every year a few farmers realize they are contracted to deliver more grain than they have in their bins and so have to buy some grain from someone else (often at a loss) just to deliver it.
This is most commonly because they sold a futures contract for X bushels expecting to grow 2X but 75% of the crop failed and they only have 0.5X.
Semiconductor fab yields aren't as susceptible to how much it will rain next year and the companies generally have a pretty good idea of what their yields are for a given process node.
edit: actually it is worse - who else isn't buying contracts - if they build new capactity on contracts and ai collapses the existing users will take up the contracts but the old capacticy is unused.
You are also forgetting that the payback period on a plant is not a single year, it will be over many years and most likely no buyer is wanting to arrange purchasing that far out.
I don’t see how what you described sounds is set in reality even for “smart manufacturers”.
They didn't spin up additional mask production b/c they knew the pandemic would eventually pass. They learned this lesson from SARS.
Not maxing out production during spikes (or seasonality) in demand is a key tenet of being a "rational economic actor".
Last week: “TSMC's board approves $45 billion spending package on new fabs”
https://www.tomshardware.com/tech-industry/semiconductors/ts...
$45 billion for new fabs is peanuts compared to Amazon's $200b and Google's $180b investment in 2026.
Can't really blame TSMC though. It takes years for fabs to go from plan to first wafer. By the time new fabs go online, demand might not be there. Who knows?
But as it is it's not like they made any bad decisions either.
And even if there were guaranteed to be non-deterministic, there is still lots of value in many aspects of content generation.
Lets say you wanted to jump into the hard drive producing market. It's going to take you a few years to get there and a lot of billions of dollars. By the time you're close to producing units the existing players will suddenly drop the prices to the point where you cannot produce profits for as long as they need to. Aka, your competitors can collude longer than you can remain solvent. And yes, in two decades you will win the court case against them. And other than a fine nothing will happen because they're are so few manufactures that they are too big to fail.
It's only when supply bumps into short-term capacity constraints and price must rise enough to fully ration demand that this assumption fails. But then even if a new entrant appears that's no reason to drop prices unsustainably, because why would you? They're not taking any share of the market away from you, they're serving new demand.
Thankfully real world and physics has the final word, so we can at least plan what to do once the whole thing runs into a wall of reality & make the best of the wreckage.
"but this time is different, it's not a bubble, there's real value there"
Economists use the term “bubble” to describe an asset price that has risen above the level justified by economic fundamentals, as measured by the discounted stream of expected future cash flows that will accrue to the owner of the asset.
I think there's little argument that is happening, the question is more about to what extent is it a bubble.
The entire global software industry is worth less than $1 trillion dollars. Or in other words smaller than the current valuation of just OpenAI + Anthropic.
Planned capital investment this year by the Magnificent 7 alone is $600B. More than 2/3 of the total global software industry. In one year. Good luck buying any computer hardware this year, there will be a shortage of everything, including electricity.
It's a bubble. But when does the music stop?
Are you saying "worth" as a shorthand for something like annual profit? If you sort the 2025 data by earnings, you get pretty large numbers quickly: https://en.wikipedia.org/wiki/List_of_largest_technology_com...
That's not how you should measure "worth". In that world, you'd have a P/E ratio of 1. Comparing to a bond, it would be like expecting to get paid the face amount in a single year. Many people are quite happy with 5-10% interest as a risky benchmark, so 10-20 P/E isn't wild. That puts the market cap for tech itself at 10-20T as a reasonable baseline.
The entire global software industry is worth less than $1 trillion dollars. Or in other words smaller than the current valuation of just OpenAI + Anthropic.
Is Microsoft 3x more important than OpenAI and Anthropic combined? Personally no. I think the value generated by OpenAI and Anthropic will surpass Microsoft.
But arguing about the details is kind of missing the point. Microsoft's value is also inflated by the AI bubble and can't be used as a point of reference.
[1] https://www.grandviewresearch.com/industry-analysis/software...
That's my guess.
Aka: take a seat, it will be a while
1) the only reason any part of the economy is growing at all
2) the only reason US banks aren't bankrupt due to the commercial real estate debacle they got themselves into
In other words, if this is a bubble, if this pops, we're back in the 2008 situation. Where banks will go bankrupt one after the other like dominoes (in the sense that this amount is large enough that large banks will fail their financial obligations). And you can argue as much as you want based on "real" valuation metrics but none of your investments, not even cash dollars or even gold, will come out of that one intact.
Fortunately, there's the counterargument: you know what else is higher than ever? The revenue produced by the software industry. To the point that at the moment you can say, as crazy as it sounds: if revenue of the big software firms keeps growing the way it IS currently growing, this is not enough investment.
In case you're wondering what exactly that means, not enough investment. Think of it like this: you're selling shoes. If you invest too little in new shoes (or whatever resources you need to sell shoes), then you will have to tell customers coming in "sorry, all out of shoes, take your money elsewhere". Currently it's not enough investment. If this growth rate keeps up for 1.5 years, Amazon will have to close the store to anyone who wants more machines, in fact they are turning away large customers right now at Amazon, Google and Microsoft. That's where the "spend more now" madness is coming from. Is it unjustified?
Well, it appears not.
Time will tell.
The damage is already being done, whether you are a 401k/IRA holder with a position on the S&P 500 way too overweighted by the Mag7&co and their circular dealings, or just needing to buy computer parts way over their market value because some companies are over-leveraging to outcompete you for that hardware (or electricity), or even at a smaller scale by increasing software costs because everything is "AI-powered" now and of course you wouldn't want only "deterministic" software that just works and doesn't have a slop machine integrated.
It's always been cycles of cheap production and then human created demand or catastrophes to reduce supply and increase prices back up again.
Modern society seems to assume any work by a person is due to that person alone, and credits that person only. But we know that is not the case. Any work by an author is the culmination of a series of contributions, perhaps not to the work directly, but often to the author, giving them the proper background and environment to do the work. The author is simply one that built upon the aggregate knowledge in the world and added a small bit of their own ideas.
I think it is bad taste to pass another's work as your own, and I believe people should be economically compensated for creating art and generating ideas, but I do not believe people are entitled to claim any "ownership" of ideas. IMHO, it is grossly egoistic.
Plagiarism is a concept from academia because in academia you rise through the ranks by publishing papers and getting citations. Using someone else's work but not citing them breaks that system.
The real world doesn't work like that: your value to the world is how much you improve it. It would not help the world if everyone were forced to account for all the shoulders they have stood on like academics do. Rather, it's sufficient to merely attribute your most substantial influences and leave it at that.
Interesting. Capitalism is often touted to be more decentralized than socialism, but this is an example of how it can centralize.
A partisan Republican will reliably interrupt you to shout nonsense, as if admitting a single positive outcome is trying to deceive them. As if a cost-benefit analysis can just be cut in half. As if these were not just authoritarian/totalitarian, but completely lacking domestic support.
This outcome was achieved with a great deal of money and propaganda over more than a century.
By the way, plenty of people on HN and Reddit ask if the demand is real or not. They all think there's some collusion to keep the AI bubble going by all the companies. They don't believe AI is that useful today.
If it is, then the world is going to lose pretty much all white collar jobs. That's not really the bright future they're selling either.
The time horizon for this is murky at best. This is something you think, but can’t know. But, you’re putting money behind it, so if you’re right, you’ll make a good profit!
But for the larger companies (like WD), over building capacity can be a big problem. They can’t plan factory expansion based on what might be a short term bubble. That’s how companies go out of business. There is plenty to suggest that you’re right, that AI will cause permanently increased demand for computing/storage resources. Because it is useful and does consume and produce a lot of new data and media.
But I’m still skeptical.
The massive increase in spending can’t be sustainable. We can’t continue to see the AI beast at this rate and still have other devices. Silicon wafer fabs can’t be built on demand and take time. SSD/HD factories take time. I think we are seeing an expansion to see who the big players will be in the next 3-5 years. Once that order has been established, then I think we will fall back to more sustainable rates of demand. This isn’t collusion, it’s just market dynamics at play in a common market. Sadly, we are all part of the same pool and so everything is expensive for all of us. At some point though, the AI money will dry up or get more expensive. Then I think we’ll see a reversion back to “normal” demand, maybe slightly elevated, but not the crazy jump we’ve seen for the past two years.
To use an analogy, imagine you're a small fluffy mammal that lives in fertile soils in open plains. Suddenly a bunch of humans show up with plows and till you and your environment under to grow crops.
Maybe the humans suddenly won't need crops any longer and you'll get your territory back. But if that doesn't happen and a paradigm change occurred you're in trouble.
The most important question is are we in 1994 or 2000 of the bubble for investors and suppliers like Samsung, WD, SK Hynix, TSMC.
What about 10 years from now? 15 years? Will AI provide more value in 2040 than in 2026? The internet ultimately provided far more value than even peak dotcom bubble thought.
There are still plenty of problems that having more tokens would allow them to be solved, and solved faster, better. There is no absolutely no way we've already met AI compute demands for the problems that LLMs can solve today.
If you use it like an agent and stick it in a loop and run it until it achieves a specific outcome it's not.
Everything is either random, deterministic, or some shade of the two. Human brain "magic" included.
Meanwhile, the fab companies want to think about what happens if AI collapses, but the AI companies don't. What do they care if they get screwed on a contract the day after they go bankrupt regardless? So offer them a contract where they get screwed if they go bankrupt, e.g. prohibit them from using any of the hardware for anything but AI for five years. Then the hardware is locked into AI stuff regardless of whether AI dries up and you can still go sell the rest of the chips that aren't to PC OEMs etc.
Got the 20TB Seagate recert in May 2025 for $239. Now it's $500 and out of stock [1].
Got another 28TB Seagate recert in Sep 2025 for $398. Now it's $482 and out of stock [2]. Same drive, but seller refurbished is also OOS, but at $700.
I sure hope everything in my homelab NAS outlives the AI bubble. Otherwise, I'll have to shut it down, as getting a replacement for ANY part inside it is going to be stupid expensive. I'm at least thankful I went for DDR4 motherboard instead of DDR5.
[1] https://serverpartdeals.com/products/seagate-exos-x20-st2000...
[2] https://serverpartdeals.com/products/seagate-exos-st28000nm0...
The above was their prediction during the crypto boom and it turns out correct. I'm not sure how AI will turn out, but it isn't unreasonable to predict that AI will also move to dedicated chips (or die?) in a few years thus making gamers more important because gamers will be buying GPUs when this fad is over. Though of course if AI turns out to be a constant demand for more/better GPUs long term they are more important.
Gamers are not the only important GPU market. CAD comes to mind as another group that is a consistent demand for GPUs over the years. I know there are others, they are all important.
they don't need CUDA, they don't need the 10 years of weird game support, even the networking tech
they need none of nvidia's technology moats
exactly same as the crypto, where they just needed to make an ASIC to pump out sha1 as quickly as possible
which is really, really easy if you have a fab contract
at which point their use of nvidia dropped to zero
Mass surveillance by corporations can be outlawed. Just because something is possible, doesn’t mean it must be necessarily so.
I travel a lot for work to different nations. The cultural differences are stark.
In the UK for example, they love their CCTVs. In Switzerland, they’re only allowed where they are deemed necessary.
At a distance, I've started to view disorganized, inefficient messes of systems as not all that bad in the grand scheme, because chaotic systems are often harder to co-opt.
Yeah, but not to the early investors. The early investors lost their shirts. The internet provided a lot of value after the bubble popped and everyone lost money.
AI has had very little to do with MSFT growth. Pretty sure the 2023 lows were a response to the massive AI spending, and the recovery mostly due to continued Azure services growth.
But I don't think you've given any moral justification for the rule, and in particular, why LLMs (who are not humans and have no legal rights or obligations) have to follow it.
As much as we expound about the rule of law, might makes right if the population isn't vigilant. Simply put technology gives capability. In 1900 we didn't have the capability to monitor everything that everybody did all the time and keep those records their entire life. Now we have technology that can do just that.
This has nothing to do with the law. Zip, zilch, nada. Switzerland is one dark day away from having all their behaviors recorded by businesses/governments.
At the end of the day legality is a theoretical construct, and technological capability is reality.
1x a live server (Proxmox, NAS, firewall, and various other capabilities). 2x RAID1 enterprise NVMe, with NAS storage on RAID1 HDDs. 12th gen Intel, so relatively power friendly apart from the enterprise HDDs. 10 gbit local, remote 1 gbit fiber.
1x a live backup server in same city. Syncs every night. I should disable it otherwise, but I don't as of now, since it also gets a livestream of my doorbell camera (I don't use cloud for it). Has 1 gbit fiber, and RAID-1. Runs OS off RAID-1 (cannot add NVMe, older Synology, well maybe USB3 would work, but I'd rather not).
1x a backup server in same location as my home server which auto starts and syncs every week. This is my main old server, a Xeon so not very power friendly. Also RAID-1 NVMe. 10 gbit local.
1x a remote cloud (Norway), to have another copy of the most important data. Doesn't contain everything. Costs me only 50 EUR/year.
So that is a lot of copies of the same data, and quite frankly I not need this many. For the HDDs I want to get rid of RAID-1 and use either RAID-0 or JBOD, doubling the available data (I'm at the max as it is) while still having great data redundancy. And I will want to store my tapes off-site, although it wouldn't have the latest and greatest backups. I still have to look up how to do FDE with LTFS though, but I'll figure it out.
It also seems a good moment to sell some old hardware, given the current prices, but I am not sure if I will. Just something to ponder on later. You'd think I'd like to sell off the Xeon with its 30W CPU, but I quite like the machine (HP Microserver 10 Gen10 Plus). I'd rather sell the Synology which is still a decent machine, but I use voodoo to run recent software on it, and ZFS (with Homebrew / Nixpkgs). Tho neither is useful for ML.
Seems legit to me. Nonetheless, I think it's a solvable problem.
I'm not saying you should never listen to a word he says. His actions shape the world after all, so it's important to understand how his words precede his behavior. But I'm baffled why anyone would take Elon at his word, or even slightly hedge their perception of reality based on Elon's claims of fact.
Did you listen to the conversation? There was a great amount of detail. Which parts of the conversation seemed unbelievable to you?
Regardless, it's also been reported in the press over the past quarter, and TSMC's previously largest customer, Apple, notably has had to make fab adjustments and form new partnerships with Intel.
https://stratechery.com/2026/tsmc-risk/
https://www.eetimes.com/tsmc-will-struggle-to-meet-ai-demand...
And even the TSMC CEO himself has acknowledged it on multiple news sources. Here's just one:
"Demand is 3 times higher than what TSMC can produce"
https://wccftech.com/tsmcs-ceo-admits-chip-production-is-ins...
Hopefully, the CEO of the company in question is good enough for you?
Little easier than "laying off" a billion-dollar fab, isn't it?
Last time I checked you cant build Chip Fabs with cloud credits.
If big tech prepays for the entire fab, I think TSMC would do it.
OTOH, if they are insisting on not investing their funds or stock, and it is simply pressure on TSMC to take on the risk, TSMC should be very wary of taking on risk for those players (unless TSMC sees another advantage of producing into a likely glut or supply canyon shortly after the new fabs come online).
meanwhile, regional grid operators are faced with Big Tech driving tens of % of total power into private contracts where there's only one customer; they are making the decisions normally reserved for nation-states, right? reopening Three Mile Island sounded like a pipe dream a few years ago. I hear They have something like 50 more experimental, small-scale NPPs they want to fire up across the country in the next few years, too (but despite sounding like a big boon for energy, they're ~meaningless short-term in the face of how much demand we're looking at). -so this power (uh, literally) gets wrested away from the grid authorities and from what was largely the domain of government, to now be managed by techbros and a select few partners who will be reliant on their money; I'm sure that will work out fine.
anyway, part of the reason it does make some sense in the US for the government to push for more coal/LNG turbines, is because they're already there and we need them now; the permitting to un-mothball, prevent mothballing, or expand facilities, is far less arduous than what a company'd have to go through for a new facility (tho again, we don't have capacity to build all the turbines we require inside 5 years anyway). I'm not saying it's a good idea to start sending up more GHGs, but it's maybe better than pricing out electricity for residences and "real" industry. hey, who knows? maybe they'll simply build natural gas pipelines that don't leak this time.
-oh, and then there's the problem with these new datacenters disrupting the traditional power demand curve, because they don't really do as much peak draw anymore; their peak draw is approaching base load, as LLM batching (when a company has a bunch of stuff they want processed and can wait a day for it to run in "off-hours") is sold, and if unsold, that time can be used as training time; so the modern datacenter is a 24/7/365 organ; the heart, powering our society, Moltbook. the importance of this is it makes solar less financially attractive, because now we need to be able to bank more energy since more demand's shifting to overnight. we might also want to consider just getting the moon really, really hot? then we can get a truly substantial haul of lunar light for our panels. you know, we decided against nuking hurricanes again recently; maybe we could build some new ones and nuke the moon, a lot.
This is the same for more or less all major industrial users of electricity. Typically it's a boon for a power grid and overall lowers prices due to the stable consumer that helps you achieve very high capacity factors on your generation side. Large industrial users typically pay for a "max usage rate" (e.g. they commit to 200MW and will always pay for 200MW even if they only use 180MW average that billing period) due to the infrastructure needed to serve them - so it's as close to guaranteed money a power grid operator is likely to ever get.
If we want to re-industrialize the nation to any meaningful degree, we are going to need more baseload. AI datacenters may be a bubble, but if we can't somehow leverage the unlimited free money being poured into this space to augment our electric grid and build generation capacity for the first time since the Greatest Generation, we will have entirely failed as a society. The fact we have made it more compelling for folks to work out private deals with nuclear power plant operators to go behind-the-meter vs. just taking it from the grid is utterly absurd and shows how absolutely impossible it is to get anything done these days. These were last-ditch options after operators got frustrated trying to do things the usual way with years to decades of delays.
What is really happening at a very high level zoomed out: As a nation we decided to stop investing in energy infrastructure for over 50 years, and we are now reaping what we have sown. Eventually you run out of the previous generation's infrastructure investments, and also run out of cheap parlour tricks like sending industry overseas and focusing on energy efficiency vs. actually building stuff.
We get to figure out how to build things again or die trying. The AI bubble has only brought the demand forward a few years - anyone paying attention to this sector knew grid instability was effectively written in stone without major changes. Take our electric grid out of the hands of politicians and put it back in the hands of engineers and planners that actually can do things. You can't even build a transmission line of any length or size these days without a decade or more of legal battles and NIMBY. Good luck with the actual size of investment we need today.
tldr; We deserve all the pain we collectively get. You can only ignore problems for so long to take short term gains. Chickens coming home to roost in this arena, among many others. Once you stop investing in the future, the future eventually comes for you.
PS. I'm pretty sure Intel is also at max capacity. They cancelled a bunch of fabs a few years ago when they were on a spiral.
No, and I'm sorry for derailing your point. Thank you for the additional links. I skimmed them all but didn't see anyone corroborate the claim that TSMC is limited by its upstream component suppliers, rather than its own factory underinvestment in prior years. Am I misunderstanding, and those two things are the same?
But, you are certainly correct that factory underinvestment is likely the primary cause for being in this predicament.