AI profitability is mathematically impossible

AI profitability is mathematically impossible(old.reddit.com)

14 points by droptablemain 2 hours ago | 15 comments

aesthesia 1 hour ago |

There are some glaring local errors that make this analysis less than trustworthy. For instance, an assumption that corporate income tax applies directly to revenue, or a supposedly generous assumption that GPUs will fully depreciate after 3 years (6-year-old A100s are still in very high demand!). I would love to read a really well thought through investigation of inference costs and how they relate to token pricing, but I have low confidence that this is it.

anamax 18 minutes ago | |

> GPUs will fully depreciate after 3 years (6-year-old A100s are still in very high demand!)

Depreciation is a tax thing. While it is supposed to track useful life, it almost never does.

For example, houses are depreciated on a 28-year schedule. I'm typing this from a house built in 1902....

Google has yet to decommission any of its Trilliums, and the V1s shipped in 2015.

The prices to rent V2 (2017) and later are on https://cloud.google.com/tpu/pricing .

aesthesia 1 hour ago | |

Oh, just noticed one other very significant error: they evaluate revenue using input token pricing while counting capacity using generated tokens per second. There's a big gap between input and output token pricing, and between prefill TPS and generation TPS.

jv22222 2 hours ago |

Why is no one talking about open source models being burned direct to chip and running inference at 10k-15k a second?

OS models close the gap (via distillation) with frontier models, then get burned to chip, then offer commoditized inference via data farms or local plugins.

With thought loops this fast even if the models are less smart they can be self correcting to level them selves up.

aeternum 16 minutes ago | |

These already exist and there are very few use-cases because typically waiting a little longer for a significantly better answer is preferable.

unknown_user_84 1 hour ago | |

I've seen Taalas come up on HN, but only once. I'm not a HN fanatic but I end up around page 3 before I kill-filp my browser into oblivion. Currently Taalas has Llama 3.1 8B burned onto a chip and offer chatbot and API access. That said they aren't selling the chips yet, on their website at least.

I expect they are waiting for an openweight model they really feel is worth burning to a chip and/or training their own thing. I'd guess they could probably figure out some efficiency speedups if they are doing model development + hardware development at the same time. Though this seems different than Google and friends with their TPUs and similar. TPUs being general purpose chips than what Taalas is making. Still, probably something there.

david_shi 1 hour ago | |

If you burn a model to a chip what happens if there's a better model?

scarmig 1 hour ago | | |

You have a slightly less great model. Depending on your thesis on how fast AI will advance, that might be minimal, or it might be huge. However, "AI is advancing too fast for people to make obvious efficiency improvements economically worth doing" is rather hard to square with "AI is a lie and will never generate profits."

nosioptar 1 hour ago | | |

I had the same question.

I wondered if it'd be possible to use a rewritable chip or a socketed chip...

saulpw 2 hours ago | |

> With thought loops this fast even if the models are less smart they can be self correcting to level them selves up.

You can't self-correct a model that's been burned to a chip. That seems like it'd be the main problem with ASIC AI, when everything's changing on a monthly basis, do you want to spend $x00 on a substandard model that'll be obsolete in 3 months, or wait 3 months?

aatd86 2 hours ago |

Not convinced. That is a very static view. You would think that the output of AI will be better AI, better energy sources and that will make AI way cheaper in the long run... It will end up a cheap commodity that is basically free to produce. Over the long run it is absolutely one of the best investments in projections.

bwestergard 2 hours ago | |

"It will end up a cheap commodity that is basically free to produce."

Wouldn't this just mean that hardware manufacturers capture the profits, not hyperscalers?

u1hcw9nx 2 hours ago | |

Classic story tellers vs people who can quantify.

Story tellers: Full self driving was commonplace already in 2020.

vablings 2 hours ago | |

The idea that a GPU being useful for 3 years is insane. There is little to no data to support that