Openai Signs $38b Cloud Computing Deal with Amazon

Every image/video/text post on a meta app is essentially subsidized by oai/gemini/anthropic as they are all losing money on inference. Meta is getting more engagement and ad sales through these subsidized genai image content posts.

Long term they need to catch up and training/inference costs need to drop enough such that each genai post costs less than net profit on the ads but they’re in a great position to bridge the gap.

The end of all of this is ad sales. Google and Meta are still the leaders of this. OpenAI needs a social engagement platform or it is only going to take a slice of Google.

No amount of reddit posts and H200s will result in a model that can cure cancer or drive high-throughput waste filtering or precision agriculture.

They're going to sell ads at the moment people are looking to buy stuff. It's the single most viable business model we've ever seen.

The financial impact if the whole AI space loses even 50% of its current "valuation" will be huge. The financial impact of the whole AI space continuing at its current velocity is... More of whatever is going on now?

I estimate that the addtional work I can do is worth that much. It doesn't matter that "I do it" or "The LLM does it" - Its both of us, but I'm responsible for the code (I always execute it, test it, and take responsibility for it). That's just my estimate. Also what a ridiculous phrasing, the intent of what I'm saying is "I would pay a lot more for this because I personally see the value in it" - that's a subjective judgement I'm making, I have no idea who you are, why would you assume thats a tranferrable objective measure that could simply be transferred to you? AI is a multiplier on the human that uses it, and the quality of the output is hugely dependent on the communication skill of the human, you using AI and me using AI will produce different results with 100% certainty, one will be better, it doesn't matter who, I'm saying, they will not be equal.

>But it’s not you doing the work. And by your own admission, anyone can eventually figure it out. So if anything you’ve lost traits and handed them to the Llm. As an employee you’re less entrenched and more replaceable.

So what? I'm results driven - the important thing is that the task gets done - it's not "ME" doing it OR the "LLM" doing it, it's Me AND the LLM. I'm still responsible if there's bugs in it, and I check it and make sure I understand it.

>As an employee you’re less entrenched and more replaceable.

I hate this attitute, this is an attitude of a very poor employee - It leads to gatekeeping and knowledge hoarding, and lots of other petty and defensive behaviour, and it what people think when they view the world from a point of scarcity. I argue the other way - the additional productivity and tasks that I get done with the assistance of the LLMS makes me a more valuable employee, so the business is incentivised to keep me more, there's always more to do, it's just we are now using chainsaws and not axes.

When you go long, you can still make money by being “sort of right” or “obliquely right” or “somewhat wrong but lucky”or by just collecting dividends if the market stays irrational long enough. If you short something you have to be exactly right (both about what will happen and precisely when) or your money will end up in the hands of the people you’re betting against. It’s not a symmetrical thing you can just switch back and forth on.

Yeah. "Markets can remain irrational longer than you can remain solvent."

https://en.wikipedia.org/wiki/Michael_Burry had an investor panic and nearly lost everything. He was right, but he nearly got the timing wrong.

Googles biggest advancement in the last ~15 years is to produce worse search results so that you spend more time engaging with Google, and doing more searches, so that Google can show more ads. Facebook is similar in that they feed you tons of rage-bait, engagement spam, and things you don't like infused with nuggets of what you actually want to see about your friends / interests. Just like a slot machine the point is that you don't always get what you want, so there's a compulsion to use because MAYBE you will get lucky.

OpenAI's potential for mooning hinges on creating a fusion of information and engagement where they can sell some sort of advertisement or influence. The problem of course is that the information and engagement is pretty much coming in the most expensive form possible.

The idea that the LLM is going to erode actual products people find useful enough to pay for is unlikely to come true. In particular people are specifically paying for software because of it's deterministic behavior. The LLM is by its nature extremely nondeterministic. That's fully in the realm of social media, search engines, etc. If you want a repeatable and predictable result the LLM isn't really the go to product.

I don’t disagree with you entirely, but I’d argue the second level apps are harder to chase because they get so specialized.

Death of Google (as everyone knows Google today) is a tricky one. It seems impossible to believe at this exact moment. It can sit next to IBM in the long run, no shame at all, amazing run.

Inherently, no. In practice, it's riddled with biases deep enough [1] to make it an informal fallacy.

"The competition in a large market, such as CRM software, is very tough," and "there are power laws which mean that you have to rank surprisingly high to get 1% of a market" [2]. Strategically, it ignores the necessity of establishing a beachhead in a small market, where "a small software company" has "a much better chance of getting a decent sized chunk."

[1] https://www.nature.com/articles/s41599-024-03403-9

[2] https://news.ycombinator.com/item?id=45804756

Does that make any sense? No.

If the market collapses I think Meta can technically just walk away and they lose access to those data centers (which they no longer want anyways) and the SPV is stuck holding $X of assets with $>X liabilities and the issues of the credit are on the hook but not Meta.

And investors are fine being on the hook because they get a higher return from the SPV bonds than Meta bonds. (risk adjusted it's probably the same return).