Fantastic analogy! As much as I want to be the same age as Google, I’m actually the same age as Amazon, but I won’t be buying any of Meta’s glasses to make myself look younger.
I knew i shouldn’t have started reading your substack. I was enjoying listening so much to your easily consumable and informative podcasts. Also i knew i shouldn’t watch it as a video (2 unattractive mugs). Leave the elderly to their few harmless botox and filler tweaks please.
Investments are necessary for survival and there are other industries too where most of their investments in R&D do not bear results. Pharmaceutical industry for example where less than 10% of their investments in drug development do not reach the regulatory approval stage. The big pharma companies still profit off our sick American populace.
Hi Ed I like your analysis and your podcasts with ProfG. This article missed one very important point that even if Amazon and MS both are and will diversify their dependence from OpenAI and Anthropic hence they are adding support for all models very fast. So it will have a much smaller effect on the hyperscalers than what everyone make it out to be. Remember the most important aspect, Amazon, MS keep the customer and the experience layer. And that’s where the monetization is, where as the LLM is replaceable either with an American model or a Chinese model.
This is a brilliant analysis. So much wisdom from an impressive young man. I'm an old, still in the market, and living on social security. Thank you for talking me off the ledge. It's going to be okay🦋
I could not agree more with insanity of AI spending, but I think we need to remember that companies are in fact not people. We mythologize the shareholder class as the ultimate boss so they need to be given larger gains at the cost of innovation and big bets. Companies are companies, full stop. Shareholders are not the boss and are in fact not owed bigger and bigger profits. We need to change and go back to thinking of companies as vehicles for creation rather than pure money generation for the sake of money generation.
AI is here to stay and will become a larger part of our work and our life. OpenAI and Anthropic WILL become profitable, either independently or after one of their largest investors swallows them up. AI platforms are in the stage of addicting us to their services, which are improving daily. Once a critical mass of consumers are addicted, POW POW ... the ads, the subscription price increases, paid relationships with AI partners, new forms of subscription with news notifications, capabilities that we cannot even now imagine. Costly data centers are needed to support that growth. There is LOTS to pay for on AI that users are not now paying for. Free crystal or cocaine fosters dependency at the beginning, but that never lasts long.
How much of Big Tech’s investment in OpenAI, Anthropic, and hyperscaling driven by fear that if they are not at the party as honored guests that they might be there as the main course ??? After all what is AI but any of these Big Tech businesses but without all the burdensome employees.
Ed, you a nailing it. You describe the AI daisy chain quite well, and these are huge friggin companies. In looking at your chart of previous CapEx booms you gotta remember that the railroad boom was accompanied by bankruptcy left and right. This could be worse. Again, thanks.
Here's a thought: maybe we need to change our perspective on what is happening with the AI investment/bubble/political hot patato/mad scramble in data centers. What if, instead of thinking we are building the new railroads of the 21st century, we are building all the factories that fed those railroads? But instead of taking 150 years to build them, we are trying to do it in 10 years! Not all those factories were successful; lots were, lots went out of business, lots were acquired by more successful competitors. Isn't our job as investors to figure out who the winners will be and invest with them?
FYI, I have made my bet on who the winners will be.
Fantastic analogy! As much as I want to be the same age as Google, I’m actually the same age as Amazon, but I won’t be buying any of Meta’s glasses to make myself look younger.
Terrible advice. They'll truly start to die as soon as they stop investing heavily in R&D. Remember the lessons of Xerox, HP and many others.
We like to think of information as oil but it really isn't and R&D spend is the vital essence of any big tech co.
This may not be a message Mark Zuckerberg is ready to hear...
Great piece Ed, keep going with the authentic voice.
I knew i shouldn’t have started reading your substack. I was enjoying listening so much to your easily consumable and informative podcasts. Also i knew i shouldn’t watch it as a video (2 unattractive mugs). Leave the elderly to their few harmless botox and filler tweaks please.
Thank you
Investments are necessary for survival and there are other industries too where most of their investments in R&D do not bear results. Pharmaceutical industry for example where less than 10% of their investments in drug development do not reach the regulatory approval stage. The big pharma companies still profit off our sick American populace.
What a great piece of writing! Your'e slowly but surely catching up with your mentor. Luckly Scott is old and doesn't really care
"Norma, you're a woman of 50, now grow up. There's nothing tragic about being 50, not unless you try to be 25." Joe Gillis - Sunset Boulevard
Hi Ed I like your analysis and your podcasts with ProfG. This article missed one very important point that even if Amazon and MS both are and will diversify their dependence from OpenAI and Anthropic hence they are adding support for all models very fast. So it will have a much smaller effect on the hyperscalers than what everyone make it out to be. Remember the most important aspect, Amazon, MS keep the customer and the experience layer. And that’s where the monetization is, where as the LLM is replaceable either with an American model or a Chinese model.
This is a brilliant analysis. So much wisdom from an impressive young man. I'm an old, still in the market, and living on social security. Thank you for talking me off the ledge. It's going to be okay🦋
I could not agree more with insanity of AI spending, but I think we need to remember that companies are in fact not people. We mythologize the shareholder class as the ultimate boss so they need to be given larger gains at the cost of innovation and big bets. Companies are companies, full stop. Shareholders are not the boss and are in fact not owed bigger and bigger profits. We need to change and go back to thinking of companies as vehicles for creation rather than pure money generation for the sake of money generation.
AI is here to stay and will become a larger part of our work and our life. OpenAI and Anthropic WILL become profitable, either independently or after one of their largest investors swallows them up. AI platforms are in the stage of addicting us to their services, which are improving daily. Once a critical mass of consumers are addicted, POW POW ... the ads, the subscription price increases, paid relationships with AI partners, new forms of subscription with news notifications, capabilities that we cannot even now imagine. Costly data centers are needed to support that growth. There is LOTS to pay for on AI that users are not now paying for. Free crystal or cocaine fosters dependency at the beginning, but that never lasts long.
How much of Big Tech’s investment in OpenAI, Anthropic, and hyperscaling driven by fear that if they are not at the party as honored guests that they might be there as the main course ??? After all what is AI but any of these Big Tech businesses but without all the burdensome employees.
Ed, you a nailing it. You describe the AI daisy chain quite well, and these are huge friggin companies. In looking at your chart of previous CapEx booms you gotta remember that the railroad boom was accompanied by bankruptcy left and right. This could be worse. Again, thanks.
Here's a thought: maybe we need to change our perspective on what is happening with the AI investment/bubble/political hot patato/mad scramble in data centers. What if, instead of thinking we are building the new railroads of the 21st century, we are building all the factories that fed those railroads? But instead of taking 150 years to build them, we are trying to do it in 10 years! Not all those factories were successful; lots were, lots went out of business, lots were acquired by more successful competitors. Isn't our job as investors to figure out who the winners will be and invest with them?
FYI, I have made my bet on who the winners will be.