Brian Merchant makes a convincing case the US has a AI bubble on it's hands and it is staggeringly massive. Quoting a WSJ column by Paul Kedrosky, Merchant sets up just how big this AI bubble is:
spending on AI infrastructure has already exceeded spending on telecom and internet infrastructure from the dot-com boom—and it’s still growing… one explanation for the U.S. economy’s ongoing strength, despite tariffs, is that spending on IT infrastructure is so big that it’s acting as a sort of private-sector stimulus program.
Capex spending for AI contributed more to growth in the U.S. economy in the past two quarters than all of consumer spending, says Neil Dutta, head of economic research at Renaissance Macro Research, citing data from the Bureau of Economic Analysis.
Merchant, underlines just how jaw-dropping the size of the bubble is:
I’ll just repeat that. Over the last six months, capital expenditures on AI—counting just information processing equipment and software, by the way—added more to the growth of the US economy than all consumer spending combined. You can just pull any of those quotes out—spending on IT for AI is so big it might be making up for economic losses from the tariffs, serving as a private sector stimulus program.
The private sector is under going a government size stimulus program. These companies are so big that they in the aggregate outsize growth in consumer spending!
To me, this is just screaming bubble. I’m sure I’m not alone. In fact I know I’m not alone. I’m thinking especially of Ed Zitron’s impassioned and thorough guide to the AI bubble; a rundown of how much money is being poured into and spent on AI vs how much money these products are making, and surprise, the situation as it stands is not sustainable.
These companies, openAI, perplexity, anthropic, etc, are all unprofitable. They are burning billions in venture capital and have little to show for. There has not been one company out there, in the 3 years chatGPT released 3.0, that has been able to build a successful genAI product.
The reason is,"fundamentally, generative AI does not let companies build something new," argues Ed Zitron in his piece AI is a money trap
Meanwhile, Nilay Patel, Verge's hype-man for blogs -- golden age tech if I may say -- announced SB Nation is becoming a next gen social network, powered by ActivtyPub. Ghost also announced you will be able to publish to fediverse apps, including bluesky. Essentially, the future of media is the blog.
The main thesis of this site is blogging is back, baby.