Technology

The value a thing creates is only part of whether the investment into it is worth it.

It's entirely possible that all of the money that is going into the AI bubble will create value that will ultimately benefit someone else, and that those who initially invested in it will have nothing to show for it.

In the late 90's, U.S. regulatory reform around telecom prepared everyone for an explosion of investment in hard infrastructure assets around telecommunications: cell phones were starting to become a thing, consumer internet held a ton of promise. So telecom companies started digging trenches and laying fiber, at enormous expense to themselves. Most ended up in bankruptcy, and the actual assets eventually became owned by those who later bought those assets for pennies on the dollar, in bankruptcy auctions.

Some companies owned fiber routes that they didn't even bother using, and in the early 2000's there was a shitload of dark fiber scattered throughout the United States. Eventually the bandwidth needs of near universal broadband gave that old fiber some use. But the companies that built it had already collapsed.

If today's AI companies can't actually turn a profit, they're going to be forced to sell off their expensive data at some point. Maybe someone else can make money with it. But the life cycle of this tech is much shorter than the telecom infrastructure I was describing earlier, so a stale LLM might very well become worthless within years. Or it's only a stepping stone towards a distilled model that costs a fraction to run.

So as an investment case, I'm not seeing a compelling case for investing in AI today. Even if you agree that it will provide value, it doesn't make sense to invest $10 to get $1 of value.