Excess Compute: Ed Elson is joined by Ed Zitron to break down Meta’s move to sell its excess AI capacity and why it’s a bad sign for the AI bubble.
That’s not the narrative, of course.
Meta CEO Mark Zuckerberg appears poised to make a big bet on a potentially big market, but one that commands much slimmer margins than his company’s dominant online ad business.
Cloud infrastructure has proven to be highly lucrative for hyperscaler peers Amazon, Microsoft and Google, and Zuckerberg has hinted of late that Meta could be headed in that direction. On Wednesday, CNBC’s Jim Cramer confirmed that Meta will sell excess computing power to outside customers. The company is debating whether to offer access to AI models hosted on its infrastructure or to sell access to raw computing power, according to Bloomberg.
Wall Street welcomed the news. …
I think it’s pretty clear to any sane person that the AI bubble, when it bursts (and it will), could tank the overall market like 30%. Don’t say I didn’t warn ya! (Also a buying opportunity, like when I timed the Covid panic down to the day in 2020)
See also:
World’s Largest Data Center Project On Verge Of Collapse After Blackstone Unexpectedly Pulls Out
https://www.zerohedge.com/technology/worlds-largest-data-center-campus-verge-collapse-after-blackstone-unexpectedly-pulls-out
So many large players have invested so much into LLMs that when the bubble pops it’s going to make the dot-bomb collapse of Nortel look like a fart in a tornado. Google will survive, they’re being sensible about their investments. I give it 50-50 Microsoft doesn’t survive in a recognizable form. Companies that haven’t abandoned their core business, like Facebook, Amazon and Apple, will take a big hit but soldier on. Everything smaller will disintegrate.