Revenue is not profit. How are they going to pay their debts, for example? 6T in (fantasised) ARR is already about a third of US Fortune 500 total revenue over 2025, 21T. Good luck with that lol.
Their argument is going to be that AI is so good, it’ll just replace half of the Fortune 500 with their own agentic AI.
It’s so delusional.
Like fuck everything AI creates is so generic and bland even generic and bland corporate output looks nice.
I guess the $6tn is also including wages not being paid. They think they can just pocket the pros of AI and leave the rest of the world population with the cons. A small analogy. If nobody does large agriculture, there won’t be many tractors and tools sold and maintained. There won’t be cheap grain to be processed into convenience food, animal feed, booze. With those there won’t be food, meat, dairy and eggs for the masses which again needs specialised tools and machinery. You can keep going with this into increasingly miniscule economic sectors.
The point I want to reach is drawing the picture of a propellerheaded youth sawing into the branch on which he is sitting - and with him the whole family of H.Sapiens.
Just another food for thought. Scientists expect the next ice age in 10 millennia but we are about to loose our advanced and highly specialised society to a manmade global warming. We surely won’t be dying out anytime soon I believe, but neither will we be to go into that ice age as an advanced society.
I actually explain exactly the plan here. I wrote an article explaining it. They intend to use several channels to socialize losses. The big ones are the front door. Literal bail outs and subsidies on multiple levels. The back door is passing it on to passive investors. At the beginning of next year we will see a near total economic collapse as this bubble bursts. Once it does passive investors will be wiped out. A whole generation of retirement savings and pension plans wiped out while simultaneously the fed will bail out the major players. Here is the article https://themildtake.com/articles/2026-06-05-priced-for-rescue/. Most people picked up on this when SpaceX went public. What they didn’t mention was even if your in the S&P that only shields you from a single bad player and a minor one at that. Microsoft, oracle, google all these big hyperscalers and service providers renting that compute are all going to take a dive.
So where do we move the retirement account investments to to avoid the bubble? I think most of mine are in stuff like mid-cap and large-cap funds
Move a slice of the large-cap into ex-US: VEU or VXUS if you can pick ETFs, or your plan’s international index fund. Mid-caps are already the less exposed half; you can’t dodge the bubble, only cut the concentration.
If they do get bailed out, people better make sure they’re armed when they’re protesting because they’re almost certainly going to use illegal force to quash dissent of their theft.
Imagine if this was invested in arresting climate change.
Instead they are literally posting trillions into accelerating climate change.
So there will be trillions spent on land and energy wasting data centers to get a dressed up ELIZA that will not solve a single world problem (like hunger, homelessness, poverty, ecological collapse). Simply great! Why not end capitalism right now? It is the only reasonable path at this point.
Someone asked me a couple of weeks ago why the New Zealand Green Party’s answer to all of our problems seemed to be taxes on rich people and big corporations. I said that it was because 40 years of neoliberalism had given us an economy that balanced a rise for the 1% with a fall for the 99%, and we should start trying to address that gently and legally before the 99% remember that a guillotine is 18th Century technology and can be easily constructed in a garage.
The end of capitalism isn’t too far off, the way things are going. And it’s going to be messy as hell.
Ok so this is interesting. I am not sure this number is accurate I haven’t fully vetted it. I do this same type of forecasting. Morgan Stanley said for current capex commitments by 2027 4th quarter they needed to be 700 billion in profit. The problem is to meet that number they would need full market saturation and another 3 trillion in capex for build out. That means the entire accessible market would be using AI. They have another problem that more than half the world cannot access AI in its current form. The tooling these companies are using are wasteful and don’t meet the bandwidth needs of mobile first countries. So until the industry adopts things like https://codecai.net/ half the world’s markets are inaccessible. Finally they are under attack from all sides even if they had the money they may not have the ability to build out the AI infrastructure because that build out is becoming untenable for most communities. Even more the open source models and low cost AI are already in someways encroaching quickly on frontier systems. If you look at it right now the only reason you don’t have home AI as a commonplace solution is because the manufacturer has chosen not to sell it to you.
The local models thing is the real threat. For what 90% of the world who actually cares and wants AI, a local model is probably already “good enough”. Or would be if they could get the hardware, or maybe they don’t know how to set one up.
Got a 27b model running on my gaming GPU. Its a bit slow but good enough to look someing up, causual coding, and stupid questions. China is really kicking ass with the open source models.
Same, a 35B model is running on my gaming rig. It’s good enough for most things, even coding.
This isn’t the same thing as making VCRs cheap enough that every home has one. There is no FOMO wirh AI at the consumer level, no one knows what to do with it. The only people who want it are the ones who male it!!
Anthropic is claiming its total addressable market is over $30tn, so it’s all good, right? (No, that’s obviously crazy)
AI lab Anthropic, reportedly on the verge of a $2 trillion IPO, is preparing to tell investors that its total addressable market is worth more than $30 trillion, according to a report in the Wall Street Journal.
To put that figure in perspective, it eclipses the total GDP of China, is roughly equal to the entire GDP of the U.S., and represents about a quarter of the total world GDP of $120 trillion.
“Mercedes claims they have a total addressable market of $30 trillion by demonstrating that everyone has sold their vehicles and switched to driving a Mercedes on the new $20/month leasing program. Mercedes has not provided a response when asked how much their cars actually cost to own.”
To put that in context, Alphabet (Google’s parent) is the biggest software company in the world. It’s the 3rd biggest company in the world after nVidia and Apple, but they’re mostly hardware companies.
Google’s annual revenues are creeping up towards $500b/year. So, the AI companies (Google included I suppose) would need 12x Google’s annual revenue just to break even.
There are 2 companies that have over $1b in annual revenue, Amazon and Wal*Mart. But, those are companies that sell goods to consumers, they’re not just digital services businesses. But, even then, you’d need 3x the revenue of Amazon and Wal*Mart combined to hit $6t.
Google, Apple, nVidia, Wal*Mart and Amazon each took decades to grow enough to capture hundreds of millions of dollars in revenue. So, somehow OpenAI and Anthropic are going to need to grow faster than any other company on earth to hit these trillion dollar targets.
Also putting this number into scale, there are about 8.3 billion people on the Earth. But, most of them are poor goat herders, subsistence farmers, sweatshop employees, and AI model trainers / reviewers living in Asia and Africa. These aren’t the kinds of people who are going to be buying a subscription to ChatGPT. There are maybe 1 billion people globally who have disposable cash they can spend on AI. So, to hit 6 trillion annually, each person living in a developed country would need to personally hit $6000 in AI spending on a yearly basis. Note, that includes children and the elderly. If you limit it to working-age people, that’s more like $10k per person per year.
Now, it doesn’t have to be that this is down to consumers. Maybe this is so valuable that Wal*Mart, the US government, and every other large employer pays for a ChatGPT subscription for each of their millions of employees. But, really, despite the fact that there have been very few actual successful AI deployments that saved companies money, or generated more profits, they’re suddenly going to be spending a significant fraction of each worker’s wage on AI subscriptions?
I think it’s pretty obvious that the AI companies thought that they were about to invent AI jesus. They thought they were just a few datacentres away from the machine god coming to life. They thought that AGI would change the world to such a degree that it might make the entire economy obsolete, so there was no limit on how much they should spend so either they would get there first (and maybe be seen as the god’s parents?) or out of some kind of altruism-type-feeling so that they could make a machine god which would align with their beliefs. But, that didn’t happen.
I saw a comment the other day about AI firms and CapEx vs OpEx. CapEx is Capital Expenditures – basically one-time costs for setting up a business. OpEx is Operational Expenses, basically ongoing costs for running a business. A good way to generate money from a business is to have a high CapEx and low OpEx. It’s hard for someone to set up a competing business because of the high initial costs, but once it’s up and running you can provide services for a low ongoing cost, and you can make a high profit on each customer. If CapEx is low but OpEx is high, sometimes it can work as a luxury business. Think an artist who hand-carves furniture. If both CapEx and OpEx are low, it’s basically a commodity business, think something like a nail salon. Cheap to set up, cheap to run, hard to fight off competitors.
The AI companies are stuck in a world where they have incredibly high CapEx (building DCs and training new models), and incredibly high OpEx (inference queries – basically talking to the chatbot, is also very expensive). Right now to try to hook customers they’re subsidizing the OpEx side of things, so each new customer costs them more money. Their paid tiers are even worse because people actually start really using the chatbots once they pay for them, and the money lost per customer goes way up for the paid tiers.
The only thing that would work is if the companies can somehow manage to get customers to pay incredibly high costs per token, so that not only are the OpEx costs covered, but the companies can start to pay down the initial CapEx. But, there’s just no justification for that yet. And the ruthless competition between all the AI companies means that if one of them starts trying to jack up costs to cover their OpEx, the others will keep theirs low to grab market share.
This is why the AI companies are doing all the things they’re doing. They’re talking about their models “escaping containment” and “hacking” other companies. Why? Because that makes it sound like these things are so powerful that they can’t be contained, rather than it being that the AI companies are incompetent and building a locked-down test environment, and how they are just running dumb scripts that they’re not even looking at before the execute. They’re boosting stories about the AIs being so powerful that they’ll destroy the world so that CEOs think they need to buy subscriptions to this powerful machine god for their companies. They’re inviting regulations and laws so that no new AI companies can enter the business, and so that they’re all forbidden from building new models, which is a massive CapEx (sorta) cost.
They can’t admit that the attempt to build a machine god has failed, because that will cause the bubble to pop. What they want to do is survive long enough to go public so that the costs they’ve spent can be foisted on the dumb retail investors – and at this point on pension funds and anybody holding index funds, because these companies are so huge that index fund managers would be obligated to buy them. So, they need to keep scaring people about how incredibly powerful and unstoppable their word-guessing-machines are until their investors have safely grabbed their profits and everything can be allowed to explode.
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IOW, the plan is proceeding as “intended”. See: Airbnb, Uber, etc.
That’s where I disagree. Uber maybe has a viable business as long as they keep finding gullible or desperate people to drive for them. Their OpEx costs are tiny, it’s nothing more than a system that receives a message that someone wants a ride and sends out a bid to take that customer. Then it’s a pricing algorithm that drops the price that they pay to drivers as low as possible, while driving the cost of the ride as high as possible. They get whatever slim margin is left.
AirBnB is similar, virtually no OpEx costs, a very simple set of algorithms to match places for rent with people wanting to rent them, then fiddle with the prices and extract a middle-man fee. As long as they keep staying ahead of government regulations, there’s a business there.
But, nobody had to go out and explain to drivers why they might want to drive for Uber. “You drive people, we pay you money”, it’s a simple sales pitch. Same with AirBnB. Hotels and taxis were annoying enough that it was easy for consumers too. But, nobody has yet found a long-term justification for chatbots.
Sure, some companies are trying to use them. But, not successfully. Air Canada replaced customer service reps (presumably in a call centre in India or something) with a chatbot. But, when that chatbot hallucinated a policy when talking to a customer, the courts found that Air Canada had to honour that policy. That’s a massive risk long term, especially once people get good at figuring out how to talk to them.
People are using them to generate vast amounts of code… but code is a liability, not an asset. The things code can do might be an asset, but you have to be able to understand and maintain the code for it to work. If people are using AI to generate the code, and other people are using AI to review it, nobody actually understands it. This is just a time bomb waiting to blow up.
If there really were some kind of guaranteed money making thing that chatbots could do (other than online scams), the AI companies wouldn’t be out there trying to sell AI in general, they’d be buying companies and/or starting divisions that did that one thing.
IMO, the AI companies intended to hit AGI, and hand everything over to the machine god. Now they realize that it really just is a clever word-guessing machine with some vague capabilities that niche users might want (but not at the price they can meet), and they’re scrambling to find a seat before the music stops.
Another comparison, they’ll need to make token cost 100x to get those numbers. That’s because almost anyone who’s the target demographic of these AI tools is already using it. I don’t see what market is even left to cover. But let’s say their user base is 2 billion ( open AI has 1 billion, I’m extrapolating the rest based on market share) and they’re trying to get almost everyone on the planet with an internet connection to use these products, which is 6 billion, that still means at current prices, they’re only 3-4℅ of the way there.
Yeah this is going to be a freaking disaster.
open AI has 1 billion
I don’t really believe that. Have 1 billion people used it at least once? Maybe? Maybe part of that 1 billion is the same people on different accounts. I definitely don’t think there are 1 billion regular users.
I’m pretty sure Ed Zitron has been keeping pretty good accounting numbers. Whether you think his predictions are right or wrong (the hype has outlived even my expectations), I think he’s right about how much debt has been generated vs how much cash will be needed to service that debt and it seems highly unlikely that we aren’t letting these companies pretend there’s a pot of gold under every blade of grass to our own detriment.
If it didn’t make sense, that’s because it’s early and I just woke up.
Fantastic. That’s USD 750 per Earth inhabitant. You could feed all of humanity for this, with is what is essentially needed.
how could you feed anyone for that little (per year, let alone permanently)?
In the global south, lots of people already spend less than that on food. $750 is more than double the average Ethiopian yearly expenditure on food.
How much is the cure/treatment for Parkinson’s worth? Or other intractable medical problems?
What about a device able to manipulate the containment field of a fusion reactor?
These are the reasons why everyone is buying the compute services - there are dozens of moonshot-grade problems that are suddenly possible to attempt. Many will fail, but whoever gets that one success will gain astronomical benefit.
I’ll believe that these things are possible when there’s some empirical evidence that they are.
Why don’t you buy my amazing car. Yes it looks like that car that your nan drives to the shops but actually it can fly and time travel as well.
Those results are still tightly controlled by NDAs. They need time for FDA approval, patents, etc. Then time to get to market. These are not released in scientific papers anymore. It’s protected because it cost so much up front.
LLMs aren’t gonna give us any of those things. Thats just snake oil.
AI is not just LLMs. Much of AI is machine control, and bioinformatics.llms are the foam on top of the ocean.
AI has been mainstream for what, 4 years now?
if AI had such powerful results for developing novel solutions to problems such as medicine or material science, why have we not seen major improvements in those sectors?
the way AI is spoken about is that it’s “world impacting” and “sector disrupting”. the only disruption and impacts I’m seeing are in human rights violations, price gouging, privacy negation, and corruption.
if these are the results after only 4 years, I can only logically assume it will only get worse with more time and support.
The PC became mainstream in 1981. Why didn’t the Internet become big for another 10 years?
bullshit. you’re talking about two different technologies.
the PC didn’t promise to cure cancer. it promised to help you run your business more efficiently.
