Big Tech Is Finally Paying for the AI Disaster It Created

[Beebo Brink]

Trillions in market value have vanished, free cash flow is collapsing even as revenues rise, companies are discovering that basic AI projects can quietly exceed their budgets by millions, and the financial relationships connecting the industry are starting to look less like a market and more like an elaborate circle. This video follows the money through Nvidia, Meta, Amazon, Tesla, SpaceX and Reddit to uncover what is really driving the simultaneous sell-off and why the bill for the AI boom may finally be arriving.
00:00 Introduction
01:25 The Magnificent 7 Are Dead
09:23 Musical Chairs aka Circular Financing
14:28 "Catastrophically Expensive"
20:23 The B Word

 

[GoblinCampFollower]

Great video! thanks for posting! I'm not yet totally convinced this is going belly up JUST YET, but do fundamentally agree with all her points. My company for one recently hit some of this. We were VERY STRONGLY URGED to use AI as much as we could and shove it up our asses. ...only to recently find out we ran out of tokens! lol.

I'm of course absolutely certain the real technology isn't going to vanish, but I of course see this big blob of circular financing she talks about (as does anyone else with eyes) and we all know this will end poorly.

EDIT: Just clarifying, when I say the real technology, I mean the things the models can actually do, not the nonsense about "superintelligence."

 

[Noodles]

Making a note to watch later.

 

[Beebo Brink]

EDIT: Just clarifying, when I say the real technology, I mean the things the models can actually do, not the nonsense about "superintelligence."

El is basically pro-AI, but she's also a sharp critic of various aspects of the AI industry and the techbros who run it. I've been following her for a while, on a wide range of topics (she really loves poking at FIFA), but her take on technology is probably her strongest suite.

 

[GoblinCampFollower]

El is basically pro-AI, but she's also a sharp critic of various aspects of the AI industry and the techbros who run it. I've been following her for a while, on a wide range of topics (she really loves poking at FIFA), but her take on technology is probably her strongest suite.

It seems like I'd agree with her on most of this. A lot of people lament that we need to shut it down, but I think very few actually want to ban the technology or research into it. There are so many cases throughout history of useful technology being pioneered by evil entities that cast a dark shadow over it for a bit. A few quick examples that come to mind are Nazi's making jet engines and rockets. Or Monsanto developing so much farming technology.

 

[Kamilah Hauptmann]

find out we ran out of tokens! lol.

Sounds like your workplace needs a decentralized, community-owned, AI-native token orchestration layer to cope with your tokenmaxxing.

 

[Jopsy Pendragon]

*Thank You* Seriously.

Seems my former (semiconductor related) employer is caught up in the shitshow. I've been getting extra spicy daily stock value updates from 'the algorithms' for the last couple of months. Sometimes double digit percentile differences, on a stock that typically had sub-percent daily changes. It's a little unnerving.

 

[Noodles]

I feel like like a big issue, and not jist with AI but a lot of new tech, evwey company is basically way way too eager to "get the next big thing.". They roll out half baked, inefficient things (like most public AI) without any reguard to safety or cost or anything.

Its like huge companies, trying to pretend like they are start ups.

Also in some cases, we seem to have forgtten thst just because an idea exists, does not mean its a GOOD idea (not as much directed at AI.)

 

[Casey Pelous]

I feel like like a big issue, and not jist with AI but a lot of new tech, evwey company is basically way way too eager to "get the next big thing.". They roll out half baked, inefficient things (like most public AI) without any reguard to safety or cost or anything.

Its like huge companies, trying to pretend like they are start ups.

Also in some cases, we seem to have forgtten thst just because an idea exists, does not mean its a GOOD idea (not as much directed at AI.)

And now, having sprinted far down that garden path, nobody wants to be the first to pull the plug on what is clearly a huge boondoggle. "Maybe the other guys will blink first, then we'll have The Whole Market!"

See also: Sunk cost fallacy.

 

[Noodles]

And now, having sprinted far down that garden path, nobody wants to be the first to pull the plug on what is clearly a huge boondoggle. "Maybe the other guys will blink first, then we'll have The Whole Market!"

See also: Sunk cost fallacy.

There also isn't a "next big thing" to jump on yet. Blockchain to Metaverse to AI. We need a new hype hotness!

 

[Free]

Can we monetize the Singularity?

 

[Jopsy Pendragon]

And now, having sprinted far down that garden path, nobody wants to be the first to pull the plug on what is clearly a huge boondoggle. "Maybe the other guys will blink first, then we'll have The Whole Market!"

See also: Sunk cost fallacy.

Exactly. It’s the corporate version of “keep doubling your bet until you win,” except they’re playing against each other and hoping everyone else runs out of money first.

Seems they're hoping it’ll all be fine tomorrow, once AI is entrenched enough that nobody can realistically opt out, research spending settles down, most of the competition is dead, and the handful left standing can stop pretending this was ever going to remain cheap.

I’m not even sure the end goal is to sell AI services to ordinary people. I suspect the real money is in pricing the useful versions beyond individual reach, so governments and corporations can afford them and everyone else gets whatever stripped-down, ad-supported, employer-controlled version they’re allowed to interact with.

 

[Caete]

Can we monetize the Singularity?

No.

 

[Free]

No.

Well, at least we can still make a profit from it.

 

[Caete]

It seems like I'd agree with her on most of this. A lot of people lament that we need to shut it down, but I think very few actually want to ban the technology or research into it. There are so many cases throughout history of useful technology being pioneered by evil entities that cast a dark shadow over it for a bit. A few quick examples that come to mind are Nazi's making jet engines and rockets. Or Monsanto developing so much farming technology.

Just to be clear, the U.K. had the WU First Model which was the first turbojet engine to be built and run in the world (1937) but Germany had the first actual jet engine powered flights (1939).

 

[Noodles]

Can we monetize the Singularity?

Pipe ads directly into your brain.

 

[Beebo Brink]

I feel like like a big issue, and not jist with AI but a lot of new tech, evwey company is basically way way too eager to "get the next big thing.". They roll out half baked, inefficient things (like most public AI) without any reguard to safety or cost or anything.

You would really find this next video interesting. During this Tech Report interview, El emphasizes this very point: the technology can do lots of things, but NOT all the things the techbros are claiming. The gap between the hype and the reality is not just misleading, it's downright dangerous.

 

[Lori Claremont]

I work for Cisco. Yesterday everyone in the Product organization got(?) to sit for four hours and listen to our SVP Jeetu Patel present the "Product Strategy FY27 Kickoff".

It was all AI all the time. Everything he talked about was about AI and in particular AI Agents. Cisco is making a huge amount of money on the massive scramble to build data centres. It stands to reason, CIsco sells loads of gear required for building out a data centre.

At the same time though, I was listening to all this with El's previous video running through my head and I'm thinking "Okay, and what's plan B for when the bubble bursts?" Cisco got hit massively when the dot-com bubble burst. It's taken until just the last few months for our stock price to get back anywhere near what it was at the height of the dot-com bubble, and its another damned bubble! There's no evidence that anyone in the upper leadership of Cisco has any sort of hedge for surviving the AI implosion that I'm increasingly convinced is coming, and seems to be coming soon.

I'm retiring in the next few years, and a significant portion of my retirement funds are tied up in Cisco stock. Am I about to get wiped out? Things that keep me up at night...

ETA: It's ironic, that at the same time we're being pushed onto the AI everywhere bandwagon "Everyone must be using AI daily!" we got a message Tuesday that was essentially "Hey, maybe you all can use cheaper models?" It seems that token expense is becoming an issue at Cisco.... colour me surprised...

 

[Erich Templar]

When the collapse of the AI industry comes, it's going to be catastrophic.

 

[Soen Eber]

I work for Cisco. Yesterday everyone in the Product organization got(?) to sit for four hours and listen to our SVP Jeetu Patel present the "Product Strategy FY27 Kickoff".

It was all AI all the time. Everything he talked about was about AI and in particular AI Agents. Cisco is making a huge amount of money on the massive scramble to build data centres. It stands to reason, CIsco sells loads of gear required for building out a data centre.

At the same time though, I was listening to all this with El's previous video running through my head and I'm thinking "Okay, and what's plan B for when the bubble bursts?" Cisco got hit massively when the dot-com bubble burst. It's taken until just the last few months for our stock price to get back anywhere near what it was at the height of the dot-com bubble, and its another damned bubble! There's no evidence that anyone in the upper leadership of Cisco has any sort of hedge for surviving the AI implosion that I'm increasingly convinced is coming, and seems to be coming soon.

I'm retiring in the next few years, and a significant portion of my retirement funds are tied up in Cisco stock. Am I about to get wiped out? Things that keep me up at night...

ETA: It's ironic, that at the same time we're being pushed onto the AI everywhere bandwagon "Everyone must be using AI daily!" we got a message Tuesday that was essentially "Hey, maybe you all can use cheaper models?" It seems that token expense is becoming an issue at Cisco.... colour me surprised...

Can you sell the stock right now?