zlacker

> Of course, ai will continue to improve. But it is also likely to get more expensive…Microsoft’s share price took a beating last week as investors winced at its enormous spending on the data centres underpinning the technology. Eventually these companies will need to demonstrate a return on all that investment, which is bound to mean higher prices.

That’s not how it works, and I’m surprised this fallacy made it into the Economist.

Commodity producers don’t get to choose the price they charge by wishful thinking and aspirational margins on their sunk costs. Variable cost determines price. If all the cloud companies spend trillions on GPUs, GPU rental price (and model inference cost) will continue going down.

Indeed, cheaper and cheaper AI for the same level of performance has been even more consistent empirically than improvement in frontier model performance.

>>highfr+(OP)
> I’m surprised this fallacy made it into the Economist.

Fallacies in the Economist, you say without irony?

From TFA:

> Yet investors risk misdiagnosing the industry’s troubles.

Oh, I think investors are asking, "where is the actual gain in capability and/or productivity?" Because they don't see it. And huge lay-offs don't prove it.

> Of course, AI will continue to improve.

This is begging the question. However, for the sake of argument, let's assume that AI continues to improve.

The thing we call AI is a long way from improving robotics. It's most prevalent practical value right now is improved search and code/text information assistance. But these improvements themselves have proven to be far from perfect.

The only monetisable path that we have seen in search and information assistance is advertising. The AI boom walks and quacks like a duck: a bubble, and a dawning generation of new facets of enshittification.