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  • trio8453 · 6 days ago

    I don't understand the people who have the patience to listen to Zitron. It's all one-tone takes with no place for nuance, you kind of know what he's going to say and the fact the mixes genuine criticism with bad faith arguments doesn't help.

    • ElProlactin · 6 days ago

      > I don't understand the people who have the patience to listen to Zitron. It's all one-tone takes with no place for nuance...

      But that's why some people give him the time of day. A lot of people prefer to see things in black and white because it's easier on the brain.

      Basically, Ed is doing the easy part (pointing out the malinvestment) and not addressing the harder part, which is to predict what comes next in realistic terms. Because the idea that LLMs are just a $30-40 billion/year TAM and there's going to be an epic implosion that leaves only rubble is not the likely outcome.

      It's a bit like the first .com boom. There was a huge amount of malinvestment and the bubble popping was painful, but there really was a business for people to buy stuff online, to consume paid content online, etc. The malinvestment got sorted and a couple decades on, immense wealth has been created.

      • cassianoleal · 6 days ago

        > It's a bit like the first .com boom. There was a huge amount of malinvestment and the bubble popping was painful

        That's the point though, isn't it? How detached from reality must you be to think this is ok?

        "Painful" is carrying a lot of weight in that sentence. Painful means people lost their jobs, families broke up, depression, probably suicide, other forms of violence...

        There must be a better way to go about these things.

        • ElProlactin · 6 days ago

          I won't dismiss the human cost but boom and bust cycles have existed for a very long time. This isn't a new thing today, and it wasn't new then either.

          You can view these things 100% cynically, or you can also consider the possibility that markets over (and also under) shooting are also a form of discovery in which the value of new business models, technologies, etc. are determined. While I'm not personally a fan of today's financial engineering and have concerns about direct government investments in particular, net-net it's probably better to live in economies where capital is abundant and malinvestment is possible, than to live economies where the opposite is true.

          From the .com days, I personally observed four categories of outcome:

          1. Total financial ruin. If we're being honest, this was often the result of individuals who got rich very quickly and spent even more quickly.

          2. Survival. Lots of people got laid off and eventually found new jobs when the economy recovered. Their experience was valuable. A decent number of these people went on to ride the recovery boom and are comfortable if not "rich" today.

          3. Survival with a story to tell. People who survived and came away with a story to tell ("at one point I was worth millions on paper and 6 months later I was laid off").

          4. Huge windfall. Some people made a lot of money and through luck and/or smarts, managed to walk away from the implosion wealth intact.

          The truth is that nobody can predict with certainty the future. Markets are the place where humans make bets about the future. Expecting entirely orderly markets in which everything moves at a predictable pace in a predictable way, where no participants win or lose too much, just isn't realistic.

          • cassianoleal · 6 days ago

            > net-net it's probably better to live in economies where capital is abundant and malinvestment is possible, than to live economies where the opposite is true.

            This is a false dichotomy. Not everything needs to exist at the extremes.

            > boom and bust cycles have existed for a very long time. This isn't a new thing today, and it wasn't new then either.

            Murder and domestic violence have existed for a very long time. Racism existed for a long time. Slavery existed for a long time.

            Things can be fixed, or at least improved to reduce the human cost associated with what's essentially a governance choice.

            • ElProlactin · 5 days ago

              > Things can be fixed, or at least improved to reduce the human cost associated with what's essentially a governance choice.

              So you think there's a way to outlaw possible malinvestment?

              • cassianoleal · 5 days ago

                You think there isn't? Or in fact that this is all that's happening, _possible malinvestment_?

                Neolibs have the most rigid, binary and least creative minds I've ever encountered...

                • ElProlactin · 5 days ago

                  > Or in fact that this is all that's happening, _possible malinvestment_?

                  Speaking of rigid and binary thinking: do you think there's absolutely no value to LLMs and that every investment in them is malinvestment?

                  > Neolibs have the most rigid, binary and least creative minds I've ever encountered...

                  If it's so simple, why don't you explain how The Government is going to prevent private individuals and enterprises from investing in things that some people (who may or not be right) believe are worthless?

                  • cassianoleal · 5 days ago

                    > Speaking of rigid and binary thinking: do you think there's absolutely no value to LLMs and that every investment in them is malinvestment?

                    No, I think there is tremendous potential value in some areas.

                    > If it's so simple, why don't you explain how The Government is going to prevent private individuals and enterprises from investing in things that some people (who may or not be right) believe are worthless?

                    Honestly, I don't know.

                    How does The Government (which one?) prevent monopolies from forming? How does The Government prevent anti-competitive commercial practices such as dumping? How does The Government prevent any practices that are against the best interest of the people whom it's supposed to be representing?

                    • ElProlactin · 5 days ago

                      > No, I think there is tremendous potential value in some areas.

                      So who is going to decide what has tremendous (real) value and what doesn't? And how are they going to force private individuals and enterprises to invest only in what has (in their estimation) value while at the same time ensuring that the level of investment permitted is sufficient to realize the value but not excessive so as to cause malinvestment?

                      • cassianoleal · 5 days ago

                        At this point I honestly think you're not even trying to have a good faith discussion, but I'll bite this last one.

                        > who is going to decide what has tremendous (real) value and what doesn't?

                        No one has to.

                        > And how are they going to force private individuals and enterprises to invest only in what has (in their estimation) value while at the same time ensuring that the level of investment permitted is sufficient to realize the value but not excessive so as to cause malinvestment?

                        They don't have to do that either.

                        Government is (or at least should be) in the business of ensuring better outcomes for the population that constitutes it, whilst reducing harm to as many of those people as possible.

                        Look for symptoms of things that are threatening either of those, and figure out a way to find balance.

                        Your argument reads a lot like "who is going to decide what a monopoly is and isn't? And how are they going to force private enterprises to break up when they are past that threshold?"

                        • ElProlactin · 4 days ago

                          > At this point I honestly think you're not even trying to have a good faith discussion, but I'll bite this last one.

                          Honestly, this sounds like a cop-out. I asked a legitimate question in response to your comment: who decides what is a good investment and what isn't, and how do they determine how much good investment is needed to prevent excess that becomes malinvestment?

                          You refuse to answer this question because, I suspect, you realize that this is an impossible task.

                          > Your argument reads a lot like "who is going to decide what a monopoly is and isn't? And how are they going to force private enterprises to break up when they are past that threshold?"

                          Except that there are criteria defining what constitutes a monopoly and they're applied to the current state of a company.

                          Adjudicating a monopoly case is therefore a completely different matter in which regulators and courts determine whether a business, based on its current state, meets the definition of a monopoly.

                          The only way to establish good investment from bad is in hindsight. Unless you have a direct line to God, you can't know whether $1 billion invested into Company A or Industry B will produce a return or wipe investors out, or whether the appropriate level of investment in Company A or Industry B is $1 billion versus $1.5 billion, and so on.

                          But your comment hints at the idea that there's a group of people who can predict the future and accurately determine what investments are good or bad, and precisely how much should be invested in anything up to threshold where good investment becomes bad. This just isn't reality.

                          • cassianoleal · 4 days ago

                            > You refuse to answer this question

                            I didn't.

                            Everything else you said is dodging my main argument, and in fact pretty much everything else I've been saying in favour of your own very very narrow interpretation of the world in pure financial terms.

          • abirch · 6 days ago

            Not sure how you would do things better without a centralized planning committee. Most people believe that bubbles are bad, but what's the alternative? People want to get rich quick.

            • cassianoleal · 5 days ago

              This is also a false dichotomy. There's a lot in between neolib free markets and centralised planning.

            • rcxdude · 6 days ago

              I don't disagree, but there's a big difference between 'this is massively overinvested and valued and that's distorting the market around a useful product' and 'this is all basically a scam with no value to it whatsoever'. For some reason a lot of AI critics seem to be really hard pushing on the latter part despite it being by far the least credible take at this point. It might be overused, it might have some big negative externalities (though these are often overstated), it might have sucked up way more capital than it deserved, but it's also still very useful and valuable for quite a lot of people.

              (to me it's a bit like criticising oil companies by claiming that oil doesn't actually produce any useful power after its refined. There's a lot to criticise about them but the fact that their product is very useful is in large part why it's so hard to do something about the rest of the problems they cause)

              • cassianoleal · 5 days ago

                I agree with you, for what it's worth.

            • Driver4732 · 6 days ago

              You should read his What If We're In a Bubble 3 part series.

              • Avicebron · 6 days ago

                > and a couple decades on, immense wealth has been created

                For whom? "Everyone". Maybe we can quote some "Everyone is better off now/the global standard of living has increased bullshit". Have you tried to get a job that pays enough to buy the average house in your area?

                • ElProlactin · 5 days ago

                  I don't know why you're conflating the issue of income and wealth inequality with the fact that investments in "the internet" (and all the associated hardware and infrastructure) proved to be some of the best investments in history. And not because of monetary policy, financial engineering, and the like, but because the internet proved to be a civilization-changing technology.

                  • Avicebron · 5 days ago

                    I'm failing to understand how you are failing to understand. Can you try and explain that again?

                    • ElProlactin · 5 days ago

                      > Can you try and explain that again?

                      Sure. How did the fact that the internet was a revolutionary, civilization-changing technology that produced some of the best investments in history cause housing to become unaffordable?

                      If you're worried about asset prices and the affordability of housing, you should be far more upset at central banks/monetary policy than you are at the internet, ecommerce, smart phones, etc. You could also be upset at zoning laws, and tax and immigration policy.

                • pasquinelli · 6 days ago

                  > A lot of people prefer to see things in black and white because it's easier on the brain.

                  people also tend to sheild their sacred cows with gestures toward nuance. maybe i'm misreading you, but it sounds like your criticism of him is he has correctly identified a problem and is reporting on it, but he hasn't taken the next step of predicting the next twenty years of consequences. sounds to me like a reporter doing his job well.

                  • ElProlactin · 5 days ago

                    A reporter doing his job well (in this context) would understand that using non-cash accounting events to make hyperbolic posts about cash burn is simply not honest.

                    I don't have a problem with skepticism around AI investments (I agree with a lot of the skepticism) but if you're going to make public arguments about these investments, you should have a grasp of basic accounting principles.

                    • pasquinelli · 5 days ago

                      can you go a little more into that? i myself am not an accountant; what is zitron being dishonest about?

                      • ElProlactin · 5 days ago

                        https://www.wheresyoured.at/exclusive-openai-financials/

                        > Exclusive: OpenAI Losses Increased Nearly 8X in 2025, With Spending Hitting $34 Billion

                        Start with the headline. He's comparing the net losses between 2024 and 2025, but $41.55 billion of the 2025 loss is a non-cash charge from "changes in fair value of convertible interests and warrant liability" tied to the for-profit conversion. He notes this but doesn't actually seem to understand (or want to explain) what that means.

                        It's a non-cash charge. This is not money actually going out. It's not an operating loss.

                        He could have used the increase in operating loss or expenditures to make his point, but he basically chose the biggest number he could find and present it in a way that distorts what it is. The only two possibilities seem to be that he is trying to be bombastic ("8X") or he actually doesn't understand what he's looking at.

                        > It then marked $3.74 billion of losses as “net loss attributable to noncontrolling members capital,” leaving the net loss attributable to the company as $5.09 billion.

                        > It’s unclear what this means, nor how OpenAI reconciled the removal of $3.74 billion in costs.

                        This is so strange because it's basic consolidation accounting: allocating a share of losses to minority equity holders. There's nothing sinister about it, and it's not anything that's being hidden. This is a standard practice for companies and anyone who is positioning himself as having the requisite expertise to comment about the financials of AI companies (or any companies for that matter) should know this basic accounting and an absolute nothingburger.

                        There are other aspects of his writing that are pretty distorted. Like, he states "I’m not sure how this company finds a way toward any kind of sustainability or profitability" while ignoring that OpenAI actually improved its gross margin from around 28% to 43%. Whether it ever becomes sustainably profitable is still a big question mark but again, someone acting as a financial commentator should know this stuff. So he's either feigning ignorance to sell his narrative (and newsletter subscriptions), or he's really ignorant.

                  • jaredcwhite · 5 days ago

                    Ed Zitron already completely defeated the comparison that this is just another dot com boom/bust with eventual payout. You're telling yourself a just-so story.

                    • ElProlactin · 5 days ago

                      > Ed Zitron already completely defeated the comparison that this is just another dot com boom/bust with eventual payout

                      "This time it's different" is a story told by people at both extremes.

                      "There is unsustainable excess and malinvestment but it's not going to be the end of the world and there will be some really important and successful things that are left standing alongside some carnage" is a narrative that doesn't appeal to the masses for a variety of reasons. And people like Zitron, who profit by selling narratives, often avoid narratives that require nuance and balance because it forces them to produce more complex and detailed, and less bombastic, analyses.

                      • tim333 · 5 days ago

                        He completely defeated the comparison that it's got an eventual payout? How so?

                        I don't think I've seen any solid argument there - just pointing out current stuff has limits which is no proof it won't improve.

                        • ToValueFunfetti · 4 days ago

                          Yeah, I think Ed's early stuff defeated the idea that the tech was worth big money at its state as of 2024, but it's clear in 2026 that this is something worth money to corporations. Just a question of how much + whether the Chinese open models (RIP Llama) can continue undercutting at a fast follow pace.

                      • 1vuio0pswjnm7 · 5 days ago

                        "The malinvestment got sorted out and couple of decades on, immense wealth has been created."

                        Only to be re-malinvested in the same garbage hype that created it

                        Aside from Amazon, who shifted from selling books online to becoming a middleman for sales of others' products, and eventually to selling "cloud" services, is this wealth really derived from "buying and selling stuff online" as envisioned at the time of .com boom

                        The truth is that no one at that time would have defined "stuff" as advertising services, "cloud" services, etc., and that is where most of this wealth has come from

                        The so-called "tech industry" is not comprised of the "buying and selling stuff online", it is comprised of offering software for free, e.g., in the form of a "web app", a remote "service", etc. This is used as bait, a Trojan Horse, with the goal of intermediating other peoples' use of the internet, collecting data and performing surveillance

                        The focus of this "industry" is not on deriving revenue through "buying and selling stuff online", it is on collecting data. The data collection and surveilllance is not only applied to commercial use of the internet, e.g., "buying stuff online", it is applied to all use of the internet

                        • 1vuio0pswjnm7 · 3 days ago

                          -1,0,1

                      • jgalt212 · 6 days ago

                        Yeah, I used to be a fan of his critiques, but it's basically the opposite of reading Tyler Cowen's blog now.

                        • surgical_fire · 6 days ago

                          I find more nuance in his arguments than on the typical AI hyper in yhe HN comment session. I can sort of predict the talking points I find here.

                          Anyway, I think Zitron is wrong on the usefulness of AI, but I don't need to agree with him on everything. That is the weaker part of his arguments anyway (and, unsurprisingly, where critics here choose to engage with).

                          He has a very solid point on the viability and economics of AI, and I am still to see facts that contradict his analysis there.

                          In fact, what spooks me about AI is not that it can replace me. It can't, that much is clear. I am spooked about the probable economic downturn that it will spawn. All the reckless spending is fun until the bill has to be paid.

                          • flowerthoughts · 5 days ago

                            I find his way of talking funny and entertaining. I can't say why, but it's a nice way to waste a few minutes. It's very boring if you're only there for the information.

                            • mirrormirroron · 5 days ago

                              > It's all one-tone takes with no place for nuance, you kind of know what he's going to say and the fact the mixes genuine criticism with bad faith arguments doesn't help.

                              This is hillariously self referential.

                              • ToValueFunfetti · 4 days ago

                                Throwaways are for anonymity, not for dodging the guidelines. Please don't pollute the community here.

                            • scotty79 · 6 days ago

                              Meanwhile Deepseek just 6x-ed their inference efficiency at zero quality loss.

                              • comrade1234 · 6 days ago

                                I logged into my account today to look at my balance and saw a notice that they're changing pricing to charge more at peak times. I haven't looked into to it more yet but I'm guessing it will still be significantly cheaper than the American models.

                                • nchmy · 6 days ago

                                  When you say "just", which innovation are you referring to? Did they literally just announce something or are you referring to something like v4 flash?

                              • tyleo · 6 days ago

                                Ed Zitron,

                                He gets things others are missing.

                                He also misses things others are getting.

                                I think it’s nice to have a voice criticizing the fundraising aspect of these companies. I do think we’ll see at least one of them blow up. The technology is obviously useful though. Hundreds of thousands of developers have already changed the way they were working for decades. Some of the criticisms that the technology doesn’t work at all go a bit too far.

                                • therobots927 · 6 days ago

                                  Would you be able to quantify how useful it is? Trillions are at stake here, so you’ll need to get specific.

                                    • Timshel · 6 days ago

                                      The header looks not too bad until you realize that 2/3 of the industry revenue is Nvidia ... If you remove the shovel sellers (Micron/Nvidia/AMD) revenue is left at $183B.

                                      • Mistletoe · 6 days ago

                                        Yep you see how deep the scam goes. It’s like in the gold rush if the ONLY people that made money were the one shovel seller.

                                      • jqpabc123 · 6 days ago

                                        Some logic for those who don't do numbers:

                                        Token rates need to double in order for the industry to "break even".

                                        In reality, just "breaking even" is not enough. Venture capital expects a sizeable return on their investment. So look for token rates to triple.

                                        In reality, most companies are not at all prepared to feed AI vendors what they need in order to become profitable.

                                        Uber is an early example of what is in store.

                                        https://aimagazine.com/news/why-uber-has-already-burned-thro...

                                        https://www.forbes.com/sites/janakirammsv/2026/05/17/uber-bu...

                                        • tim333 · 5 days ago

                                          That doesn't actually show profit in the GAAP sense.

                                        • zulban · 6 days ago

                                          I can't quantify how useful GitHub is as a software developer either. That doesn't prove it's useless, just that it's hard to quantify.

                                          • therobots927 · 6 days ago

                                            I never said it was useless. But you better be able to quantify the value of something you’re spending trillions of dollars building.

                                            This seems like common sense to me.

                                        • vb-8448 · 6 days ago

                                          > Hundreds of thousands of developers have already changed the way they were working for decades

                                          I agree on this, but it doesn't mean that there is an automatic benefit on business side ... and business is what is paying our wages & tokens!

                                          We are still in the discovery phase, but we don't know yet if there will be enough return to repay those hundreds of billions already invested and other few trillions that will be invested in the near future.

                                          • jqpabc123 · 5 days ago

                                            Some of the criticisms that the technology doesn’t work at all go a bit too far.

                                            It's not enough for it to "work". It has to work in a way that is affordable and cost effective for widespread use.

                                            Otherwise, people/companies will use it sparingly or not at all. Anything less than widespread, "universal" use is a big problem for those investing $ trillions in AI.

                                          • vb-8448 · 6 days ago

                                            Just keep in mind that Zitron is in the business of content creation. It doesn't mean he's wrong[1] but his job isn't making successful predictions.

                                            [1] Actually I think it's right on the overinvestments and ROI claims

                                            • therobots927 · 5 days ago

                                              As if the pro-AI crowd doesn’t have a vested interest in how AI is perceived.

                                              Ed Zitron is a journalist. Do you say that about every journalist?

                                              • vb-8448 · 5 days ago

                                                It was more a critique to the crowd saying "Zitron is making wrong predictions since 2024" rather than Zitron itself.

                                            • jacknews · 6 days ago

                                              It actually does work for a whole range of things.

                                              Is it a panacea? Of course not, but it is potentially a sustainable business.

                                              Except - open models are barely months away from the same performance and there is no moat, so we will see commodity pricing, and the billions being heaped on the fire currently will probably not see a return, unless someone comes up with a genius trading bot perhaps.

                                              • rybosworld · 6 days ago

                                                I believed that $10-30 billion/year TAM figure is sourced from this research report:

                                                https://www.precedenceresearch.com/large-language-model-mark...

                                                The TAM figure they arrive at is ~$36 billion by 2030. And for 2026 they claim a TAM of $10.6B

                                                OpenAI alone is rumored to be on track for $30B of revenue in 2026. Add in Anthropic, Google, Microsoft, Meta, and Chinese providers, and the revenue being generated from LLM's in 2026 is plausibly in the range of $50-100B already.

                                                Whatever your thoughts are on the cash burn to get there are irrelevant. There's at least $50B of LLM usage being paid for in 2026. 5x higher than the figure these research report companies are providing.

                                                • vb-8448 · 6 days ago

                                                  > There's at least $50B of LLM usage being paid for in 2026

                                                  Just out of curiosity, where did you get the 50B figure?

                                                • returnInfinity · 6 days ago

                                                  Folks if you believe this Ed guy, you're soon going be really disappointed.

                                                  LLMs are big, Codex app is huge. You can control the browser from within codex app with just natural language.

                                                  Tell codex to perform a few actions, you go get coffee and come back to work done. This is real boost in productivity.

                                                  • jordemort · 6 days ago

                                                    How many days in a row can you do this, and then still be able to get things done when Codex is unavailable or the price has been raised to $UNAFFORDABLE?

                                                    • jaredcwhite · 5 days ago

                                                      You can't tell the critics they're completely wrong and not actually address anything they're saying, lol.

                                                      • therobots927 · 5 days ago

                                                        Oh you sure can. That’s all the boosters do on here.

                                                    • therobots927 · 5 days ago

                                                      Anyone can explain why this was flagged?

                                                        • therobots927 · 5 days ago

                                                          Haha. Yep there you go

                                                        • verdverm · 5 days ago

                                                          Because of the comments here that turned into an ideological battle, and that Zitron is a talking head who makes hyperbolic statements within his sometimes valid points. He's playing for a particular crowd, not doing good journalism and reporting. See how his statements created ideologically based comments here? We'd prefer better discourse on HN.

                                                          • therobots927 · 5 days ago

                                                            For the record I can’t wait for the “ideologically based” comments after this trillion dollar Jenga tower comes crashing down. This place will be censored to shit of course. But that won’t stop people like me from rubbing it in.

                                                            You know being a Ycombinator proxy, you would think you guys could take a little bit of shit. You certainly don’t hesitate to shove ai down the throat of everyone, without consent obtained.

                                                            • verdverm · 5 days ago

                                                              I have no affiliation with YC or HN, just commenting about the likely reasons the community flagged it.

                                                              when the comments under a post become ideological, as they have here, there is high probability we will flag the post, regardless of the OP content

                                                        • 1vuio0pswjnm7 · 5 days ago

                                                          Zitron is recently a very effective HN comment trigger

                                                          Guaranteed defensive replies, usually personal attacks, HN commenters cannot seem to ignore him

                                                          He must be on to something

                                                          Big Tech is a slave to the dynamics of attention and popularity. They monitor these dynamics in real-time

                                                          Perhaps Zitron is getting more attention and becoming more popular

                                                          He was recently on Bloomberg and now CNBC

                                                          • tim333 · 5 days ago

                                                            There's a big boom on and he's one of the two best known naysayers. The other, Gary Marcus, has gone a bit quiet recently.