Again, Zitron provides the numbers for his theories and they’re very compelling.
I’m still not seeing any equally compelling arguments as to why this is not the case. Only accusations of doomerism and links to him calling the bubble collapse early.
Microsoft’s total depreciation and amortization in Q2 2027 was $11B - not clear how much of this is AI related. Apparently they had $34B in AI ARR as of May.
So let’s say their AI capex amortization and revenue are about equal. Not amazing, obviously they’re relying on continued growth, but doesn’t seem like the end of the world?
Compare that to Ed’s framing - Microsoft has $34B in revenue but spent $116B in capex last year to “make it”. They’re doomed!
But that capex spend is to make future revenue. Clearly he assumes demand won’t increase in the future, and that future projected revenue is “fake”. And sure, it definitely might not increase enough to make profitability.
But his whole analysis hinges on that one assumption. The entire article, all the numbers he gish gallops at you, could basically be replaced with “I don’t think AI demand and revenue will increase much beyond today.” Yeah, we know.
We see that companies are already balking at the cost and are increasingly looking at what the actual return of their current spend is, let alone when these prices have been increasing.
Where is the increase in demand going to be coming from?
Especially the increase needed to make this make sense?
My personal hunch is that the “diffusion curve” for AI is slower than most people in this space think. Most businesspeople I talk to have only tried a basic Copilot chat and/or free ChatGPT. Many still haven’t used anything “AI” at all. As more use cases become practicable and cost-effective, more people will use AI with or without knowing.
Also: note that the Wall Street analyst estimates Ed cites (and then declares impossible targets) are predictions by serious people with a lot of money at stake. Of course they could be wrong, but they’re not made up.
> The other problem is the monstrous and abusive marketing campaign from the AI industry itself, and those who use AI on a regular basis. If you are against the consensus that AI will grow ever-larger every single quarter forever, you will be harassed and dogpiled across multiple social media platforms by everyone from AI influencers to actual journalists. The fact that it’s more professionally dangerous to critique the powerful than it is to align with them is disgusting, but I should be clear that these tactics only reinforce that I’m on the right track.
> As Nik Suresh noted in his recent piece, refusing to say that AI is giving you massive productivity benefits will lead to actual professional consequences, because so much is riding on the overall grift about what AI can do (which is much, much less than the boosters will promise). This runs antithetical to productivity or good sense, and everybody involved in it should be both eternally shamed and shunned from any sensible business.
> And while the AI industry and its fandom will claim that people like me are “skeptics” and “haters,” the outright hatred and vitriol that they spew for not falling in line behind a nakedly false narrative built on outright disinformation is disgraceful.
The most charitable way I can read those paragraphs is that he's vaguely alluding to a nebulous conspiracy by a cabal of elites, which evokes a specific ideology that cannot be discussed constructively.
Ed has repeatedly done the "why are people using LLMs?" bit but ignores what well-respected software engineers have actually said about them because he thinks they're AI boosters and they are just lying. At the least, it's an obvious blind spot to explain how the AI industry is what it is despite the numbers he reports arguing otherwise, and many of his industry trend predictions have been incorrect as a direct result.
I’m still not seeing any equally compelling arguments as to why this is not the case. Only accusations of doomerism and links to him calling the bubble collapse early.
Microsoft’s total depreciation and amortization in Q2 2027 was $11B - not clear how much of this is AI related. Apparently they had $34B in AI ARR as of May.
So let’s say their AI capex amortization and revenue are about equal. Not amazing, obviously they’re relying on continued growth, but doesn’t seem like the end of the world?
Compare that to Ed’s framing - Microsoft has $34B in revenue but spent $116B in capex last year to “make it”. They’re doomed!
But that capex spend is to make future revenue. Clearly he assumes demand won’t increase in the future, and that future projected revenue is “fake”. And sure, it definitely might not increase enough to make profitability.
But his whole analysis hinges on that one assumption. The entire article, all the numbers he gish gallops at you, could basically be replaced with “I don’t think AI demand and revenue will increase much beyond today.” Yeah, we know.
We see that these companies have no moat.
We see that companies are already balking at the cost and are increasingly looking at what the actual return of their current spend is, let alone when these prices have been increasing.
Where is the increase in demand going to be coming from? Especially the increase needed to make this make sense?
Also: note that the Wall Street analyst estimates Ed cites (and then declares impossible targets) are predictions by serious people with a lot of money at stake. Of course they could be wrong, but they’re not made up.
> As Nik Suresh noted in his recent piece, refusing to say that AI is giving you massive productivity benefits will lead to actual professional consequences, because so much is riding on the overall grift about what AI can do (which is much, much less than the boosters will promise). This runs antithetical to productivity or good sense, and everybody involved in it should be both eternally shamed and shunned from any sensible business.
> And while the AI industry and its fandom will claim that people like me are “skeptics” and “haters,” the outright hatred and vitriol that they spew for not falling in line behind a nakedly false narrative built on outright disinformation is disgraceful.
sigh
Ed has repeatedly done the "why are people using LLMs?" bit but ignores what well-respected software engineers have actually said about them because he thinks they're AI boosters and they are just lying. At the least, it's an obvious blind spot to explain how the AI industry is what it is despite the numbers he reports arguing otherwise, and many of his industry trend predictions have been incorrect as a direct result.