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birb_cromble  5d ago (text post)   569 thread views

Weekly Finance Thread 2026-06-06

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If you expect an AI fizzle, sure, the rest follows.

(TBC, I want an AI fizzle, at least for neural nets, but I suspect that we will need to ban it to make it fizzle. And I am a prepper, just not particularly for AI - non-AI GCRs are definitely a thing.)

Take this with a grain of salt because it isn't my area of expertise and I am dashing this off to you as a quick reply rather than doing a half-hour's worth of research to verify, but I tend to expect a slowdown in the nearish future for two reasons:

  1. The major developers (Anthropic, OpenAI) are running a fundamentally unsustainable business model and need insane amounts of revenue generation to be sustainable. They've hiked prices recently and the response from Big Tech was to crack down on the AI compute spend. That's not a good sign - who's going to spend millions on AI if Uber or Zillow won't? Not people making HTML browser games and memes for kicks, that's for sure.
  2. Despite all the breathless takes about how good The Next Model is, from what I've seen (very casually, so I might deserve correction here) the direction the models are going isn't "Anthropic's Gigamonster: now hallucinates half as much time as Gila Monster for only 110% of the inference," it's "Anthropic's Fable now hallucinates 10% less than Sonnet for only 300% of the inference." On the one hand, hallucinating only, say, 10% of the time rather than 20% of the time is a big difference, I'm not suggesting there's no gains being made. But from what I can tell, the so-called "leading edge" models are using tremendously more compute to make relatively minor absolute gains. Everyone focuses on the trendline going up but if you model it as performance-per-cost from what I can tell there's an argument the trendline is going down.

Now note that the trendline can be qualitative as well as quantitative - so for instance Haiku is just straight-up better at performing simple math than Opus or something (it will get the answers right much more cheaply) but if you're getting into something that Opus can't do but maybe Fable can - okay, maybe you're okay paying twice as much. But that general trend, I think, suggests that pushing the frontier is growing more costly, which is not ideal for an infinite recursion scenario. If you get to the point where "sure okay we can make Deus Ex but it will cost the moon if it was made of gold to run" that's another way of saying it won't get made and if it is nobody will run it.

Note that I'm not an "AI denier" or something, and I don't think that anything that I am talking about will cause AI to go away like it never existed. But I think that a world where we have AI slowdown because the demand for compute at prices that make it solvent isn't there to the extent to support the overhead to keep pushing the frontier forward is pretty plausible. A world where the US government bails out AI and then nobody ever sees Mythos again also seems pretty plausible. But both of those scenarios will look - at least temporarily - like an LLM fizzle (unless the .gov makes Skynet real, I guess - my guess is that they are more likely to use it to gundeck mandatory paperwork, hacking, and programming, though, not stick it in a bunch of robots.).

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