‹ BackHN Continuity

Thread

AI needs $6T in annual revenue to justify data centre boom

222 points · 335 comments · Betelbuddy

  1. bunderbunder · · focus · HN ↗
    They talk a bit about where the AI companies are supposed to get their revenue from. I’d like to see these analyses go a step further and talk about how those AI customers are supposed to come up with that money as well.

    For example, the article suggests $1T from enterprise productivity tooling. A quick Google suggests the global enterprise productivity tooling market is only worth about $0.1T right now.

    Do we really expect all the world’s corporations to suddenly up their annual spend by 1,000% on average? Why?

    1. zero_shift · · focus · HN ↗
      In a recession, too. You have to ask where the money even enters the funnel.
      1. dawnerd · · focus · HN ↗
        Ultimately I think they’re looking at the taxpayers to bail them out of this bubble. Everyone knows they over invested, no one wants to admit it because they’ll lose money.
    2. tw04 · · focus · HN ↗
      Because they’ll be able to just fire all their employees and redirect the spend to AI. That’s the current delusion.
      1. rf15 · · focus · HN ↗
        Even if they were right... they don't really understand mass unemployment of that scale, right? Hungry people with a lot of time on their hands are known to get particularly inventive to entertain those who own too much.
        1. hirako2000 · · focus · HN ↗
          And it's proven constraints nurture creativity and risk taking. It adds up.
      2. SlightlyLeftPad · · focus · HN ↗
        Seriously. We’re supposed to believe this AI boomer rhetoric that it won’t take jobs. In order for companies to pay for it, it must take out jobs.
        1. someonebaggy · · focus · HN ↗
          It must seem like it's taking jobs.
    3. EA-3167 · · focus · HN ↗
      I truly don't think anyone serious believes that, but if they pretend to believe it and preach it aggressively they might make out with an historic payday and stick the rest of us with the bill. People did the same with Crypto, with NFT's, with a bunch of things for as long as the ball is rolling.
      1. jknoepfler · · focus · HN ↗
        A healthy measure of my personal skepticism comes from the fact that GenAI represents the convergence of so many historically negative (and frankly idiotic) influences.

        - AI hype-mongers. We've dealt with these for decades in academia and industry, through countless boom/bust cycles. Yes, there's progress, but reality is boring and selective.

        - Tech Bros. NFTs? The MeTaVeRsE? The CEOs of OpenAI, Anthropic, Meta, and SpaceX have proven repeatedly to be dishonest grifters chasing all and only money. They're like the tobacco industry of laughably dishonest at this point (and consistently wrong).

        - Singularity grifters. The Kurzweil cultists flooding the ranks of lesswrong feel suddenly emboldened. They've been issuing batshit proclamations and navel gazing about AI alignment to anyone who will pay attention to them (and write them a check) for decades. It's no more connected to reality now than it was then.

        - The LinkedIn hivemind. If you aren't transforming your organization to meet the new GenAI future, your company is BEHIND and you are FAILING AS A LEADER. Be the one firing white collar workers, not the one being fired. Make sure you look good on paper with bullshit performative AI initiatives or your ass is dust. Oh, no ROI? No problem. Read my book on NAVIGATING THE ENTERPRISE AI TRANSFORMATION. It's skin-deep and filled with empty platitudes and clip art, but it will make you look like a big brave tech leader, just like Steve Jobs or Dario.

        - Investors. Yes, we're in a bubble. Yes, we've been in a bubble before. Yes, it's going to pop. Yes, that's going to be bad. Really bad, probably. Remember the financial crisis? Investors don't. And this time, there won't be a deep-pocketed government to bail anyone out, because debt is already sky-high and we're still recovering from COVID.

        So while I get there's something there, and I'm keeping abreast of it and extracting the best and leaving the worst, it is an exhaustingly negative experience. My guard is up and I have absolutely run out of patience for bullshit. It's not funny or smart or interesting. It's not even fun to complain about. The forces in the mix are awful and I don't want anything to do with them.

        1. the13 · · focus · HN ↗

          [dead]

    4. kingstnap · · focus · HN ↗
      > enterprise productivity tooling market

      AI is not a replacement for powerpoint and excel. You can't substitute those.

      White collar worker salaries is ~$30T+ global.

      1. EA-3167 · · focus · HN ↗
        Please don't cover up one insane claim with an even less plausible one.
        1. kingstnap · · focus · HN ↗
          I'm very confused by what you mean.

          My point was that AI isn't some productivity software thing. The addressable market is white collar work that can be done on a computer.

          You think its implausible for AI to replace some fraction of white collar workers? To me this is directionally exactly where this is heading?

          1. shimman · · focus · HN ↗
            Agreed. The literal CEOs of these companies, and their acolytes, have been proudly proclaiming that you can replace all types of workers with AI. We know they have their anti-human sentiments but this is nothing new, as you said.
            1. owebmaster · · focus · HN ↗
              Meanwhile they pay $500k for the same roles they want other companies to automate (using their products).
          2. tovej · · focus · HN ↗
            If that white collar work disappears, so does most of the demand in the entire economy.
          3. owebmaster · · focus · HN ↗
            > You think its implausible for AI to replace some fraction of white collar workers?

            Yes, it is. Software already did it. Better software (AI) can only marginally change what's already automated.

            1. eurhe · · focus · HN ↗
              Yup spot on.

              Either people don’t want to believe or they find it difficult to understand.

              The only pipe dream AI has is to replace the human in totality. Otherwise it’s at best a complement.

              1. EA-3167 · · focus · HN ↗
                It's the old Upton Sinclair line, at the end of the day there's so much money on the line and so much pressure to buy in that people just do. People are easily influenced and overwhelmed by their environment, especially when economic and social incentives are strong to do so. We saw it here with the blind worship of Elon Musk many years ago, then Crypto, then NFT's, and now with this. In every case it wasn't as if there was NOTHING there to admire, whatever I feel about Musk personally SpaceX has achieved remarkable things. Admittedly crypto and NFT's are a lot less useful outside of speculation and some really dark use cases. ML really is incredible and it's going to be something that helps humanity cope with the sheer volume of information that's become available.

                But that's been conflated with "Actually a $2T Anthropic IPO makes perfect sense because they're going to replace white collar work."

        2. micromacrofoot · · focus · HN ↗
          the people at these companies really believe the insane claims
      2. base698 · · focus · HN ↗
        What does this mean? I've been using AI as a replacement for both of those for longer than a year. If I need a PowerPoint file I have it generated off my tooling. Instead of fiddling to align text you say update slide 6 to look like this, strike this sentence. And you can add even more dynamic content. Like live application dashboards connected to real sources.
        1. kingstnap · · focus · HN ↗
          You can personally do that but I don't see how having ChatGPT means mass uninstalls of excel occur in enterprise. AI using PowerPoint doesn't mean powerpoint got replaced right.
          1. TheOtherHobbes · · focus · HN ↗
            You can't imagine AI keeping the format and replacing the software? Or making it possible to create cheap clones with some customised features?

            I very much can.

            That applies to most software.

            This doesn't solve the problem of "Who gets paid now, and for what?" at all. If anything it makes it worse.

          2. ben_w · · focus · HN ↗
            There's two things.

            LLMs can use PowerPoint, but also LLMs can write the raw document file directly without the software. One time I asked for a letter and what came out was it doing that.

            What really matters with this though is reading other people's documents, whatever format they happen to be in. PowerPoint isn't the only game in town for creating slide decks, but if you want to be sure you can read all the ones sent to you, it used to be the case you'd need a copy.

            Used to be. Now the AI can read and summarise the slides for you.

            ("AI, expand these bullet points into a slide deck" -> "AI, condense this slide deck into bullet points", as the meme goes).

          3. HEmanZ · · focus · HN ↗
            If there are no humans looking at the excel anymore, why is it needed? My guess is all of this office software gets replaced by stuff that looks a lot more low level and controlled by agents, and just converted to a nice view when a human wants to look for some reason.
        2. owebmaster · · focus · HN ↗
          Most people spent 15 minutes making bad PPTs in the past now they spend 5 minutes asking ChatGPT to create one. The presentation/meeting will take the same 2 hours where most ppl will get bored.

          This "productivity" gain changes nothing. Software already optimized most of it in the past 20 years, the gains now are marginal, at best incremental.

          1. eurhe · · focus · HN ↗
            I’d argue productivity is declining in this context.

            The PowerPoint object is meant to be a package of one’s insights. If those insights are of zero value (the less time you spend the less value - correlation) - that time expended is a net negative for he firm’s productivity.

    5. bmoathn · · focus · HN ↗
      you might make a hypothesis they'd offset operations costs like headcount for this but I think the counterpoint is stronger, if they benefit from increased productivity in your example, why not run more net production from same input.

      Still though, the thesis seems based on an assumption that the companies would experience either major growth or major efficiency gain, neither of which really pass the smell test to me. Option 1 growth - money has to come from somewhere ultimately? Option 2 efficiency - put into profit rather than simple offset to AI provider?

      Or the AI providers get companies hooked with subsidized pricing that unwinds later and you end up with the Uber/AirBNB situation of market capture and good product reverting to mean level of price/quality over time. Tinfoil hat thinks it ultimately gets squeezed out of retail investors in index funds.

    6. herf · · focus · HN ↗
      Total software developer comp (worldwide) is ~$1T
      1. hirako2000 · · focus · HN ↗
        And that's why those CEO keeps promoting the threat AI may displace many white collar jobs, not just developers.

        They already figured they would need trillions revenue. So they paint an economic where such amount is plausible.

      2. wnmurphy · · focus · HN ↗
        Yes, and it's $30T when you include all knowledge worker roles.
      3. throwaway0q5347 · · focus · HN ↗
        Information worker compensation might be something like 14T total.

        A ~40% reduction in employee compensation to source 6T, globally, seems a little more plausible.

        Clearly, I'm eliding a ton of complexity/nuance.

    7. Legend2440 · · focus · HN ↗
      Keep in mind wealth is not a fixed thing. If AI makes their businesses more productive, it would allow the creation of more wealth, giving them more money to pay for AI with.

      This of course hinges on the big if: does AI create wealth? I think yes, but maybe not $6 trillion of it in five years.

      1. simianwords · · focus · HN ↗
        this also happened with the internet. 6T is possible only if AI creates more wealth. same as with internet. Its not a zero sum game.
        1. Legend2440 · · focus · HN ↗
          Indeed, it is hard to say exactly how much wealth the internet creates, but it's a lot. E-commerce alone is $30 trillion industry; some estimates put the total economic value of the internet at $200 trillion or higher.

          That said, this came too late for investors in the dot-com boom. AI investors may find themselves in a similar situation.

          1. sigmoid10 · · focus · HN ↗
            The dotcom bubble burst because the development of the internet could not keep up with expectations, even though investors were correct in principle with their assumption it would generate swaths of wealth. For AI the hope is that AI itself will start to push its own development and adoption sooner rather than later, so the timing issue that killed dotcom investors might instead make AI investors insanely rich. That's why we're still seeing heaps of money getting dumped into it.
            1. eurhe · · focus · HN ↗
              That’s a very charitable take.

              Without smartphone, cellular networks etc you’d be miles off. Nobody had this in their thesis so they were plain wrong.

              1. cthalupa · · focus · HN ↗
                Obviously there were plays from the dotcom era that just were not going to work on the timeframes expected because the rest of the infrastructure also hadn't caught up - not just internet, but shipping in general took a long time to catch up, and Amazon having to basically build their own logistics empire shows that ecommerce just wasn't going to be able to be The Thing at the speed those investments required.

                But let's say you invested in the NASDAQ at it's peak during the bubble - late 2010s you're whole, inflation adjusted. Obviously, not ideal, but a decade and a half isn't the worst turnaround to make your money back if you just sit. Lots of trades that have gone far, far, far worse.

                Smartphones overtook regular cell phones ~2013-2014 as the majority of owned cell phones in the US.

                But the NASDAQ started on clear trajectory up and up since 08, several years before smartphones became big.

                Smartphones accelerated it, but obviously the internet was going to keep growing and growing and everyone could see where it was heading well before smartphones. A huge amount of the value generated by the internet is on the business side. The amount of productivity from making it basically frictionless to collaborate from anywhere in the world is hard to understate.

              2. sigmoid10 · · focus · HN ↗
                Young people and vanilla users might only see "the internet" as something that primarily happens on smartphones, but there are entire industries out there dependent on software that doesn't even exist for mobile phones yet still requires an internet connection. Smartphone internet is primarily an end-user/casual consumer thing. Sure there is a lot of money in that too if you can capture millions of users, but the real easy money is in B2B. And everyone in the dotcom era correctly saw that coming, but the digitalisation simply happened too slow for most industries because there was a whole generation of people who grew up without computers and who didn't mind wasting hours everyday on something senseless.
          2. bunderbunder · · focus · HN ↗
            And, perhaps more to this particular point, it came too late for vendors behind the dotcom boom. Lucent Technologies no longer exists. WorldCom no longer exists. Cisco is a shadow of its former self, with a stock price that only recovered last year.
            1. someonebaggy · · focus · HN ↗
              Cisco is a profitable company making useful products and services. The fact that we consider that a failure is damning.
        2. forgetfreeman · · focus · HN ↗
          It isn't exactly not a zero sum game either though. If you want to sell something you have to have willing buyers with either funds on hand or sufficient credit to make the purchase. So yeah that 6T gotta come from somewhere.
      2. kergonath · · focus · HN ↗
        > This of course hinges on the big if: does AI create wealth? I think yes, but maybe not $6 trillion of it in five years.

        There is also the question of time scale. Growing a market takes time. Assuming the numbers above are the right order of magnitude, we are not going from 0.1 to 1 in a year. So even if the number would make sense over longer time frames, it can still be unsustainable for a significant amount of time before that.

        Like the Internet at the end if the 1990s, basically.

      3. overtone1000 · · focus · HN ↗
        The non-zero-sum game is a concept that cuts both ways. If wealth can be created, it can also be destroyed.
        1. ericd · · focus · HN ↗
          Well of course. Wars tend to destroy wealth quite efficiently.
      4. bunderbunder · · focus · HN ↗
        But that's where the "Why?" comes in.

        At a time when corporate CEOs are largely saying that they can't see that AI has improved office productivity at all, why should we believe that a killer productivity application of genai that's amazing enough to justify an order of magnitude increase in enterprise spending on productivity tools is just around the corner?

        1. strulovich · · focus · HN ↗
          Are they saying it right now?

          I think CEOs could honestly say it a year ago, but by now the numbers of those who say so should be dwindling.

          Recent surveys by BCG and others suggest things have changed.

          Personally, I know many people in different fields who’ve seen crazy speed ups in many of their tasks.

          1. ForHackernews · · focus · HN ↗
            But does crazy speedup of tasks actually yield more productivity? Or does it yield greater numbers of pointless tasks?

            Anecdotally, I've seen management using AI to produce more and more flashy looking dashboards and interactive displays of various metrics. Will this help our bottom line?

            1. apelapan · · focus · HN ↗
              If management spends their idle time building dashboards by themselves instead of taking up developer time asking for dashboards to be built and populated for them, there might be productivity to be had...
              1. bunderbunder · · focus · HN ↗
                Absolutely not. A big chunk of my last job was figuring out ways to gently help managers understand that some dashboard or report they built was producing incorrect numbers because they didn’t get the data munging quite right, or fundamentally misunderstood what some field was measuring.

                AI made it worse because LLMs will instantly give a confidently wrong answer where previously that moment of uncertainty might have led to a conversation with the data’s custodian.

            2. FridgeSeal · · focus · HN ↗
              I’ve watched my work go absolutely ballistic for AI-ing all the things.

              Lots of code gets written, that much is certain. A lot of slopped out PowerPoint presentations which are just worse to read than human-written ones. We have _not_ magically accelerated delivery times and the product which is 99% vibe-coded perpetually has “oh that’s weird” bugs. An obscene amount of effort is being poured into internal tooling, 90% of which is reinventing existing tooling. Important to note that the internal tooling isn’t actually usable or helpful in building the product, but we are pouring eye watering amounts of cash into it.

          2. bunderbunder · · focus · HN ↗
            The latest BCG report I saw on this was the one from this summer that found that employees are saying they're saving time, but businesses still haven't figured out how to turn that into dollars.

            And employees self-reporting that they saved time doesn't necessarily mean they actually save time. Humans are famously crap at estimating that sort of thing.

            1. bluefirebrand · · focus · HN ↗

              [dead]

            2. fy20 · · focus · HN ↗
              The same report said 67% of regular AI users have increased job satisfaction, so that has value. Even from an entirely capitalist mindset you cannot argue that increased satisfaction = increased wellbeing = less time on sick leave = increased productivity.

              <a href="https:&#x2F;&#x2F;www.bcg.com&#x2F;press&#x2F;3june2026-ai-reshaping-jobs-faster-than-companies-reshaping-work" rel="nofollow">https:&#x2F;&#x2F;www.bcg.com&#x2F;press&#x2F;3june2026-ai-reshaping-jobs-faster...

              1. bootsmann · · focus · HN ↗
                Less time on sick leave would be measurable…
              2. bunderbunder · · focus · HN ↗
                I&#x27;d want to know a lot more about how they get that number before trying to extrapolate it to a general business trend. There could be a huge self-selection bias there. Perhaps people who enjoy using AI are significantly more likely to become regular AI users. In which case, what that statistic really says might only be, &quot;People who like a thing report that they enjoy using it.&quot;

                You also have to be careful about the Hawthorne Effect. It&#x27;s quite common for workplace interventions to produce improved productivity measures that are illusory or fleeting because what workers are really responding to is the novelty of the change or the simple fact that they know they&#x27;re being observed.

                Which doesn&#x27;t necessarily mean that the benefits people are seeing right now aren&#x27;t real. Just that, again, it may not translate to a sustained financial benefit that would justify a meaningful contribution to a global $6T&#x2F;year rate of AI spending.

          3. trashface · · focus · HN ↗
            Maybe they are speeding up things that were not the bottleneck or don&#x27;t matter. Or LLMs speed up the time to learn, &quot;well this idea probably sucks actually&quot;, which is great, but in the end there is still no good idea. For software dev, it had already gotten pretty efficient before LLMs came around - the business of making software demanded it. There are still gains to be had no doubt, but many will have less impact.

            I&#x27;m using claude to make gaming mod apps I never would have bothered to code before, but they have zero monetizable value. There is demand for sure, but somewhat ironically, copyright&#x2F;IP&#x2F;TOS law stands in the way. The thing which committed the biggest copyright infringement in human history lets me make another thing which I can&#x27;t release because of copyright law. I&#x27;d get cease-and-desisted instantly if I did so.

            1. eurhe · · focus · HN ↗
              Correct framing.

              Many here are idiotic. Economic growth is measured via monetisation of output - not what you think is of value to you.

            2. bunderbunder · · focus · HN ↗
              For my part I’ve seen it actually slowing down time to decide ideas suck. It’s reduced the friction to start implementing so much that people are just diving in before they’ve even had a chance to fully bake the idea. At which point they’re likely to get stuck on Mr Sunk Cost’s Wild Ride.

              Management doesn’t see the problem because they are still completely distracted trying to measure dev team productivity in story points or KLOC instead of something meaningful like USD.

        2. Legend2440 · · focus · HN ↗
          I don&#x27;t really care what CEOs say - most of them are, for lack of a better word, idiots. They&#x27;re all MBAs that wouldn&#x27;t know a revolutionary technology from a hole in the ground.

          I see how useful AI tools are for myself and can&#x27;t imagine it not changing the world over the next few decades.

          1. eurhe · · focus · HN ↗
            Are you putting your money where your mouth is and creating a startup then?

            If not then a) don’t diss the mba folks b) you don’t have as much conviction as you claim c) if you are then send a link so I can review?

            Cheers

            1. FridgeSeal · · focus · HN ↗
              Oopsy, MBA-holder detected!!

              Simply holding an overrated degree doesn’t instantly guarantee that their opinions and skills are “worthwhile” or “good”.

          2. bunderbunder · · focus · HN ↗
            GenAI is revolutionary.

            GenAI is difficult to monetize.

            Two things can be true at the same time.

            For example, I helped build a specialized GenAI product that disrupted its niche and unseated the incumbent market leader. It was also, as of when I left the company earlier this year, losing money hand over fist.

      5. otherme123 · · focus · HN ↗
        I think you are mixin wealth with money. In the short run it is a near zero sum game: money should go from A (now obsolete) to B. For example, brick and mortar shops replaced by online shops. For example horse business going bankrupt while car business is booming. Wealth is created in the form of more convenient shopping or travelling, not as $$$. AI might help some businesses with their productivity (creating new wealth), but those business are expected to divert $6T from current expenses (wages, or non AI tooling) towards AI pockets, or steal $6T market share from non-AI business.
        1. ai-x · · focus · HN ↗
          If you show productivity, banks have no problem lending you money (new freshly printed money)
          1. someonebaggy · · focus · HN ↗
            Indeed, although there are also pressures pushing banks to lend out money regardless of created wealth. This is why there&#x27;s so much investment into stupid things like AI - they call it TINA or &quot;There Is No Alternative&quot; (to put your dollars into). The scale of AI is as big as it is because there were huge pools of money sloshing around looking for things to invest into, that&#x27;s the underlying problem that caused the RAM crisis, not AI itself.
        2. Legend2440 · · focus · HN ↗
          &gt;For example horse business going bankrupt while car business is booming.

          But also the car business is far larger than the horse business ever was. It is not zero-sum; every time Henry Ford&#x27;s factory spit out a new model T, real wealth was being created.

          Money is just a standin for wealth. If we suddenly doubled the amount of wealth in the world, we could just print more dollars to match - or the existing dollars would just become worth twice as much.

          1. r3trohack3r · · focus · HN ↗
            This. Positive sum games are deflationary. Economic policy can, and has, offset the deflation of techno capital growth.
      6. greekrich92 · · focus · HN ↗
        I think the Labor Theory of Value is going to bite these companies and the economy as a whole in the end
        1. Legend2440 · · focus · HN ↗
          The labor theory of value has been debunked for over a century and modern economics doesn&#x27;t use it.
        2. UpsideDownRide · · focus · HN ↗
          LTV is not encompassing enough of a concept. We are getting immense value from nature that we are not accounting for and LTV is just as oblivious to it. And there are more holes like that in it.
      7. root_axis · · focus · HN ↗
        More productivity might translate into more revenue, but more productivity doesn&#x27;t necessarily create more wealth.

        For example, if I&#x27;m a landlord that uses AI to more intelligently price rental increases to maximize profit without attrition, I have created more revenue but not more wealth.

        1. r3trohack3r · · focus · HN ↗
          Wealth creation happens in positive sum games. Wealth destruction happens in negative sum games. Winners and losers are decided in zero sum games.

          Play positive sum games.

      8. latexr · · focus · HN ↗
        No matter how productive you are, at some point producing more does not yield more return. We live in a finite world.
    8. ben_w · · focus · HN ↗
      Customers coming up with it is basically fine*, but it&#x27;s also why the SpaceX IPO chose to use &quot;TAM&quot; as a big number to dangle before investors: if you can do the work of {$6T + markup}&#x2F;year worth of desk jobs, that&#x27;s your customers.

      However, customers coming up with the money is the easy half of the problem. The hard part is having them pay you.

      Wikipedia&#x27;s valuation is on the small side of {number of people on the internet worldwide} * {peak price of Encyclopaedia Britannica} † despite containing a lot more content.

      LLMs can only chase high margins while they&#x27;re ahead of their competitors; the moment the investment stalls, open weighs catch up, they loose their edge. Cloud compute providers still win on supplying inference, but there too competition will likely lower margins, not justify huge valuations.

      NVIDIA may remain as valuable as today, but their P&#x2F;E ratio will likely shrink a lot even while keeping up the price.

      Model makers still have a problem here even if the tech is so useful it rapidly grows the economy: &quot;free&quot; is right behind them almost immediately after they stop.

      * under the assumption the tech is real; there&#x27;s plenty of people here on Hacker News who still dismiss it as a &quot;scam&quot;

      † that would be about 13 trillion USD, from what I read

      1. [deleted] · · focus · HN ↗

        [deleted]

    9. supertrope · · focus · HN ↗
      AI is the second Industrial Revolution! You cannot use outdated notions. The nature of work and value creation itself is changing. Those who do not embrace AI will be left behind. Soon AI will accelerate in its ability to self-improve resulting in general artificial intelligence. This will result in not just our economy reaching the next level but will illuminate the very nature of knowledge and existence. We will ascend becoming beings made of pure energy.
      1. pydry · · focus · HN ↗
        This really is the only scenario that justifies current valuations.
    10. nicce · · focus · HN ↗
      &gt; Do we really expect all the world’s corporations to suddenly up their annual spend by 1,000% on average? Why?

      If they keep replacing employees with AI, that is indeed the direction.

      1. sailfast · · focus · HN ↗
        It’s true - but then where do folks get money to buy from the businesses?

        Eventually this merry-go-round runs into some issues if we don’t figure out a way to make this huge productivity boom work.

        1. ben_w · · focus · HN ↗
          All money is a merry-go-round when you get down to it.

          That doesn&#x27;t mean the wheels won&#x27;t fall off, they fall off pretty regularly as is.

          The difference between this loop and the previous loops, is that people making the tech used to be pretty straightforward (&quot;invest in me, your money will let me make a machine that lets me fire 90% of my peasants and we can share in the savings&quot;), while today they&#x27;re all &quot;invest in me, either this will kill everyone or just make the concept of money irrelevant, either way rotflmao&quot;.

        2. BenoitEssiambre · · focus · HN ↗
          In theory:

          1) This would make stocks worth a lot more and produce more dividends so everyone owning stock would get money to spend.

          2) Governments effectively indirectly own ~40% of all business profits via corporate taxes, capital gains taxes, dividend taxes, sales taxes. So governments would also have more revenues to spend&#x2F;redistribute (this depends on governments not wasting it, spending it on wars etc.)

          1. xboxnolifes · · focus · HN ↗
            #1 is still mostly just moving money from the poor to the rich. Most people working for a wage are going to be in the bottom 80%, yet the top 20% own over 80% of the stocks.
        3. someonebaggy · · focus · HN ↗
          From other business owners. If this hypothesis is true, they&#x27;re saying the share of wealth controlled by labour goes dramatically down, and the share of wealth controlled by capital goes dramatically up. So most of your revenue will come from capital holders instead of labourers.
        4. 0c3ca83 · · focus · HN ↗
          Folks stop having money to buy from businesses. Other businesses buy from them instead.

          There&#x27;s no hard and fast rule that humans need to be involved in the economy, it&#x27;s just that until recently, you needed to pay them in order to have an economy that worked.

          Corporations are legally people; give them enough brains, and they may become a real boy one day.

          1. riffraff · · focus · HN ↗
            Ah yes, the &quot;Accelerando&quot;[0] dead galaxy where all life&#x27;s dead and only automated corporations remain.

            0: <a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Accelerando" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Accelerando

            1. 0c3ca83 · · focus · HN ↗
              This is the world we&#x27;re building.
            2. cthalupa · · focus · HN ↗
              If it frees humans up to pursue whatever we desire instead of having to work to generate more value for someone else than myself, then I&#x27;m happy.

              Now obviously, hell is more likely than a utopia, but this is the sort of advancement that would be required for us to reach that point. Something has to do the work.

      2. raesene9 · · focus · HN ↗
        But if all those peolple are unemployed will they still be able to buy all the products the corporations sell…..
        1. ben_w · · focus · HN ↗
          The historical precedent is those people get other jobs, and&#x2F;or everyone else in the economy gets richer faster than they get poorer.

          If this does or doesn&#x27;t happen with AI kinda depends how fast it makes multiple different sections of the population unemployed, rather than just one group like &quot;software developer&quot; or &quot;vehicle driver&quot;.

          1. TheOtherHobbes · · focus · HN ↗
            That&#x27;s very much not what happened in the Industrial Revolution. Hand weavers were relatively well-paid, and the new factories were more likely to employ the urban poor - including kids - than to give jobs to people who used to be hand weavers.

            It took maybe a century and a half for the modern consumer economy to appear. And it didn&#x27;t happen until money started being shared into the wider economy for political reasons, not technological ones.

            Meanwhile the enclosure of common land was catastrophic for rural populations. Sources of food and pasture disappeared as the Big Houses took them over and turned them into huge single family estates.

            1. ben_w · · focus · HN ↗
              Your claims are mostly orthogonal to mine; I&#x27;m not saying &quot;this was fun for all involved&quot; or &quot;the specific people who were laid off got better jobs&quot; or anything like that, though with the benefit of hindsight I can see how:

              &gt; those people get other jobs, and&#x2F;or everyone else in the economy gets richer faster than they get poorer.

              Could be read the way you seem to have read it. With this quotation &quot;other jobs&quot; was &quot;a job&quot; rather than &quot;a good job&quot;, while &quot;everyone else&quot; was intended to refer to the aggregate economy, not to all other individuals within it personally and individually benefitting. And the &quot;and&#x2F;or&quot; because this isn&#x27;t just about the initial phase of the industrial revolution but all technological job displacement that has continued to this day.

              Not even saying it was fast or error-free; another comment I made around the same time used a colourful metaphor to reference various economic depressions that keep on happening.

          2. yetihehe · · focus · HN ↗
            &gt; The historical precedent is those people get other jobs

            Heh, got fired from my old company for reasons not connected to AI. Then couldn&#x27;t find job. AI suggested one that is perfect for me, helped me put up webpage (I can do everything from electronics&#x2F;firmware&#x2F;backend&#x2F;iot&#x2F;cad, but nice webpage is not something I can do easily), then helps me every day to learn new things and make useful products I always wanted to make. And I found something safe for now from AI and big companies - making old equipment work with new systems. No one will touch it, because you have only small projects here and can&#x27;t extract a lot of value at once, but a single person who can do anything with some help from AI can carve out a whole niche.

            I think such solution - thousands of small niches by small entrepreneurs (1 person companies) who can use AI for some small skill they are lacking - are our future and they will absolutely extract a lot of money from people, who hope to make some more money with small optimisations of already working businesses. One example of such small optimisation - making a slightly better wood drying controller for small woodmill owner. He already put up small cabinet with cheap tuya controllers and needs to control them though atrocious app. Now I can make a small module that will add several more sensors, give him some simple dedicated control panel on webpage. Not even medium company would make such small product, because planning phase alone would cost more than what I can charge for whole system and do it in a week.

            And it all started with one prompt - &quot;Given my CV, what single person job would you recommend?&quot;

        2. sebzim4500 · · focus · HN ↗
          No, so companies will pivot more towards luxury goods affordable only to investors
        3. shimman · · focus · HN ↗
          Well look at how the US treats the bottom 10% of the country, that&#x27;s potentially your future.
    11. ItsMattyG · · focus · HN ↗
      it seems fairly obvious to me that once ai becomes as good as a worker, people will pay a workers wages to use it - 24&#x2F;7, can&#x27;t quit, can&#x27;t complain that badly, no lunch breaks

      productivity tooling replaces employees

      1. geraneum · · focus · HN ↗
        &gt; people will pay a workers wages

        Who re these people?

        1. ItsMattyG · · focus · HN ↗
          ... the people who are currently paying workers
          1. geraneum · · focus · HN ↗
            Fair… how many (ballpark) of these people do think are there? Where do they get the money to pay the workers currently?
            1. ItsMattyG · · focus · HN ↗
              you can&#x27;t reason about currently because the entire economy will change before collapsing completely - there will be a poor class and a rich class
              1. geraneum · · focus · HN ↗
                I haven’t started reasoning anything. I was curious if you’ve thought this through yourself.
      2. scottLobster · · focus · HN ↗
        So we&#x27;re talking about the complete destruction of the consumer economy.

        Hard to see how Google or Facebook keeps their advertising models in that environment. There aren&#x27;t enough construction workers and data scientists to buy everything.

        1. ItsMattyG · · focus · HN ↗
          they won&#x27;t need their advertising models because they&#x27;ll have a new oligopoly on ai, and make the money directly from b2b

          which yes, will completely destroy the consumer economy and social structures and current forms of governance

          1. TheOtherHobbes · · focus · HN ↗
            If it&#x27;s any consolation, in the end it will destroy capitalism too.
            1. ItsMattyG · · focus · HN ↗
              true, and humanity may all be dead due to rogue ai or speciation, so maybe there&#x27;d be no humans around to care
              1. vconnor · · focus · HN ↗
                But for a beautiful minute, everybody could one shot a dog food recipe website without knowing anything about HTML.
            2. MentalM · · focus · HN ↗
              &gt; If it&#x27;s any consolation, in the end it will destroy capitalism too.

              That is hardly will be of any consolation. AI will probably destroy capitalism, but not because it will replace some useless f.ucks from their useless computer jobs (most of them will perfectly fine find another more useful job, if only way less paid), but because with surveillance and totalitarian control that AI capable of, socialists like Stalin or Hitler will build resilient and durable society where no member will have any way for resisting.

              1. scottLobster · · focus · HN ↗
                Odd that you mention that, China is afraid of exactly the opposite. Their systems are so centralized for surveillance purposes that an AI seriously breaching their systems could destroy their control.
                1. MentalM · · focus · HN ↗
                  Of course it is afraid, and because of that AI will be banned for many use cases and severely regulated by the government for other use cases.

                  That is like one of the first steps to build the ultimate totalitarian regime. In the USSR bolsheviks were grate proponents of civilian weapons right until they have got power. And then civilian weapons were banned.

        2. MentalM · · focus · HN ↗
          &gt; There aren&#x27;t enough construction workers and data scientists to buy everything.

          There will be, when two third of the office workers will be replaced by AI.

          It is astounding why so many people does not understand how consumer economy works. I think it is more a matter of the copium, because, well, it is generally hard to accept the truth that in five years you will have to haul bricks as a job, and the guy who used to put that bricks on one another and make three times less than you in your tech job now will be your new boss.

          And advertising models in that environment? Why should something changed for it?

      3. bojan · · focus · HN ↗
        No lunch breaks, but also no responsibility.
    12. timcobb · · focus · HN ↗
      anecdotally, my AI aka personal productivity spending has gone up something like that
    13. [deleted] · · focus · HN ↗

      [deleted]

    14. HDThoreaun · · focus · HN ↗
      MSFT office suite alone sells $.1 trillion a year
      1. pessimizer · · focus · HN ↗
        And will continue to. AI won&#x27;t reduce those costs by a penny.

        As far as I can tell, it won&#x27;t even accelerate a competitor who could bite off a piece of that. As far as I can tell, it won&#x27;t even make the suite itself better, just buggier. Maybe MS themselves could fire %15 to %30 of the people who work on Office, but these companies have been vastly overhiring for years; they could have done that 10 years ago and they didn&#x27;t.

      2. dragonsky67 · · focus · HN ↗
        Can I please pay a bit more to never have to use it again?
    15. wnevets · · focus · HN ↗
      &gt; Do we really expect all the world’s corporations to suddenly up their annual spend by 1,000% on average? Why?

      because AI is gonna make them so much more productive of course. &#x2F;s

    16. jstummbillig · · focus · HN ↗
      &gt; Do we really expect all the world’s corporations to suddenly up their annual spend by 1,000% on average? Why?

      Because spend on &quot;enterprise productivity tooling&quot; (or whatever category they want to place AI spend in) can now increasingly offset human labor cost.

    17. schainks · · focus · HN ↗
      No, they are dropping expensive people for cheap people who can steer AI. That will reduce their spend by quite a bit.
    18. qaq · · focus · HN ↗
      &quot;Do we really expect all the world’s corporations to suddenly up their annual spend by 1,000% on average? Why?&quot; Because they will replace people with tools I am guessing?
      1. wnmurphy · · focus · HN ↗
        Bingo. When that 1000% increase in spending on tokens represents a cost savings of 80% on knowledge worker labor, companies will happily pay it.

        The other factor that threatens the $6T required to justify... open source models crushing the pricing power of these companies. If I can use some open source agent management framework + self-hosted Qwen to basically replace my entire Product org for free, then why would I pay Microsoft&#x2F;Google&#x2F;Anthropic&#x2F;OpenAI?

    19. idiotsecant · · focus · HN ↗
      I think we&#x27;ve barely scratched the surface of available &#x27;evil&#x27; applications for AI that will be immensely powerful. Building, for example, an application capable of building personalized emotionally targeted advertisements based on a user profile would be incredibly effective and probably expensive but I bet it would pay dividends.
    20. user43928 · · focus · HN ↗
      The global GDP is $126T, a 5% productivity increase would correspond to $6.3T.

      So, I have the following thoughts:

      How much more productive can AI for knowledge work realistically make the global economy? 5%, 10%, 20%?

      What if it also does robotics soon and can be deployed in manufacturing and construction? Can we get 50% more productive, or 200%?

      Then there&#x27;s science, medicine, and so on. Who is to say what happens if AI solves also that?

      While I do not know if AI will be capable for these use cases, I see no reason to believe it unlikely that AI could be applicable to eg. robotics and speed up production by factor 3x.

    21. TimByte · · focus · HN ↗
      &gt; For example, the article suggests $1T from enterprise productivity tooling. A quick Google suggests the global enterprise productivity tooling market is only worth about $0.1T right now

      We tried to justify enterprise assistant budget to the CFO last quarter. They sent us packing after asking exactly how many headcount reductions we could guarantee post-purchase, which stalled the conversation immediately...

    22. lopsotronic · · focus · HN ↗
      I deeply suspect that the oligarchs are seeking for a way - all the ways - that they can preserve their wealth through the collapse of USD Seigniorage thanks to its reserve currency status[1]. The romance of superintelligence is window dressing, as a double-snake-eyes bet on owning the posthuman.

      Exchanging USD-tied assets and securities for ownership in physical infrastructure, water, land, energy.

      Another strategy is exchanging USD-tied assets for hunks of governmental power or to get shares of the governmental monopoly of force. We&#x27;re seeing this, as well. Have been seeing this, but it&#x27;s accelerating at a dizzy pace.

      In many ways, the AI infrastructure play assumes this piece to be a given, because the same infrastructure is still costed in USD-denominated debt. Governmental power will allow for that debt to be dealt with opaquely.

      On the other hand, who knows, maybe they will manage to build Cyber Jesus &#x2F; MechaHitler. No pricing that in.

      [1] Ok ok ok strictly, seigniorage is the profit from issuing currency: the gap between what it costs to create a dollar and what it buys. This is broader. It&#x27;s the &quot;exorbitant privilege&quot; of reserve-currency status: the world accepts US liabilities (cash, Treasuries, dollar deposits) as savings, so the US can run persistent deficits at low borrowing costs. This system is on the very brink, in the early stages, of collapse - every financial indicator is pointed at the same direction: petrodollar recycling to US compute and power through vehicles like Stargate, Abu Dhabi&#x27;s MGX, and Saudi PIF commitments; Japan and Korea 2025 trade deals are directed at US physical industry rather than bond purchases; 2022 Russian bond freezes showed the danger; every central bank on the planet is blowing up the physical gold market.

Open on Hacker News to reply ↗

Unofficial Hacker News client; not affiliated with Y Combinator.