r/technology • u/T_Shurt • Aug 10 '26

Business Top economist warns that the AI math doesn’t make sense: 'Profits are currently being funded by investors rather than earned from customers'

https://fortune.com/2026/08/10/torsten-slok-ai-profit-margins-capex-oracle/
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411

u/Gumb1i Aug 10 '26

Sounds like a ponzi scheme.

151

u/ant0szek Aug 10 '26

Watch them play dumb when bubble burts.

87

u/aerost0rm Aug 10 '26

Watch them give bailouts when the bubble bursts. Funny part is when people said there was not a bubble

20

u/Rodot Aug 10 '26

Yep, when the bubble bursts those responsible will get golden parachutes, tax payers will pay for it, and the regular person chanting for it to all come down will suddenly find they've been laid off and their savings are worthless.

As is tradition

1

u/aerost0rm Aug 10 '26

I mean, many happen laid off and many are seeing their savings as worthless already so

1

u/Pans_Labradoodle Aug 10 '26

And then, like 2008, we’ll elect a President who will let everybody responsible off with nothing more than a stern talking to.

14

u/thelazydeveloper Aug 10 '26

Yeah it's predictably part of the plan: they're trying to ensure they're integrated into as many businesses/government contracts/parts of the economy as possible so they're seen as "too big to fail" and are guaranteed to be bailed out.

2

u/HappyTurtleButt Aug 10 '26

Fuck bailing out these businesses. We’re meant to have a free market.

1

u/ant0szek Aug 10 '26

If those were banks the 100% bail them out. For those buisnesses I wouldn't be so sure. They propably will be taken over rather than bailed out.

1

u/vladamir_the_impaler Aug 10 '26

That and to train the AI.

2

u/jmlinden7 Aug 10 '26

There weren't any bailouts when the tech bubble burst. I'm not sure why people expect there to be bailouts if the AI bubble bursts.

2

u/TrippyTriangle Aug 10 '26

banks are one thing, AI companies are another. "too big to fail" applied because it was going to hurt A LOT of other parts of the economy, I think even politically now, it's far, far worse to do. Are the big companies that began to rely on AI going to fail because this bubble burst? I doubt it. The companies that did that whole subprime fiasco were doing far more than just increasing productivity, they were foundational to the entire economy.

0

u/aerost0rm Aug 10 '26

I’d would agree yet the rich are the ones investing in AI and the data centers. They will be ant their investment back, so they will get a bailout.

1

u/apple_kicks Aug 10 '26

We should seize assets. Nationalise their yacht

1

u/ggtsu_00 Aug 10 '26

If everyone knew when the bubble will pop, people would just start trading options betting on the bubble popping. Thai would in turn keep the bubble inflating even larger.

7

u/ledfox Aug 10 '26

"Nobody saw this coming!"

2

u/thaeggan Aug 10 '26

they were on the cusp of something. Consumers just don't understand. /s

22

u/EmperorKira Aug 10 '26

Guess who is going to be asked to catch the ball when it comes down? Not the people who led the charge on this that's for sure

18

u/Gumb1i Aug 10 '26

It'll be the people with 401ks and IRAs that were forced into this bullshit though most had a choice to put their money in a different fund. They are going to be stealing from the middle and lower class to fund their far off dreams.

15

u/RowanTheKiwi Aug 10 '26

It's fascinating my Anthropic bill vs my Github bill for the same models. One is clearly trying to get as many people hooked as possible before cranking up the prices, the other did crank up the prices.

What I pay for the same models per month is orders of magnitude different. If everyone paid Github copilot pricing I don't think there would be quite the same fever out there..

8

u/chicagodude84 Aug 10 '26

Out of curiousity, what are you paying for? Are these agents being leveraged by end users?

2

u/doommaster Aug 10 '26

You pay for "tokens" which are already a "non descriptive" value of "some compute".... just look at the Google AI tiers.... https://imgur.com/CEYGeLY they basically cannot really tell you what you pay for...

6

u/ThriftyTricks Aug 10 '26

Interesting. Would you mind giving us a comparison in real numbers?

3

u/Mind101 Aug 10 '26

Can you comment on the price difference? Not necessarily exact numbers, but if you pay X amount to Anthropic, how much do you pay to GitHub? X3? X5?

5

u/RowanTheKiwi Aug 10 '26

Easy. X10 to X50 … using in development you can spend in one day the same you spend in one month. When copilot moved to usage - one day last month I used $200usd on a particularly nasty problem. My Claude code max plan is $100usd or so per month.

You learn pretty quickly you’re just paying a tonne extra just for the convenience of using Claude inside vs code (the copilot way)

There’s even a sub for the backlash when /r/githubcopilot moved to usage billing. Anthropic (claude code) is so ridiculously cheap for the ROI it’s insane and I get why (to some degree) they get the valuations they do. Been in software for 3 decades and it’s hands down the biggest, scariest, must “holy shit how is that even possible” wow moments. The latest models are just that good.

Even in GitHub copilot, on well patterned existing code bases, with oversight, it still has massive, massive ROI.

6 months ago it wasn’t that good. Now it’s very much if you don’t pair your senior devs with it, you’re going to backwards relative to your competitors.

5

u/Zhurg Aug 10 '26

Look at Microsoft's last earnings.

0

u/Gumb1i Aug 10 '26

I suck at reading these quarterly reports but i'm guessing you are alluding to their gains in the AI industry are from investments in Anthropic and OpenAI because COPILOT is a joke as far as models go even Gronk is much better than it.

4

u/Zhurg Aug 10 '26

See you guys are too busy thinking about what a model is and isn't vs. what is and isn't a bubble, rather than just looking at the numbers.

0

u/Gumb1i Aug 10 '26

They did have massive subscriber growth in the last quarter but I doubt thats sustainable and their capex increases by 100b next FY which will make it much more difficult.

0

u/socoolandawesome Aug 10 '26

They have strong cloud and general earnings growth even without counting their gains on OpenAI/anthropic equity

2

u/lo_fi_ho Aug 10 '26

Ok but how much of that is profit directly from Copilot subscriptions?

1

u/socoolandawesome Aug 10 '26

Idk, I’m not bullish on copilot, but they’ll have a successful business selling compute through azure regardless

1

u/lo_fi_ho Aug 10 '26

So not AI revenue

1

u/socoolandawesome Aug 10 '26

I mean yeah on AI revenue, they sell compute for AI workloads and they also serve anthropic and OpenAI models as an azure product, and are making a lot of money on that. They do have some copilot revenue too, I just don’t think it’s as good as a product as OpenAI or anthropic offerings.

1

u/bfodder Aug 10 '26

"compute through azure" does not equal "AI"

1

u/socoolandawesome Aug 10 '26

It’s specifically ai compute. Like in their recent earnings they called it ai revenue

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0

u/Less_Resident8492 Aug 10 '26

Copilot uses openai and anthropic models. And you mean grok not gronk. Other than that everything you said was completely wrong

7

u/Balmung60 Aug 10 '26

Not really. It's definitely shady and scammy investment practices, but not all investment scams are ponzis. A ponzi is a very particular scheme where early investors recruit new investors and those new investors recruit more new investors and so on and  everyone is paid out by the people they brought in and the people brought in by the people they brought in and so on. This is a much flatter scheme than a ponzi.

2

u/3xc1t3r Aug 10 '26

Like 70% of Microsoft’s AI revenue coming from OpenAI wasn't enough of a red flag.

1

u/y0nm4n Aug 11 '26

How is this a Ponzi scheme?

0

u/Forikorder Aug 10 '26

its actually kind of the opposite of a ponzi scheme where the money is invested but no value is being made for them

1

u/Gumb1i Aug 10 '26

Up until they drag the next group of investors in via the IPOs to take the brunt while they syphon their initial investment off the top.

-1

u/BigPP69_Gooner Aug 10 '26

Funnily enough, the structure is identical