They’re not out of cash or creditors, they just want to build faster. Slowing down is fine, but respecting a speed limit doesn’t mean you’re about to stop.
The data center builders and operators are running behind on basically every data center project, massive amounts of Blackwell are just sitting in warehouses right now because they loose money the moment they’re plugged in. New IT load for the operators isn’t even a third of the capacity of the chips sold to these companies. Most of the companies that got switched over to token billing by the model providers are pulling back and freaking out over a yearly “AI budget” annihilated in a quarter. The model providers wouldn’t have swapped to token based billing for enterprise clients if they didn’t have to. They’ve been pumping demand with hype and by selling at a fraction of operational costs. Reporting non-gap EBITA to hide what a mess the financials are.
The SpaceX S1 alone shows how insanely cash incinerating it all is. Can’t wait to see Anthropic and OpeAIs S1s. It’s gonna be hilarious.
I’m gonna go look it up now, but for those who follow behind me: can you explain what an S1 is?
Edit to add (emphasis mine):
SEC Form S-1 is the initial registration form for new securities required by the SEC for public companies that are based in the U.S. Any security that meets the criteria must have an S-1 filing before shares can be listed on a national exchange, such as the New York Stock Exchange. Companies typically file SEC Form S-1 when planning their initial public offering (IPO). SEC Form S-1 requires companies to explain the use of capital, outline their business model and competition, and provide a brief prospectus of the security, including pricing and any dilution of other securities.
SEC Form S-1 is also known as the registration statement under the Securities Act of 1933. Additionally, companies must disclose any significant business dealings with directors and outside counsel. Investors can view S-1 filings online to research new offerings before they are issued.
To clarify why the S1s are so important here. There are a ton of laws that prevent companies that have their shares bought and sold on public stock markets from outright lying about the state of their business to the public. This is to ensure that companies can’t just lie to push up share prices.
Since the most important model providers are currently private, they have not been bound by these laws and have basically been allowed to say what ever they want. With them going public, and the release of the S1s, they need to publicly display accurate financials, not just vague and un verifiable numbers.
The question of “is this just a fad or is this a revolutionary technology that will reshape the economy” is easily answered if we have accurate accounting of the costs to run these business.
This stuff has been there. Just not much reporting or investigation has been done on it, instead a lot of news outlets focused on interviews with the heads of these companies and thoughtlessly reiterated press releases. Those who have criticized it have mainly just done so in ways that play in to the narrative convenient for the industry “but what if it’s TOO good?”.
The failure of tech journalism on this topic has been frankly catastrophic.
They’re not out of cash or creditors, they just want to build faster. Slowing down is fine, but respecting a speed limit doesn’t mean you’re about to stop.
The data center builders and operators are running behind on basically every data center project, massive amounts of Blackwell are just sitting in warehouses right now because they loose money the moment they’re plugged in. New IT load for the operators isn’t even a third of the capacity of the chips sold to these companies. Most of the companies that got switched over to token billing by the model providers are pulling back and freaking out over a yearly “AI budget” annihilated in a quarter. The model providers wouldn’t have swapped to token based billing for enterprise clients if they didn’t have to. They’ve been pumping demand with hype and by selling at a fraction of operational costs. Reporting non-gap EBITA to hide what a mess the financials are.
The SpaceX S1 alone shows how insanely cash incinerating it all is. Can’t wait to see Anthropic and OpeAIs S1s. It’s gonna be hilarious.
I’m gonna go look it up now, but for those who follow behind me: can you explain what an S1 is?
To clarify why the S1s are so important here. There are a ton of laws that prevent companies that have their shares bought and sold on public stock markets from outright lying about the state of their business to the public. This is to ensure that companies can’t just lie to push up share prices.
Since the most important model providers are currently private, they have not been bound by these laws and have basically been allowed to say what ever they want. With them going public, and the release of the S1s, they need to publicly display accurate financials, not just vague and un verifiable numbers.
The question of “is this just a fad or is this a revolutionary technology that will reshape the economy” is easily answered if we have accurate accounting of the costs to run these business.
Interesting. You actually have a real answer and explanation. I mean, that’s amazing. My goodness, something actually worth double-checking. 👏
This stuff has been there. Just not much reporting or investigation has been done on it, instead a lot of news outlets focused on interviews with the heads of these companies and thoughtlessly reiterated press releases. Those who have criticized it have mainly just done so in ways that play in to the narrative convenient for the industry “but what if it’s TOO good?”.
The failure of tech journalism on this topic has been frankly catastrophic.