> This isn't like the early days of the web, or Amazon, or any of those other big winners that lost money before becoming profitable. Those were all propositions with excellent "unit economics" – they got cheaper with every successive technological generation, and the more customers they added, the more profitable they became. AI companies have – in the memorable phraseology of Ed Zitron – "dogshit unit-economics." Each generation of AI has been vastly more expensive than the previous one, and each new AI customer makes the AI companies lose more money...
See, I think this is wrong. The unit economics of LLMs are great, and more than that, they have a fuckton of users with obvious paths to funding for those users that aren't paying per unit (https://www.snellman.net/blog/archive/2025-06-02-llms-are-ch...). The problem is the ludicrous up front over infestment, none of which was actually necessary to get to useful foundation models, as we saw with DeepSeek.
"So, you're saying a third of the stock market is tied up in seven AI companies that have no way to become profitable and that this is a bubble that's going to burst and take the whole economy with it?"
Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla.
I dispute the "no way to become profitable" claim (literally all profitable right now, it's the private ones which probably aren't). I do have other negative sentiments for most of them, but those are the seven that represent about that share of the S&P500.
> This isn't like the early days of the web, or Amazon, or any of those other big winners that lost money before becoming profitable. Those were all propositions with excellent "unit economics" – they got cheaper with every successive technological generation, and the more customers they added, the more profitable they became. AI companies have – in the memorable phraseology of Ed Zitron – "dogshit unit-economics." Each generation of AI has been vastly more expensive than the previous one, and each new AI customer makes the AI companies lose more money...
See, I think this is wrong. The unit economics of LLMs are great, and more than that, they have a fuckton of users with obvious paths to funding for those users that aren't paying per unit (https://www.snellman.net/blog/archive/2025-06-02-llms-are-ch...). The problem is the ludicrous up front over infestment, none of which was actually necessary to get to useful foundation models, as we saw with DeepSeek.
> infestment
So true.
"So, you're saying a third of the stock market is tied up in seven AI companies that have no way to become profitable and that this is a bubble that's going to burst and take the whole economy with it?"
I said, "Yes, that's right."
Which companies are those?
Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla.
I dispute the "no way to become profitable" claim (literally all profitable right now, it's the private ones which probably aren't). I do have other negative sentiments for most of them, but those are the seven that represent about that share of the S&P500.
Right. The are also not “AI companies” in any meaningful way — only NVidia’s revenue and market cap is heavily driven by AI sales.
The author’s thesis seems to lack rigor.