Betting on continued exponential growth is basically a game of chicken. Growth has to slow down and level off at some point as adoption and usage saturates.
It's a bit like playing roulette by always betting on black and doubling your bet every time you lose. When you eventually, inevitably, do lose, your loss is going to be huge because you've been doubling your bet at each stage.
With LLM model generations and investment, it goes something like this. Let's say profits have been doubling year over year for each new model/investment cycle, and you want to bet on this doubling continuing forever.
Year 1 you get $10B in profit, and spend $20B on extra capacity for next year
Year 2 you get $20B in profit, and spend $40B on extra capacity
Year 3 you get $30B in profit, and spend $??? on extra capacity
You're already in trouble. Profit growth from Year 2 to 3 was "only" 50% vs the doubling you were gambling on, so you've now lost $10B ($40B spent only earnt you $30B of profit), and what are you going to do? Double down like the roulette player?
The longer the pattern of profit doubling goes, before it slows down, the worse it will end for you, since your bets are doubling each year. Saying "woo hoo, look at me! risk pays!" is a bit like saying the same while playing russian (not casino) roulette for money.
I worked for Acorn Computers UK in the early 80's and saw something similar firsthand. The brand new personal computer market was exploding, a once in a lifetime phenomenon, that no-one knew how to forecast. To make matters worse the market was highly seasonal with most sales at xmas, so the company had to guess what continued year-on-year exponential growth might look like (brand new market - no-one had a clue), and plan/spend ahead and stock warehouses full of computers ready for xmas. Sadly Acorn took the Sam Altman highly optimistic/irresponsible approach, got the forecast wrong, and was left with a huge warehouse full of rapidly depreciating computers. The company never fully recovered, although ARM rose out of the ashes.
It's a bit like playing roulette by always betting on black and doubling your bet every time you lose. When you eventually, inevitably, do lose, your loss is going to be huge because you've been doubling your bet at each stage.
With LLM model generations and investment, it goes something like this. Let's say profits have been doubling year over year for each new model/investment cycle, and you want to bet on this doubling continuing forever.
Year 1 you get $10B in profit, and spend $20B on extra capacity for next year
Year 2 you get $20B in profit, and spend $40B on extra capacity
Year 3 you get $30B in profit, and spend $??? on extra capacity
You're already in trouble. Profit growth from Year 2 to 3 was "only" 50% vs the doubling you were gambling on, so you've now lost $10B ($40B spent only earnt you $30B of profit), and what are you going to do? Double down like the roulette player?
The longer the pattern of profit doubling goes, before it slows down, the worse it will end for you, since your bets are doubling each year. Saying "woo hoo, look at me! risk pays!" is a bit like saying the same while playing russian (not casino) roulette for money.
I worked for Acorn Computers UK in the early 80's and saw something similar firsthand. The brand new personal computer market was exploding, a once in a lifetime phenomenon, that no-one knew how to forecast. To make matters worse the market was highly seasonal with most sales at xmas, so the company had to guess what continued year-on-year exponential growth might look like (brand new market - no-one had a clue), and plan/spend ahead and stock warehouses full of computers ready for xmas. Sadly Acorn took the Sam Altman highly optimistic/irresponsible approach, got the forecast wrong, and was left with a huge warehouse full of rapidly depreciating computers. The company never fully recovered, although ARM rose out of the ashes.