And just like that—surprise!—one AI company bails out another AI company's grift.
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@raganwald Soooo, no one wants to use their AI stuff except some government contracts for white supremacist agents or something. So Google gets to buy the compute running on dirty energy to meet their demands without sullying their rep while they build out. Apple doesn't want to play but feels they have to meet the market so it's paying for Google AI to put inside Siri on iOS devices. Meanwhile, doesn't Google still pay Apple to make Google search the default on iPhone?
Am I getting all this?@PizzaDemon Seemingly so! But it gets better.
Google owns an estimated 5% stake in xAI ("SpaceX"). Now if xAI can obtain a valuation of 90+ times revenue, and Google gives them 11 billion a year, that makes the entire company
worth 990 billion more. 5% of 990 billion is 49.5 billion, so by promising to pay 11 billion they inflate their own equity by 49.5 billion.All they have to do is sell their stake and then exercise their 90 day cancellation option.
What a great company to go public.
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And just like that—surprise!—one AI company bails out another AI company's grift. Google agreeing to rent compute from xAI (cough, "SpaceX") magically makes them eligible for inclusion in the S&P500.
Americans, they are looting your life savings, the ones you earned through labour that they are gleefully replacing. Your descendants will never have the chance you had.
https://techcrunch.com/2026/06/05/google-will-pay-spacex-920m-per-month-for-compute/
@raganwald Diversify into European and Asian stocks.
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And just like that—surprise!—one AI company bails out another AI company's grift. Google agreeing to rent compute from xAI (cough, "SpaceX") magically makes them eligible for inclusion in the S&P500.
Americans, they are looting your life savings, the ones you earned through labour that they are gleefully replacing. Your descendants will never have the chance you had.
https://techcrunch.com/2026/06/05/google-will-pay-spacex-920m-per-month-for-compute/
@raganwald
S&P 500 should know to wait as Elon is always promising and not delivering. -
@raganwald Aw crud, guess I should transfer the last of my employee stock. The corruption of the stock index criteria is absolutely a grab on everyone's conservative retirement stock funds. It wasn't enough to let people choose risky mixes in their investments and to inflate the market generally with pension savings.
Check kiting via circular investment wasn't enough.
@jmeowmeow @raganwald where do you run to? Where do you hide?
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@ilia That is from Thursday, June 4th. What the S&P 500 said is that they are not changing the rules for xAI ("SpaceX').
Whereas, xAI announced the Google deal the next day. The assertion is that adding the Google deal to their S-1 allows them to claim profitability, thus making them eligible under the existing rules for inclusion without changes to the rules.
I believe that both sets of reporting can be true at the same time.
UPDATE: They still must wait four quarters.
S&P made it clear the index inclusion rules would continue to require 4 quarters of reported profitability. Being able to "claim" future profitability doesn't enter into it. SpaceX's inclusion in NASDAQ 100 and Russell indices is bad enough (Vanguard etc) but they're not going to be in SP500 for the next year, unless the rules change. And hopefully, never.
@raganwald @ilia -
And just like that—surprise!—one AI company bails out another AI company's grift. Google agreeing to rent compute from xAI (cough, "SpaceX") magically makes them eligible for inclusion in the S&P500.
Americans, they are looting your life savings, the ones you earned through labour that they are gleefully replacing. Your descendants will never have the chance you had.
https://techcrunch.com/2026/06/05/google-will-pay-spacex-920m-per-month-for-compute/
-
And just like that—surprise!—one AI company bails out another AI company's grift. Google agreeing to rent compute from xAI (cough, "SpaceX") magically makes them eligible for inclusion in the S&P500.
Americans, they are looting your life savings, the ones you earned through labour that they are gleefully replacing. Your descendants will never have the chance you had.
https://techcrunch.com/2026/06/05/google-will-pay-spacex-920m-per-month-for-compute/
@raganwald
Not having any kids keeps playing out for me. -
S&P made it clear the index inclusion rules would continue to require 4 quarters of reported profitability. Being able to "claim" future profitability doesn't enter into it. SpaceX's inclusion in NASDAQ 100 and Russell indices is bad enough (Vanguard etc) but they're not going to be in SP500 for the next year, unless the rules change. And hopefully, never.
@raganwald @ilia@osma @raganwald @ilia The S&P 500 delists unprofitable companies, and they already stated up front that SpaceX has to show a history of profitability and other factors before it qualifies for consideration.
With them losing $15 to $160 Billion a year, $11 Billion a year is hardly going to bail them out. Even going public does not bail them out in any way that fools the index.
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@osma @raganwald @ilia The S&P 500 delists unprofitable companies, and they already stated up front that SpaceX has to show a history of profitability and other factors before it qualifies for consideration.
With them losing $15 to $160 Billion a year, $11 Billion a year is hardly going to bail them out. Even going public does not bail them out in any way that fools the index.
Profitability is often sacrificed for growth, for example Amazon was unprofitable for 6 years after going IPO, uber 4 years, I am sure there many other similar examples
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And just like that—surprise!—one AI company bails out another AI company's grift. Google agreeing to rent compute from xAI (cough, "SpaceX") magically makes them eligible for inclusion in the S&P500.
Americans, they are looting your life savings, the ones you earned through labour that they are gleefully replacing. Your descendants will never have the chance you had.
https://techcrunch.com/2026/06/05/google-will-pay-spacex-920m-per-month-for-compute/
Absolutely thievery. I need to be off Google services ASAP.
(Edit: I long ago tapered off my use of their services to a minimum, but I'm still using Gmail. Time to end that too.)
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And just like that—surprise!—one AI company bails out another AI company's grift. Google agreeing to rent compute from xAI (cough, "SpaceX") magically makes them eligible for inclusion in the S&P500.
Americans, they are looting your life savings, the ones you earned through labour that they are gleefully replacing. Your descendants will never have the chance you had.
https://techcrunch.com/2026/06/05/google-will-pay-spacex-920m-per-month-for-compute/
@raganwald Google paying $920m per month for access to Melon Husk owned computers is ludicrous. That is close to $1 billion per month. Does not make sense. You could feed and educate a lot of people for that mount of wasted money.
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Profitability is often sacrificed for growth, for example Amazon was unprofitable for 6 years after going IPO, uber 4 years, I am sure there many other similar examples
-
And just like that—surprise!—one AI company bails out another AI company's grift. Google agreeing to rent compute from xAI (cough, "SpaceX") magically makes them eligible for inclusion in the S&P500.
Americans, they are looting your life savings, the ones you earned through labour that they are gleefully replacing. Your descendants will never have the chance you had.
https://techcrunch.com/2026/06/05/google-will-pay-spacex-920m-per-month-for-compute/
We are watching a tech/AI-bubble come crashing down in real time.
Proof that the "market" N.E.V.E.R. learns.
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Profitability is often sacrificed for growth, for example Amazon was unprofitable for 6 years after going IPO, uber 4 years, I am sure there many other similar examples
@ilia @osma @raganwald they both had to wait to join the S&P 500 until they both showed a history being profitable and dozens of other factors.
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Profitability is often sacrificed for growth, for example Amazon was unprofitable for 6 years after going IPO, uber 4 years, I am sure there many other similar examples
@ilia @webology @osma @raganwald
All AI services operate at a massive negative margin. Every time they generate revenue they lose money. Amazon and Uber had obvious paths to positive margin, AI has none.
When Amazon buys a warehouse it lasts decades. When an AI service stocks a datacenter, the GPUs become useless in a couple of years.
The CapEx that Amazon was spending was largely in actual durable things, the "CapEx" for AI services is mostly consumables.
If these were bakeries, Amazon issued stock to buy more ovens, while the AI services are issuing stock to buy flour for the week.
Paradoxically, Musk and SpaceX were once on the good side of this; reusable rockets are more like tools than consumables, so you get recurring value from their construction.
I don't see recurring value for expenditure, I don't see a moat, I don't see a path to positive margin, these are money pits up and down.
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@ilia @webology @osma @raganwald
All AI services operate at a massive negative margin. Every time they generate revenue they lose money. Amazon and Uber had obvious paths to positive margin, AI has none.
When Amazon buys a warehouse it lasts decades. When an AI service stocks a datacenter, the GPUs become useless in a couple of years.
The CapEx that Amazon was spending was largely in actual durable things, the "CapEx" for AI services is mostly consumables.
If these were bakeries, Amazon issued stock to buy more ovens, while the AI services are issuing stock to buy flour for the week.
Paradoxically, Musk and SpaceX were once on the good side of this; reusable rockets are more like tools than consumables, so you get recurring value from their construction.
I don't see recurring value for expenditure, I don't see a moat, I don't see a path to positive margin, these are money pits up and down.
@eestileib @webology @osma @raganwald AI business could be profitable if the fees they charged better reflected costs, but right now they (AI companies) are still in price discovery mode and fighting to establish market/mind share.
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@eestileib @webology @osma @raganwald AI business could be profitable if the fees they charged better reflected costs, but right now they (AI companies) are still in price discovery mode and fighting to establish market/mind share.
@ilia @webology @osma @raganwald
Seems like that when fees line up with costs, it's more expensive than the alternative (a recently-fired engineer with kids and a mortgage). At least for program listing generation.
For the real use cases of claim denial, automating racist policing, domestic surveillance and purges, bombing children, AI provides a useful culpability sink that may be worth a trillion dollars to the Epstein class.
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@ilia @webology @osma @raganwald
Seems like that when fees line up with costs, it's more expensive than the alternative (a recently-fired engineer with kids and a mortgage). At least for program listing generation.
For the real use cases of claim denial, automating racist policing, domestic surveillance and purges, bombing children, AI provides a useful culpability sink that may be worth a trillion dollars to the Epstein class.
@eestileib @webology @osma @raganwald Not really, if you look @ token costs from Chinese models it is massively cheaper than what frontier labs charge, there is also the matter that there is little dedicated inference hardware optimized for inference and inference alone, which will reduce costs significantly.
That being, I do think over time number of engineers needed will only increase not decrease.
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@eestileib @webology @osma @raganwald Not really, if you look @ token costs from Chinese models it is massively cheaper than what frontier labs charge, there is also the matter that there is little dedicated inference hardware optimized for inference and inference alone, which will reduce costs significantly.
That being, I do think over time number of engineers needed will only increase not decrease.
@ilia @webology @osma @raganwald
Yeah my friend who runs an eng team that uses Qwen with a non-chatbot interface says that pretty much nobody he considers to be serious is using one of the American models, because China has established credibility that they will release a free version that's just as good and far more efficient with a three month delay.
So, no moat. These AI service IPOs are money pits.
I honestly think a major reason that chatbots took over the world is that they flatter men made lonely by age and power.
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@ilia @webology @osma @raganwald
Yeah my friend who runs an eng team that uses Qwen with a non-chatbot interface says that pretty much nobody he considers to be serious is using one of the American models, because China has established credibility that they will release a free version that's just as good and far more efficient with a three month delay.
So, no moat. These AI service IPOs are money pits.
I honestly think a major reason that chatbots took over the world is that they flatter men made lonely by age and power.
@eestileib @webology @osma @raganwald The beauty of those models is that you can run them on own or cloud hardware, so you are not feeding training data to the AI labs and have full control.
They are admittedly a bit behind, but not far enough to be non-competitive or not useful for real work.
