The Coming Generative AIPocalypse

0:00This is an iHeart Podcast.

0:30Thomson Reuters and specialized bikes have since they upgraded to the next generation of the cloud. Oracle Cloud Infrastructure. OCI is the blazing fast platform for your infrastructure, database, application development, and AI needs, where you can run any workload in a high availability, consistently high performance environment, and spend less than you would with other clouds. How is it faster? OCI's block storage gives you more operations per second. Cheaper? Better? OCI costs up to 50 % less for computing, 70 % less for storage, and 80 % less for networking. Better? In test after test, OCI customers report lower latency and higher bandwidth versus other clouds.

1:12This is the cloud built for AI and all your biggest workloads. Right now, with zero commitment, try OCI for free. Head to oracle.com slash strategic. That's oracle.com slash strategic. This week on a very special episode of Health Discovered, we're taking a closer look at a condition that affects hundreds of thousands of men each year, prostate cancer. I first found out about my cancer on my birthday at the age of 45. Found out my cancer has spread to my pelvic bone. And from there, life just changed. About one in eight men will be diagnosed with prostate cancer during their lifetime, and the risk increases with age.

1:58Anything with cancer, you just think death sentence. And the only thing I could think about was, who's going to take care of my family? You have to go out there and build your support system. You got to build your team. In this episode, we'll explore the science behind detection, along with the practical steps men can take to protect their health. Listen to Health Discovered on America's number one podcast network, iHeart. Open your free iHeart app, search Health Discovered, and start listening.

2:30Hey, it's Ryan Reynolds here for Mint Mobile. Now, I was looking for fun ways to tell you that Mint's offer of unlimited premium wireless for$15 a month is back. So I thought it would be fun if we made$15 bills. But it turns out that's very illegal. So there goes my big idea for the commercial. Give it a try at mintmobile.com slash switch. A front payment of$45 for a three-month plan equivalent to$15 per month required. New customer offer for first three months only. Speed slow after 35 gigabytes of networks busy. Taxes and fees extra. See MintMobile.com. This is Jacob Goldstein from What's Your Problem?

3:03When you buy business software from lots of vendors, the costs add up and it gets complicated and confusing. Odoo solves this. It's a single company that sells a suite of enterprise apps that handles everything from accounting to inventory to sales. Odoo is all connected on a single platform in a simple and affordable way. You can save money without missing out on the features you need. Check out Odoo at O-D-O-O dot com. That's O-D-O-O dot com.

3:39Hello and welcome to Better Offline. I'm your host, Ed Zitron.

3:52Better Offline. In the last episode, I walked you through how generative AI has hit its ceiling, and how big tech has burned billions of dollars chasing a technology that really isn't going to give them the returns they got from the smartphone and cloud computing revolutions. Not that that's going to stop them. In this episode, I'm going to walk you through the potentially massive problems they have ahead, the ones they've created by building these massive supercomputers, the ones necessary to capture this imaginary demand of this kind of bullshit AI revolution, and I'm going to try and guess what might happen next.

4:24Alright, so. The AI boom helped the S &P 500 hit record levels in 2024, largely thanks to chip giant NVIDIA, a company that makes both the GPUs necessary to train and run generative AI and the software architecture behind them, as well as some of the server parts too. Part of NVIDIA's remarkable growth has been its ability to capitalize on CUDA architecture, the software layer that lets you do complex computing on GPUs rather than simply using them to render video games or complex 3D images. Someone's going to email and say that that's partially wrong, just bear with me. And of course, one of NVIDIA's other things they do is continually create new GPUs to sell for tens of thousands of dollars to tech companies that want to burn billions of dollars on generative AI, which has led NVIDIA's stock to pop more than 179 % over the last year.

5:11Back in May, NVIDIA CEO and professional Carnival Barker Jensen Huang said that the company was now, and I quote, on a one-year rhythm in AI GPU production, with its latest Blackwell GPUs, specifically the B100, B200, and GBT200, used to regenerative AI, supposedly due at the end of 2024. Except they're now delayed until at least March 2025. Now, before we go any further, it's worth noting that when I say GPU, I don't mean the one you'd find in the gaming PC, but a much, much larger chip put on a specialized server and actually a specialized board as well, with multiple other GPUs, all integrated with special casing, cooling and networking infrastructure, all of which is sold by NVIDIA, by the way.

5:49You can use other things, but yeah, you might as well buy it in one place, right? That's their product strategy. In simple terms, these are the things necessary to make sure all these chips work together efficiently and also stop them from overheating, because they get extremely hot, and Generative AI makes them run at full speed all the time. Now, the initial delay of the new Blackwell chips was caused by a now-fixed design floor and production, But as I've previously suggested, the problem isn't just creating the chips. It's making sure they actually work at scale for the jobs they've been bought for.

6:21Now, what if that wasn't possible? A few weeks ago, the information reported that NVIDIA is currently grappling with the oldest problem in computing. How to cool the fucking things. According to their reporting, NVIDIA has been asking suppliers to change the design of its 3 ,000-pound, 75-GPU server rack several times to overcome these heating problems, which the information calls, quote, the most complicated design that NVIDIA had ever come up with. According to the report, a few months after revealing the racks, engineers found that they didn't work properly, even when they used the smaller 36-chip racks, and they've been kind of scrambling to fix it ever since.

6:59While one can dazzle investors with buzzwords, charts, and the term superintelligence, the laws of physics are a little bit more of a harsh mistress, and if NVIDIA is struggling mere months before the first installations to begin, though I've heard some are going out now, it's kind of unclear how they practically plan to launch this next generation of chips, let alone doing another one in a year. The information reports that these changes have been made late in production, which is scaring customers that desperately need them now so that their models can continue to do something that they will work out later.

7:31To quote the information again, two executives at large cloud providers that have ordered the new chips said they're concerned that such last-minute difficulties might push back the timeline for when they can get their GPU clusters up and running next year. The fact that NVIDIA is having such significant difficulties with thermal performance is very, very bad. These chips are very expensive, 30 to 70 grand I hear, and will be running, as I've mentioned, at full speed, generating an incredible amount of heat that must be dissipated, while sat next to anywhere from 35 to 71 other chips, which will in turn be densely packed so that you can cram more servers into a data center.

8:06New, more powerful chips require entirely new methods to rack mount them, operate them, and cool them. And all of these parts must operate in sync, as overheating GPUs will die. And while these units are big, some of their internal components are nanometers in size, and unless properly cooled, their circuits will start to crumble when roasted by a guy typing Garfield with a gun and a bra into chat GPT, which I have never done, of course. Remember, Blackwell is supposed to be NVIDIA's next big thing. It's meant to represent a major leap forward in performance. If NVIDIA doesn't solve its cooling problem and solve it well, its customers will undoubtedly encounter thermal throttling, where the chip reduces its speed in order to avoid causing any permanent damage.

8:47It could eliminate some or all of the performance gains obtained from the new architecture and new manufacturing process, despite costing much, much more, both for the chips itself and the housing for them. NVIDIA's problem isn't just bringing these thermal performance issues under control, but both keeping them under control and being able to educate their customers on how to do so. NVIDIA has, according to the information, repeatedly tried to influence its customers' server integrations to follow its designs, because it thinks it will lead to better performance, but in this case, one has to worry if NVIDIA's black-well chips can be reliably cooled.

9:21Maybe they can. NVIDIA's worked out crazy things in the past. And while NVIDIA might be able to fix this problem in isolation within its racks, it remains to be seen how this works at scale as they ship and integrate hundreds of thousands of Blackwell GPUs, starting in the front half of 2025. Things also get a little worse when you realize how these chips are being installed. In these giant supercomputer data centers where tens of thousands, or as many as 100 ,000 of them in the case of Elon Musk's Colossus data center, which is just very funny. that that's what it's for. It's for Grok on a dying social network.

9:54But yeah, these GPUs, they're running concert to power generative AI models. That's all they're really for. And the Wall Street Journal reported a few weeks ago that building these vast data centers creates entirely new engineering challenges, with one expert saying that big tech companies could be spending as much of half of their capital expenditures on replacing parts that have broken down, in large part because these clusters are running on GPUs that are running at full speed that need to all be cooled and need to be cooled well. Remember, the capital expenditures on generative AI and its associated infrastructure have gone over$200 billion in the last year.

10:26If half of that's dedicated to replacing broken shit, what happens when there's no path to profitability? In any case, eh, NVIDIA's fine. They'll work it out well enough to keep flogging these things. They've already made billions of dollars selling Blackwells. They're sold out for a year, in fact, and they'll continue to do so for now. But any manufacturing or cooling issues are going to be very costly. And even then, at some point, somebody has to ask the question, why do we need all these GPUs if we reach peak AI? Despite the remarkable power of these chips, NVIDIA's entire enterprise GPU business model centers around the idea that throwing more power at these problems will finally create some solutions.

11:03What if that isn't the case, though? So, as ever, I'm kind of pissed off. I'm pissed off reading this stuff, and it's not just because I was saying this months ago. it's because all of this money could have gone literally anywhere else. They could have done something else. They could have, I don't know, I'm not running a big tech company, but I would have put it into climate stuff or new battery technology. Everyone's saying, oh, we'll make our own chips now. Yeah, see you in a few years, dickhead. Why don't you go to TSMC and ask if they've got any spare slots? I'm sure they've got plenty. I'm sure that you can just go and build a chip tomorrow.

11:38Sam Altman talking about building his own goddamn chips. What an absolute farce this is. this fucking farce. All of this money burned in search of a technology that only kind of works on something sometimes. It's just kind of a joke. The tech industry is overleveraged. They've doubled, they've tripled, they've quadrupled down on generative AI now. And this technology does not do much more than it did a few months ago. And I don't think it's going to do very much more in a few months. Every single big tech company has piled tens of billions of dollars into building out these massive superclusters with the intent of capturing AI demand.

12:12Yet they never seemed to think whether they were actually building things that people wanted or would pay for, or that would make them money, or that would help humanity in any way, or really anything to do with an outcome other than line go up. While some have claimed that agents are the next frontier, AI agents, frontier Jesus, nope, keep it. The reality is that agents may be the last generative AI product. Multiple large language models and integrations bouncing off of each other in an attempt to simulate what a human might do at a cost that won't be sustainable for the majority of businesses.

12:44While Anthropic's demo of its alleged model that can control a few browser windows with a prompt might have seemed impressive to credulous people, specifically me in Casey Newton here, these were controlled demos which Anthropic added was slow and make lots of mistakes. Hey, almost like it's hallucinating. I sure hope they fix that unfixable problem I've been talking about for months, Jesus Christ. even if it does. Anthropic has now successfully replaced an entry-level data worker position at an indeterminate cost, and likely an unprofitable one too. And in many organizations, those jobs have already been outsourced or automated or staffed with cheap contractors.

13:20So the people who are going to lose out here are people who are already getting shat on by life. It really sucks. And the obscenity of this mass delusion, it's just nauseating. It's a monolith to bad decision-making and the herd mentality of tech's most powerful people, as well as an outright attempt to manipulate the media into believing something was possible that never was and the media bought it hook line and sinker you all bought it hundreds of billions of dollars have been wasted building giant data centers to crunch numbers for software that has no real product market fit all while trying to hammer it into various shapes to make it pretend that it's alive conscious or even fucking useful there is no path from what i can see to turning generative AI from what it is today into anything resembling a sustainable business.

14:05And the only path that big tech appeared to have seen or thought about was to throw as much money, power, and data at the problem, an avenue that appeared to be, and definitely appears to be now, a complete dead end. And worse still, nothing's really come out of this movement. I've used a handful of AI products that I found useful, an AI-powered journal, for example. But these are not products that one associates with revolutions. They're useful tools that would have been a welcome surprise if it didn't require burning billions of dollars, blowing past emissions targets, and stealing the creative works of millions of people to train them.

14:40It's just sickening. It's sickening because this did not have to happen. Had Sandar Pichai seen what Microsoft did with OpenAI and said, not for me, mate, that's definitely not how he talks, but nevertheless, none of this would have continued. You think Microsoft was going to hold this shit up on their own? God, no. they have no juice Sachin Adela he's just a he's a cult leader something I'm going to get into in a later episode and it's just it's all very sad but if you want to cheer yourself up maybe you could listen to one of the following advertisements and this is a short episode so if they don't put one after this you might just have a short gap between me talking that's up to Matt Matt's a genius that's my producer by the way Matt Ossowski anyway ads

15:30Parking shouldn't slow you down. ParkWiz gives every driver a shortcut. Book ahead, save up to 50 % and skip the hassle of circling the block. Park smarter, park faster. ParkWiz. Download the ParkWiz app today and save every time you park. This week on a very special episode of Health Discovered, we're taking a closer look at a condition that affects hundreds of thousands of men each year. prostate cancer. I first found out about my cancer on my birthday at the age of 45. Found out my cancer has spread to my pelvic bone and from there life just changed. About one in eight men will be diagnosed with prostate cancer during their lifetime and the risk increases with age.

16:17Anything with cancer you just think death sentence and the only thing I could think about was who's going to take care of my family. You have to go out there and build your support system. You got to build your team. In this episode, we'll explore the science behind detection along with the practical steps men can take to protect their health. Listen to Health Discovered on America's number one podcast network, iHeart. Open your free iHeart app, search Health Discovered and start listening.

17:16compliments there too. I have a few of them. Love their rust-colored ones as well. And in general, I really like Quince. The shirts fit nicely and the rest of their clothes do too. They ship quickly, they look good, they're high quality, and they partner directly with ethical factories and skip the middleman. So you get top-tier fabrics and craftsmanship at half the price of similar brands. And I'm probably going to buy more from them very, very soon. Keep it classic and cool this fall, with long-lasting staples from Quince. Go to quince.com slash better for free shipping on your order and 365 day returns that's q u i n c e.com slash better free shipping and 365 day returns quince.com slash better stop settling for weak sound it's time to level up your game and bring the boom hit the town with the ultra durable lgx boom portable speaker and enjoy vibrant sound wherever you go elevate your listening experience to new heights because let's be real your music deserves it.

18:14The future of sound is now with LG X boom. And for a limited time, save 25 % at LG.com with code fall 25. Bring the boom X boom. There's a lot going on in Hollywood. How are you supposed to stay on top of it all? Variety has the solution. Take 20 minutes out of your day and listen to the new daily variety podcast for breaking entertainment news and expert perspectives. Where do you see the business

18:59And we're back. Look, I truly don't know what happens next, but I'm going to walk you through what I'm thinking. If we're truly at the diminishing return stage of Transformer-based models, it's going to be extremely difficult to justify buying further iterations of NVIDIA GPUs past Blackwell. And also, I have doubts they're going to be able to make a new one every year. The entire generative AI movement lives and dies by the idea that more compute power and more training data makes these things better. And if that's no longer the case, there's not really a reason to keep buying bigger and better.

19:33What's the point? Even now, what exactly happens when Microsoft or Google has racks worth of Blackwell GPUs. Models aren't getting better. Faster, I guess? What does faster even mean? What does better even mean? Better has yet to mean a new product. Better has not seemed to be measurable by humans, just by bullshit benchmarks. This also makes the lives of OpenAI and Anthropic a little more difficult. Sam Altman has grown rich and powerful lying about how GPT will somehow lead to AGI, some conscious computer. But at this point, what exactly is open AI meant to do? What are they doing? The only way this company has ever been able to develop new models is by throwing masses of compute and training data at them.

20:18And their only other choice is to start stapling their reasoning model onto the side of their large language model. At which point, something happens. Something, everyone. It's happening. Something that is so good that literally nobody working for open AI or in the media appears to be able to tell you what it is. Yeah. Putting that aside, OpenAI is also a terrible business that has to burn$5 billion to make$3.7 billion, and there's no proof that they're able to bring down their costs. The constant thing I hear from VCs and AI fantasists is that the chips will bring down the cost of inference. Yet I don't see that happening.

20:55I've yet to see that happening. There's cerebrus, dinner plate-sized chips, but you know what? I just don't think that shit's going to scale. And at that point, you have to wonder, do they have, like, where is this going? I know you're listening to an episode where I tell you, but still, even reading this stuff all day, you just look at it too hard and you start feeling a little crazy. I've read pretty much every article on OpenAI at this point. I've read Microsoft's earnings, multiple quarters straight, same with the rest of them. I've read all their blog posts. I've read all their shit. they don't have any idea i'm confident that they don't have any idea it's terrifying and this is just this dismal situation where the only other there's really only a few options if i'm honest you stop now that is the biggest one you just stop someone has to admit microsoft google they'll never do this they need to go this is not going to scale we need to pare this back or we need to stop it and it will hurt their stock it will hurt their media but it's the right thing to do for the environment alone, but as a sustainable business.

22:01But assuming they don't do that, we have another problem, which is the only other option they can have is to keep flooring the gas. It costs$100 million to train GPT-4O. Anthropic CEO Dario Amadei estimated a few months ago that training future models would cost$1 billion, if not$10 billion, with one researcher claiming that training OpenAI's next model, GPT-5, will cost around a billion dollars. Outside of a miracle, we're about to enter an era of desperation in generative AI. We're two years in, and we have no killer apps, no industry-defining products, other than ChatGPT, a product that burns billions of dollars and nobody can really describe.

22:41Every episode, I'm like, email me, tell me what ChatGPT is, and I'll get some smart ass who sends me three paragraphs. No, no, no, no, no. That's not a description, that's an essay, mate. you actually need to tell me what the hell this is. And if you can't, you've proven my point in my extremely thin and rigged game. Anyway, neither Microsoft, nor Meta, nor Google, nor Amazon seem to be able to come up with any profitable use cases, let alone one their users actually like. Nor have any of the people that have raised billions of dollars in venture capital for anything with AI take to the side. An investor interest in AI is already cooling according to the information.

23:16It's kind of unclear how far this fast goes from here. If only because it isn't obvious what it is that anybody gets by investing in future rounds of OpenAI, Anthropic, or any of these other generative AI companies. At some point, they must make money. And the entire dream has been built around the idea that all of these GPUs and all of this money would eventually spit out something. Something revolutionary. Something world-changing. Yet what we have is this clunky, ugly, messy, larcenous, environmentally destructive, and mediocre piece of shit. Generative AI was a reckless pursuit, one that shows a total lack of creativity and sense in the minds of big tech and venture capital, one where there was never anything really impressive, other than the amount of money it could burn and the amount of time Sam will and could say something stupid and get quoted for it.

24:01I'll be honest with you, I don't really know what happens here. The future was always one that demanded big tech spend more to make even bigger models that would at some point become useful, and it isn't happening. In pursuit of doing so, big tech invested hundreds of billions of dollars into infrastructure specifically to follow one goal and put AI front and center of their businesses, claiming it was the future without ever checking if it was, if it actually did anything useful. And really, as I've said in the rock-com bubble a few months ago, they don't have anything else. They don't have another growth market.

24:34And maybe that's why they're shoving all the cash into this because they don't have it anywhere else to put it. They don't want to admit they've got nothing else. They don't want to admit that their businesses are crumbling under scrutiny from antitrust. They don't want to admit their services are kind of deteriorating, especially in the case of meta. They don't have anything else. The revenue isn't coming. The products aren't coming. Orion, OpenAI's next model, it will underwhelm as will its competitors model. And at some point, somebody is going to blink in one of the hyperscalers and the AI era will end.

25:05Almost every single generative AI company that you've heard of is deeply unprofitable. And there are very few innovations coming to save them from the atrophy of the foundation model system, which by the way, is the main large language models that they're training in all of these cases. Now, I've tried to keep my emotions in check, but you might be able to tell that this pisses me off a little. I just feel sad and exhausted about it all. I feel drained as I look at how many times I've tried to warn people. I'm pissed off at the many members of the media that failed to push back against the over-promises and outright lies of people like Sam Altman and Dario Amadei.