> Nobody depends on AI for core operations.
Financial failure of an AI lab wouldn’t make that AI disappear.
If people depend on them (aka demand) the IP of the labs would be valuable, someone would purchase it in bankruptcy, and they would continue serving the model.
There is basically no comparison to the credit market collapse, even though all of the simplified comparisons try to draw a straight line between the two.
The real concern is different: The theory is that if the frontier labs start collapsing, they will argue that their failure is equivalent to the US losing AI supremacy, which is equivalent to losing the future if you believe AI is winner take all. The argument is that they’ll be financially reckless and then ask the government to backstop losses if it falters, both to retain their lead and to protect the overall economy.
The other part that of this is the increasingly widespread belief that AI is a total bubble without demand and it’s all going to collapse because there’s no profits to be found at all because it’s all financial theater. That argument is harder to make if you’ve looked at the actual unit economics of these companies (hint: Anthropic isn’t subsidizing inference like so many believed). AI is not going away and the demand for compute will only increase. The question is how accurately these scale ups track it and if they’re going to dip below the insolvency threshold from getting it wrong.
But if the companies blow up, the technology doesn’t go away. The model weights aren’t deleted. The ML engineers don’t retire. Companies get restructured, IP assets can be sold to new operators, and engineers move to new companies with new business models.
Financial failure of an AI lab wouldn’t make that AI disappear.
If people depend on them (aka demand) the IP of the labs would be valuable, someone would purchase it in bankruptcy, and they would continue serving the model.
There is basically no comparison to the credit market collapse, even though all of the simplified comparisons try to draw a straight line between the two.
The real concern is different: The theory is that if the frontier labs start collapsing, they will argue that their failure is equivalent to the US losing AI supremacy, which is equivalent to losing the future if you believe AI is winner take all. The argument is that they’ll be financially reckless and then ask the government to backstop losses if it falters, both to retain their lead and to protect the overall economy.
The other part that of this is the increasingly widespread belief that AI is a total bubble without demand and it’s all going to collapse because there’s no profits to be found at all because it’s all financial theater. That argument is harder to make if you’ve looked at the actual unit economics of these companies (hint: Anthropic isn’t subsidizing inference like so many believed). AI is not going away and the demand for compute will only increase. The question is how accurately these scale ups track it and if they’re going to dip below the insolvency threshold from getting it wrong.
But if the companies blow up, the technology doesn’t go away. The model weights aren’t deleted. The ML engineers don’t retire. Companies get restructured, IP assets can be sold to new operators, and engineers move to new companies with new business models.