Commodification of Intelligence: Good, Bad, and Ugly Circular AI Deals
I argue that circular financing in the AI sector signals the industry's shift toward treating intelligence as a commodity like electricity. While deals between OpenAI, Microsoft, and Nvidia mirror healthy strategies in traditional markets, they also introduce risks. I explore how these structures can either stabilize the ecosystem or hide liabilities, ultimately defining the future trajectory of artificial general intelligence.
The evolution of circular deals points to the commodification of AI, where compute capacity is moving from a business model where you buy a product to something so fungible that you buy it the way you buy electricity, copper, natural gas, or other commodities.
- jgord
Has a competent economist modeled the circularity of these deals ? [ numerically or analytically ]
It seems a healthy economy has a lot of wide circularity .. money circulating is a good thing, a result of a functioning market, tracking the flow of real goods / services. But large corps circulating paper 'self-deals' or debt-swaps seems like a bad thing - a creative accounting practice designed to pump up their stock price/valuation.
How can we _quantify_ the difference ? I guess it would need to match the cash / debt flows against the movement of actual goods and services ??
Not an economist, feel free to weigh in, suggest links.
- rambambram
> commodification of intelligence
Is HN really this fast!? Everybody already skipped the hard questions whether LLMs are intelligent? 'It' can already be commodified?
So how much time and effort it took from these companies? A couple of years and millions spent on PR? And LLMs are "intelligent" all of a sudden, is what everybody says nowadays?
Especially applicable for programmers: naming things is not only hard, it's also important, and can be very insidious. Remember, marketeers also name things. For example, naming the internet 'the cloud', some 15 years ago.
I can't stop thinking about a quote of one of my favorite authors (Theo Kars): "Progress can only be technical in nature, because knowledge is transferable and wisdom is not." [translated from Dutch]
- Stitch4223
So, companies are just prepaying with seemingly large parts of their livelihood for (use of) potential value.
Expecting demand to stay equal over longer stretches of time in IT is an interesting bet as both hardware and software tend to depreciate in value extremely rapidly, unlike oil from the example. Or water. Both are limited in nature.
Commodifying something that is the fraction of its value the next year might be possible, but I don’t see how. Perhaps MS Windows or Office are such things, but might not compare.
There are more limits to demand. For example what humans can process. The AI might write the finest prose and the best software but have nobody to read or use it.
- WalterGR
Recently: "Nvidia, CoreWeave, and Nebius: Inside the Circular Financing of the GPU Boom" (io-fund.com)
https://news.ycombinator.com/item?id=48873836
370 points| 18 days ago | 182 comments
- andiey
If healthy and risky circular financing deals look similar at first, how can investors or regulators tell when a circular deal has crossed the line into something dangerous...especially when it's off the balance sheets?