Meta building cloud business to sell excess AI capacity

_heimdall

For one thing, I still don't understand Meta as a business. It seems like Zuck refused to accept owning a boring ad business and keeps trying to act like a tech business. For another, this seems like a move that happens when the bubble pops. The dotcom bubble went from having tons of business raising fortunes on the promise of business models the internet unlocks to having few internet businesses left at that scale and a bunch of unused fiber. Now we're starting to see all the companies claiming AI products will make fortunes to them trying to sell unused hardware capacity.

emsign

Excess AI capacity? Huh? Wait a minute does that mean they've built more data centers than there's demand for? Oh! How did that happen? Well, I'm a complete idiot, a layman, not even a developer, what do I know about economics and technology...

fghorow

"Bubble? What Bubble? I don't see no steenkin' Bubble."

Sol-

xAI has shown this to be quite lucrative. And it seems to even make some sense - if the contract can be ended on relatively short notice, you basically have the capacity on stand-by if you ever need it yourself (accumulating GPUs is not trivial), but can monetize it if you don't need it. Though it's probably a bad sign generally that you can't capitalize on all the GPUs you've acquired.

SilverSlash

So have they just given up on llama then? What happened to the 25 year old Zuck paid $250M for?

cmiles8

So like likes of AWS are spending crazy sums building capacity citing amazing demand they can’t meet. Meanwhile those with capacity are saying hey maybe we don’t need so much and are building cloud businesses to compete with AWS and flood the market with excess capacity. Oh yeah, this is gonna end well.

khurs

Good news. The more providers, the more competition and lower prices. Meta are laying their own sub-sea cables globally at present: https://www.bbc.co.uk/news/articles/ckgrgz8271go

dachworker

I'm excited for the opportunities that an abundance of compute brings, even in the absense of AI applications. Big compute is the right direction, if we can afford it. There are always things to simulate or discover or automate in some way shape or form.

Traster

I think we're going to look back on this as one of the things that really exacerbates this bubble. It's one thing for these companies to have high expectations of their future compute needs and therefore overbuild. But what the SpaceX/Anthropic deal showed was even if you fall short, you can profit by selling off your overcapacity. This means there is essentially no incentive to limit how much capacity you're building, anything you don't use you'll still profit from. The problem is that only works if aggregate demand is higher than supply. At some point, all these new data centres are going to come on line, and the frothy "throw AI at everything with no regard to costs" is going to drawn down across the industry. And this supply will be much larger - because everyone thought the down side was limited. At that point you're going to have all of these companies trying to dump their excess capacity on the market and it suddenly won't be true that you can just sell capacity to your competitors. Obviously this won't bankrupt Meta - it'll just eat into their profits from their ads business. But it likely will drive a bunch of neo-clouds out of business very quickly, and the technology providers like Nvidia etc will suddenly come back to reasonable P/Es.

dotcoma

Meta is just another company that, like xAI/Grok, is at last starting to face reality: there are going to be two or three winners in this space, and they are not one of them.

ChrisArchitect

[dupe] Earlier on source: https://news.ycombinator.com/item?id=48745966