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Significantly more than that; MFN pricing for NVIDIA DGX H100 (which has been getting priority supply allocation, so many have been suckered into buying them in order to get fast delivery) is ~$309k, while a basically equivalent HGX H100 system is ~$250k, coming to a price per GPU at the full server level being ~$31.5k. With Meta’s custom OCP systems integrating the SXM baseboards from NVIDIA, my guess is that their cost per GPU would be in the ~$23-$25k range. | |
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350,000 NVIDIA H100 x $23k = $8b :0 | |
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Wait till you find out how much they spent on VR. It is a real loophole in the economy. If you're a trillion dollar company the market will insist you set such sums on fire just to be in the race for $current-hype. If they do it drives their market cap higher still and if they don't they risk being considered un-innovative and therefore doomed to irrelevancy and the market cap will spiral downwards. Sort of reminds me of The Producers. | |
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The thing is, this could be considered basic research, right? Basic research IS setting money on fire until (and if) that basic research turns into TCP/IP, Ethernet and the Internet. | |
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I wish. Funnily enough Arpanet and all that Xerox stuff were like <$50 million (inflation adjusted!) total. Some real forward thinkers were able to work the system by breaking off a tiny pittance of a much larger budget. Where as I think this more appropriately can be considered the meta PR budget. They simply can't not spend it, would look bad for Wall Street. Have to keep up with the herd. | |
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Funny you pick a company that has very little to answer to the markets, out of all the large tech companies, META is the rare one that does not need to answer because Zuckerberg controls the company. | |
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> Funnily enough Arpanet and all that Xerox stuff were like <$50 million (inflation adjusted!) total.
That doesn't say much. The industry was in utter infancy. How much do you think it cost to move Ethernet from 100Mbit/sec to 1GBbit/sec to 10GB to 100GB to 400GB to 800GB? At least one or two orders of magnitude. How about the cost to build a fab for the Intel 8088 versus a fab that produces 5nm chips running @ 5GHz. Again, at least one or two orders of magnitude. | |
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This suffers from hindsight bias, at the time it was impossible to know if Arpanet or flying cars was the path forward. A better comparison would be the total sum of investment : payoff ratio, and is not something we can see from where we are now. Only in the future does it make sense to evaluate the success of something. Unfortunately, comparison between eras is difficult to do fairly because conditions are so different between now and Xerox. | |
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> If you're a trillion dollar company the market will insist you set such sums on fire just to be in the race for $current-hype. If they do it drives their market cap higher still and if they don't they risk being considered un-innovative and therefore doomed to irrelevancy and the market cap will spiral downwards. You don’t think earning increasing amounts of tens of billions of dollars in net income per year at some of the highest profit margins in the world at that size for 10+ years has anything to do with market cap? | |
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$1T Market Cap lets it be known it will invest $10B a year into $current-hype that will change everything. P/E loosens speculatively on sudden new unbounded potential, Market Cap $1.1T. Hype funded. PR as innovator cemented. | |
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> Market Cap $1.1T. Hype funded. I'm confused. How does your stock price, which determines market cat, affect your cashflow to fund R&D? It does not. | |
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Capitalism is so weird sometimes. | |
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Would you kindly provide sources to the numbers?What is MFN? Thanks!(Your number is consistent with what I hear of, but I never managed to get solid sources to back them up) | |
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> $3.5b Which is a fourth of what they spent in VR/AR in a year. And Gen AI is something they could easily get more revenue as it has now become proven technology, and Meta could possibly leapfrog others because of the data moat. | |
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Proven technology, maybe, but proven product-market fit for the kinds of things Facebook is using it for? Their linked blog about AI features gives examples "AI stickers" and image editing... cool, but are these potential multi-billion dollar lifts to their existing business? I guess I'm skeptical it's worthwhile unless they're able to unseat ChatGPT with a market-leading general purpose assistant. | |
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I have a few group chats just that devolve into hours of sending stickers or image generation back and forth, lately we've been "writing a book together" with @Meta AI as the ghost writer, and while it utterly sucks, its been a hilarious shared experience. I don't think anyone else has gotten that group chat with AI thing so nailed. | |
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On the podcast TrashFuture, November Kelly recently described AI systems as “garbage dispensers” which is both a funny image (why would anyone make a garbage dispenser??) and an apt description. Certainly these tools have some utility, but there are a load of startups claiming to “democratize creativity” by allowing anyone to publish AI generated slop to major platforms. On the podcast this phrase was used during discussion of a website which lets you create AI generated music and push it to Spotify, a move which Spotify originally pushed back on but has now embraced. Garbage dispenser indeed. | |
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> unseat ChatGPT with a market-leading general purpose assistant. It's not impossible. The prediction from many(not that I believe it) is that over long run modelling tricks would become common knowledge and only thing that matters is compute and data, both of which Meta has. Also there could be a trend of LLMs for ads or feed recommendation in the future as they has large completely unstructured dataset per user across multiple sites. | |
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Compute, data, and most importantly distribution/users. IMO standalone AI companies like OpenAI might be successful by providing infrastructure to other companies, but I can’t imagine ChatGPT remaining #1 many years from now. The web is still trending towards being a walled garden. Maybe not right now, but long term I think people will use whatever AI is most convenient which probably will be AI built into a giant company with established user base (FB, GOOG, MSFT, and Apple if they ever get around to launching - would love Siri 2.0 if it meant not needing to open the ChatGPT iOS app) | |
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What moat exactly? Much of the user data they have access to is drying up due to new regulations, some of which prohibit IIRC direct use on models as well. I'm not even sure they can use historical data. Meta certainly has an edge in engineer count, undoubtedly. But I'd say they really, really want the metaverse to succeed more to have their on walled garden (i.e. equivalent power of Apple and Google stores, etc.). There's a reason they gave a hard pass to a Google partnership. | |
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> There's a reason they gave a hard pass to a Google partnership. AIUI, Google required Meta to basically cede control of a partnered OS to them: "After years of not focusing on VR or doing anything to support our work in the space, Google has been pitching AndroidXR to partners and suggesting, incredibly, that WE are the ones threatening to fragment the ecosystem when they are the ones who plan to do exactly that. "We would love to partner with them. They could bring their apps to Quest today! They could bring the Play store (with its current economics for 2d apps) and add value to all their developers immediately, which is exactly the kind of open app ecosystem we want to see. We would be thrilled to have them. It would be a win for their developers and all consumers and we’ll keep pushing for it. "Instead, they want us to agree to restrictive terms that require us to give up our freedom to innovate and build better experiences for people and developers—we’ve seen this play out before and we think we can do better this time around." -- From Mark Bosworth | |
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I think the raw text inside Facebook groups is at least as valuable as Reddit data. Even if demographics data is restricted under European law, the raw text of people interacting is quite valuable. | |
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Indeed, my deranged auntie posting on FB is approximately as valuable as my ADHD/PTSD quaranteeny nephew redditing. | |
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That ignores all the user groups that are on Facebook. From apartment communities aka Nextdoor to grief support counseling to the mindfulness therapy groups, there’s a wealth of user comments a tad bit higher than Uncle John’s racist rants. | |
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Ahhh you had posted some other negative META criticism that was not even factual. Your made-up narratives really do not paint the correct picture. | |
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facebooks downfall will be their lock in. every other social media platform lets you view a public profile, discussion groups etc. it's all locked inside facebook. | |
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> Much of the user data they have access to is drying up due to new regulations, some of which prohibit IIRC direct use on models as well. Source would be appreciated, because this is opposite of obvious. Regulations against using public first party would be a big news and I haven't heard of anything like that. They use my data for recommending feed so why not for answering my question? | |
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It’s often forgotten now, but just a few years NVidia was cancelled production batches and writing down inventory when the GPU shortage cleared. No one needed more GPUs. It also happens to be when Meta first announced they were going to increase CapEx spending on compute. I’m guessing that Meta got a sweetheart deal to help take a lot of inventory for NVidia and make commitments for future purchases. | |
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I don’t think it was that nobody needed GPUs. It was that nvidia thought they could get scalper margins by restricting supply after the shortage showed people were willing to pay scalper prices. | |
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That sounds like a reasonable budget for 3 years of hardware at a major AI company. | |
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They may have to pay a premium to secure ~¼ of the output; certainly unlikely to be that steep a discount. | |
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Semi analysis posted recently noting that Meta locked in these purchases a while ago; something like a year or more. So they probably didn’t pay today’s spot rate. | |
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Yes, billions in GPU cap ex. | |
