The explosion of compute

Disclaimer: personal, possibly highly incorrect opinion. I'm keeping it here to hold my future self accountable.

There is a common belief that we are in a bubble: that the datacenter buildout will fail to generate the revenue it needs, and that the whole economy will go down in flames with it.

Initially I bought into that too, the same way I was skeptical, back in 2023/2024, of the transformative change LLMs could bring. I can't be too hard on myself for that, though: the early GPTs and Bard, which I mostly used, were pretty bad.

I have changed my view significantly since then. I have zero doubt that we are just at the beginning of a massive transformation, one unlike anything humanity has seen before, and we still can't wrap our heads around how big it will be. It will happen exponentially faster than we can expect. Still, I am very optimistic about the benefits it can bring.

That aside, datacenter hardware stocks have exploded in the past few years. Micron grew 14x, and RAM prices are starting to behave like an appreciating asset.

I'm no stock trader, and many people think these are overvalued, but the demand for AI is only going to grow. Tokens will get cheaper, and fully autonomous agents will grow 10x year over year for the next few years. The infrastructure needed to run them will have to keep up: processors, memory, networking equipment and accelerators will all follow the same growth pattern.

We will have to invest heavily in all of this to avoid being constrained by any of these components, especially CPUs and storage. Agents will generate tons of intermediate artifacts while working through problems, and they will need CPUs to do that work.