AI moats fading? Profits may diffuse across the economy as models converge
Terrible-Mind-5414 · reddit · 2026-08-23
The author argues that the economic picture of AI is becoming clear: hyperscaling and network effects are not dominant. Models converge rapidly, and the marginal value lies in the "harness" (application layer). Datacenters are becoming like utilities, and chip makers' high profits will likely revert to a commodity business.
AI companies are shifting to helping businesses integrate AI, which is essentially consulting—billing by the hour like lawyers, unlike the residual revenue model of software development. The author suggests that the enormous profits from AI will be spread granularly throughout the economy rather than concentrated in a few "Mag 7" companies, arguing for a broad-based investment strategy.
More from AGI Musings
- Inference engine team says they're in a real RSI loop: faster engine helps build faster engine — cephaloform · 2026-10-16
- FDA pays small company to build a grading system for AI-written radiology reports — YvesMulkers · 2026-10-16
- 'If we developed AI in the 1800s, people would demand ASI to cure diabetes' — zetalyrae · 2026-10-16
- AI trained on the fraction of human intelligence that fit the page — r0ck3t23 · 2026-10-16
- Alignment researcher Turn_Trout blasts AI assistants scraping private Signal chats without consent — Turn_Trout · 2026-10-16
- Stage-4 cancer patient builds his own personalized mRNA vaccine with AI — TheMoonMidas · 2026-10-16