Why Does AI Infrastructure Get Overbuilt?

Cliff Sosin says AI infrastructure gets pushed until it is overbuilt because a strong price signal is what makes a buildout of a huge technology possible at all. Super smart, talented people are focusing their lives on the project, and they will make, and deserve, lots of money. Without that money, people would not keep pushing.

American society looks like a household saving money for a house. Electricians, plumbers, and other resources go into the AI infrastructure, so costs rise elsewhere in the economy. The work keeps going because nobody really knows the right stopping point, and it continues until the buildout is overdone. Lead times and a winner's curse mean the last person to stop will regret it. He is skipping the bet on which railroad tycoon makes money and how many railroads are needed. He wants the foresight to see what follows once railroads exist, the way CPG brands came next, and he is aiming at the longer-term equilibrium the world reaches.

From where he sits, it is very hard to figure out where to invest along the supply buildout and whether the investment makes any money. Plenty of opportunity is still there, and people smarter than him have probably figured it out. His attention stays on the later equilibrium results.