When a Company’s Biggest Expense Is A.I.

– They’re just shifting the cost from human labor to A.I. – Right. – They are plowing this money that they’re going to save by laying off these thousands of people into the building of data centers. And basically, the bet they’re making is these new A.I. workers are going to be faster, more efficient, maybe cheaper in the long run, maybe not, but they are going to be able to do the work that used to require many thousands of people, and that is a profound shift. I recently talked to a venture capitalist who said that a lot of the A.I. start-ups that he sees are spending more on A.I. tools than they are on payroll. – I also just think it is worth noting that this is still purely, mostly speculative, right? Like in the case of Meta specifically, this is a company that has arguably been struggling when it comes to A.I. They had to abandon their last model, Behemoth, because it wasn’t very good. The Times reported last week that it’s delaying the release of its latest model, Avocado, because it hasn’t been hitting its performance targets. It’s apparently barely outperformed Gemini 2.5. What is this, last March? – Yeah, that model is really the pits. – So … – That’s an avocado joke. – That’s very good, thank you.