{"id":2507,"date":"2026-06-29T20:44:40","date_gmt":"2026-06-29T20:44:40","guid":{"rendered":"https:\/\/crosscountrymovingteams.com\/?p=2507"},"modified":"2026-06-29T20:44:40","modified_gmt":"2026-06-29T20:44:40","slug":"hyperscalers-could-end-up-resembling-airlines-plagued-by-small-margins-intense-competition-and-high-expenses-ai-skeptic-warns","status":"publish","type":"post","link":"https:\/\/crosscountrymovingteams.com\/?p=2507","title":{"rendered":"Hyperscalers could end up resembling airlines\u2014plagued by small margins, intense competition, and high expenses, AI skeptic warns\u00a0"},"content":{"rendered":"<div>\n<p>That\u2019s because the enormous amounts of capital expenditures have failed to clean up errors their large language models produce while also removing any technical moats that might give them a competitive edge.<\/p>\n<p>Read more <a href=\"https:\/\/crosscountrymovingteams.com\/?p=2505\">One of Trump\u2019s Supreme Court appointees just saved the late mail ballots he hates so much<\/a><\/p>\n<p>\u201cThis has led to price wars coexisting with high operating expenses (needed to run bigger data centers to train and operate new models) and low or even negative margins, since all are building more or less the same product,\u201d Marcus wrote in a <em>Financial Times<\/em> op-ed on Thursday.\u00a0<\/p>\n<div>\n<div>\n<div><\/div>\n<\/div>\n<\/div>\n<p>The professor\u00a0emeritus\u00a0of psychology and\u00a0neural science\u00a0at\u00a0New York University, who has long been skeptical of the AI boom, also pointed out that more U.S. companies are using cheaper, open-source Chinese AI models.<\/p>\n<p>In fact, even hyperscaler Microsoft may make China\u2019s DeepSeek available for its Copilot Cowork AI agent, according to Axios, and is looking at open-source models as lower-cost alternatives to Anthropic and OpenAI products.<\/p>\n<p>That\u2019s as Microsoft is transitioning Copilot Cowork to usage-based pricing amid ballooning AI expenses. \u201cWe have users who do hundreds of tasks a week, which is great\u2014they\u2019re way productive\u2014but the consequence is the costs can go very high,\u201d Charles Lamanna, Microsoft\u2019s executive vice president for Copilot, told Axios.<\/p>\n<p>Further underscoring Marcus\u2019s argument are signs Chinese AI companies are quickly closing the gap with their U.S. rivals.<\/p>\n<div>\n<div><\/div>\n<\/div>\n<p>Security researchers said China\u2019s Zhipu AI can now match U.S. models in finding security bugs, the <em>Wall Street Journal<\/em> reported, though Anthropic\u2019s and\u00a0OpenAI\u2019s products are still superior at other tasks.<\/p>\n<p>Meanwhile, the Trump administration has further complicated the competitive landscape by limiting access to the most advanced U.S. models, raising the risk that Anthropic\u2019s customers may look to other companies to avoid getting cut off.<\/p>\n<div>\n<div>\n<div><\/div>\n<\/div>\n<\/div>\n<p>But Meta, Microsoft, Alphabet, Amazon, and fellow hyperscalers are barreling ahead for now, collectively spending hundreds of billions of dollars a year on data centers, chips, and other infrastructure. Their tally for 2026 alone is expected to top $700 billion.<\/p>\n<p>Read more <a href=\"https:\/\/crosscountrymovingteams.com\/?p=2503\">The most reassuring argument about AI and jobs quietly explains why Gen Z can\u2019t get one<\/a><\/p>\n<div>\n<div><\/div>\n<\/div>\n<p>The scramble to build as quickly as possible has fueled concerns a bursting of the AI bubble will leave behind a glut of computing capacity.<\/p>\n<div>\n<div><\/div>\n<\/div>\n<div>\n<div><\/div>\n<\/div>\n<p>While optimists look to the rise of railroads as an example where capacity remained useful, Marcus warned most chips depreciate as more advanced versions come out and that high-end AI models could be displaced by more efficient rivals that don\u2019t rely on so many pricey chips.<\/p>\n<p>\u201cIn placing massive hyperscaling bets, investors are setting lavish expectations about future earnings. But LLMs are not likely to replicate the near monopolies that have made the market power of current tech giants hard to assail,\u201d he explained.<\/p>\n<p>\u201cA better analogy for them might be airlines, which are hobbled by small margins, intense competition, high expenses, and dependence on hardware created by outside vendors.\u201d<\/p>\n<p>The risk goes beyond having too many data centers. If the fallout hit pension funds, banks, or the global economy, then a worst-case scenario could involve governments bailing out AI giants, Marcus added.<\/p>\n<div>\n<div>\n<div><\/div>\n<\/div>\n<\/div>\n<div>\n<div><\/div>\n<\/div>\n<p>OpenAI even floated the idea of a government backstop for data center financing, but soon backtracked after widespread outcry.<\/p>\n<p>And airlines have received federal bailouts in the past, including during the COVID-19 pandemic and after the terrorist attacks on Sept. 11, 2001.  <\/p>\n<p>\u201cSome form of AI\u2014one that is reliable and efficient and compatible with human safety\u2014might well be worth the investments that are being poured into data centers. To make the bet on the version we have now is premature,\u201d Marcus concluded.<\/p>\n<p>Read more <a href=\"https:\/\/crosscountrymovingteams.com\/?p=2501\">Nancy Pelosi brings her legendary congressional knowhow to a new Berkeley institute with $35 million in funding<\/a><\/p>\n<div>\n<div><\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>\u201cIn placing massive hyperscaling bets, investors are setting lavish expectations about future earnings.\u201d<\/p>\n","protected":false},"author":1,"featured_media":2506,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[85],"tags":[],"class_list":["post-2507","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-data-centers"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Hyperscalers could end up resembling airlines\u2014plagued by small margins, intense competition, and high expenses, AI skeptic warns\u00a0 - Cross Country Moving Team<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/crosscountrymovingteams.com\/?p=2507\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Hyperscalers could end up resembling airlines\u2014plagued by small margins, intense competition, and high expenses, AI skeptic warns\u00a0 - Cross Country Moving Team\" \/>\n<meta property=\"og:description\" content=\"\u201cIn placing massive hyperscaling bets, investors are setting lavish expectations about future earnings.\u201d\" \/>\n<meta property=\"og:url\" content=\"https:\/\/crosscountrymovingteams.com\/?p=2507\" \/>\n<meta property=\"og:site_name\" content=\"Cross Country Moving Team\" \/>\n<meta property=\"article:published_time\" content=\"2026-06-29T20:44:40+00:00\" \/>\n<meta name=\"author\" content=\"admin\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"admin\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/crosscountrymovingteams.com\\\/?p=2507#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/crosscountrymovingteams.com\\\/?p=2507\"},\"author\":{\"name\":\"admin\",\"@id\":\"https:\\\/\\\/crosscountrymovingteams.com\\\/#\\\/schema\\\/person\\\/1b8121bfb9a1c55d1fff3fca675fceaa\"},\"headline\":\"Hyperscalers could end up resembling airlines\u2014plagued by small margins, intense competition, and high expenses, AI skeptic warns\u00a0\",\"datePublished\":\"2026-06-29T20:44:40+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/crosscountrymovingteams.com\\\/?p=2507\"},\"wordCount\":659,\"commentCount\":0,\"image\":{\"@id\":\"https:\\\/\\\/crosscountrymovingteams.com\\\/?p=2507#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/crosscountrymovingteams.com\\\/wp-content\\\/uploads\\\/2026\\\/06\\\/6e304387d61d39b6e0c694ab1d76da6a.webp\",\"articleSection\":[\"Data centers\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/crosscountrymovingteams.com\\\/?p=2507#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/crosscountrymovingteams.com\\\/?p=2507\",\"url\":\"https:\\\/\\\/crosscountrymovingteams.com\\\/?p=2507\",\"name\":\"Hyperscalers could end up resembling airlines\u2014plagued by small margins, intense competition, and high expenses, AI skeptic warns\u00a0 - 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