How to run sed on over 10 million files in a directory?

Give this a try:

find -name '*.txt' -print0 | xargs -0 -I {} -P 0 sed -i -e 's/blah/blee/g' {}

It will only feed one filename to each invocation of sed. That will solve the "too many args for sed" problem. The -P option should allow multiple processes to be forked at the same time. If 0 doesn't work (it's supposed to run as many as possible), try other numbers (10? 100? the number of cores you have?) to limit the number.

I've tested this method (and all the others) on 10 million (empty) files, named "hello 00000001" to "hello 10000000" (14 bytes per name).

UPDATE: I've now included a quad-core run on the 'find |xargs' method (still without 'sed'; just echo >/dev/null)..

# Step 1. Build an array for 10 million files
#   * RAM usage approx:  1.5 GiB 
#   * Elapsed Time:  2 min 29 sec 
  names=( hello\ * )

# Step 2. Process the array.
#   * Elapsed Time:  7 min 43 sec
  for (( ix=0, cnt=${#names[@]} ; ix<$cnt; ix++ )) ; do echo "${names[ix]}" >/dev/null ; done  

Here is a summary of how the provided answers fared when run against the test data mentioned above. These results involve only the basic overheads; ie 'sed' was not called. The sed process will almost certainly be the most time-consuming, but I thought it would be interesting to see how the bare methods compared.

Dennis's 'find |xargs' method, using a single core, took *4 hours 21 mins** longer than the bash array method on a no sed run... However, the multi-core advantage offered by 'find' should outweigh the time differences shown when sed is being called for processing the files...

           | Time    | RAM GiB | Per loop action(s). / The command line. / Notes
-----------+---------+---------+----------------------------------------------------- 
Dennis     | 271 min | 1.7 GiB | * echo FILENAME >/dev/null
Williamson   cores: 1x2.66 MHz | $ time find -name 'hello *' -print0 | xargs -0 -I {} echo >/dev/null {}
                               | Note: I'm very surprised at how long this took to run the 10 million file gauntlet
                               |       It started processing almost immediately (because of xargs I suppose),  
                               |       but it runs **significantly slower** than the only other working answer  
                               |       (again, probably because of xargs) , but if the multi-core feature works  
                               |       and I would think that it does, then it could make up the defecit in a 'sed' run.   
           |  76 min | 1.7 GiB | * echo FILENAME >/dev/null
             cores: 4x2.66 MHz | $ time find -name 'hello *' -print0 | xargs -0 -I {} -P 0 echo >/dev/null {}
                               |  
-----------+---------+---------+----------------------------------------------------- 
fred.bear  | 10m 12s | 1.5 GiB | * echo FILENAME >/dev/null
                               | $ time names=( hello\ * ) ; time for (( ix=0, cnt=${#names[@]} ; ix<$cnt; ix++ )) ; do echo "${names[ix]}" >/dev/null ; done
-----------+---------+---------+----------------------------------------------------- 
l0b0       | ?@#!!#  | 1.7 GiB | * echo FILENAME >/dev/null 
                               | $ time  while IFS= read -rd $'\0' path ; do echo "$path" >/dev/null ; done < <( find "$HOME/junkd" -type f -print0 )
                               | Note: It started processing filenames after 7 minutes.. at this point it  
                               |       started lots of disk thrashing.  'find' was using a lot of memory, 
                               |       but in its basic form, there was no obvious advantage... 
                               |       I pulled the plug after 20 minutes.. (my poor disk drive :(
-----------+---------+---------+----------------------------------------------------- 
intuited   | ?@#!!#  |         | * print line (to see when it actually starts processing, but it never got there!)
                               | $ ls -f hello * | xargs python -c '
                               |   import fileinput
                               |   for line in fileinput.input(inplace=True):
                               |       print line ' 
                               | Note: It failed at 11 min and approx 0.9 Gib
                               |       ERROR message: bash: /bin/ls: Argument list too long  
-----------+---------+---------+----------------------------------------------------- 
Reuben L.  | ?@#!!#  |         | * One var assignment per file
                               | $ ls | while read file; do x="$file" ; done 
                               | Note: It bombed out after 6min 44sec and approx 0.8 GiB
                               |       ERROR message: ls: memory exhausted
-----------+---------+---------+----------------------------------------------------- 

Another opportunity for the completely safe find:

while IFS= read -rd $'\0' path
do
    file_path="$(readlink -fn -- "$path"; echo x)"
    file_path="${file_path%x}"
    sed -i -e 's/blah/blee/g' -- "$file_path"
done < <( find "$absolute_dir_path" -type f -print0 )