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The warning signs the AI bubble is about to burst
- singingwolfboy 1y agohttps://archive.is/QH4hl https://archive.is/QH4hl
- jandrese 1y agoEvery time I see an article like this a quote comes to mind: "The market can stay irrational longer than you can stay solvent." -- John Maynard Keynes Predicting when a bubble is going to burst is close to impossible.
- shermantanktop 1y agoBut it feels like it’s about to pop! It really is hard to stay objective as predictors all seem to point one way.
- dcastm 1y agoWhat predictors do you mean? I’m genuinely curious
- reaperducer 1y agoWhat predictors do you mean? I’m genuinely curious I don't think you're genuinely curious because the title of the article is literally "The warning signs the AI bubble is about to burst."
- kleene_op 1y agoIf people are so convinced the market is gonna crash very soon they can just short it and make millions easily. Funny how no one's doing that amidst all the concerns and outcries expressed online.
- righthand 1y agoI mean a bursting bubble is what? A C-Suite pulling the valve shut or a company going under? It seems like the bubble has burst already then when Zuckerberg and Altman started decrying it earlier in the week. Now we just wait for all the smaller companies to either fold. For the larger companies the bubble will probably deflate slowly rather than burst. There are no market indicators if the actual burst is at the whim of a human. Being that Meta can probably bleed for a while before seeing real losses after a burst. All they have to do is be the first one to stop growing while the bubble deflates.
- jandrese 1y agoA traditional bubble burst is when there is a major sector-wide selloff of an overinflated asset. When there is a race to not be one of the suckers left holding the bag.
- deng 1y agoFortunately, there are open-end put options, so the timing doesn't have to be THAT accurate. EDIT: to be precise: I mean open-end turbo put, which have no expiration but a knock-out.
- dharmatech 1y agoPut options have an expiration. So I'm curious what you mean by "open-end"?
- turnsout 1y agoYeah, not a thing. You can short a stock long-term, but that's an easy way to become insolvent.
- Kranar 1y agoPerpetual options are a thing, although not mainstream.
- Kranar 1y agoOptions exist with no expiration date, but they are not commonly traded. There's nothing in principle unusual about them, at least not more so than most other derivatives.
- jameslk 1y agoThe Fed is giving indications that rates will be cut. The bubble will not be bursting yet if that happens If NVIDIA crashes, I can easily see the gov saving it in some way (either massively pumping liquidity or bailing it out). It’s too critical to the US at this point
- slickytail 1y agoI think the biggest sign of a potential crash is that Meta has frozen AI hiring. Such a quick reversal from just a few months ago.
- spogbiper 1y agoThe reports of Meta's hiring freeze may be somewhat exaggerated https://www.tipranks.com/news/meta-poaches-another-apple-employee-despite-hiring-freeze https://www.tipranks.com/news/meta-poaches-another-apple-emp...
- blargey 1y agoTo be fair, it would be surprising if the supply of AI researchers worth hiring (or poaching with Mega Millions comp packages) lasted that long, either. There has to be a point of diminishing returns somewhere, and a headline-worthy hiring frenzy should be expected to hit it quickly.
- verbify 1y agoThe article claims that: a) AI is a bubble b) It's about to burst This is based on a study that "just 5pc of integrated AI pilots are extracting millions in value, while the vast majority remain stuck with no measurable P&L [profit and loss] impact". I think the conclusions (while possibly true) are not supported here. By comparison, in the stock market in general, just a handful of stocks provide most of the returns over the past few decades. This does not mean the stock market is a bubble or about to burst.
- Cheer2171 1y agoYou have LinkedIn lunatics saying exactly this for years, AI startups are a money printer, that we're months away from AGI that gives drop in 1000x (or even infinite asymptotic) return. Adding 'AI' to your name bumps your valuation even if it is Actually Indians behind the scenes. THAT bubble needs to burst.
- abullinan 1y agoThe stock market has been a bubble since the 90’s but the bursts have been minimal because the elite class uses the stock market to extract wealth from normal people. Once they find something new (enshittification) they will suck all the value out of the market and leave its husk to peasants and their meager 401ks (if they even have that). I say this because there are so many millionaires in the US, and we can’t have too many people with extra wealth or it ruins things for the elite. The 0.01% must extract every penny from the 10%, too. It used to be every millionaire felt entitled to be a billionaire, but now centibillionaires feel entitled to be trillionaires and who do you think that money is stolen from?
- drdaeman 1y agoArticle talks about "AI" as a buzzword. My understanding is that "AI" here means something much more closer to "market virtue signalling" when every product now has "AI", rather than "cutting-edge ML research". It's the kind of "AI" I see when I walk by the TVs at Costco and see that every box that used to feature the word "smart" now has "AI" prominently written on it, even though in practice no one knows for sure what it possibly means or does. In this sense - sense of companies slapping "AI" (whatever it means to them) for the sake of having "AI" looks like a bubble/fad/hype. I have no idea about any possible economical outcomes of that hype declining (for a better term than "bubble" "bursting"), but I'm skeptical it's gonna be anything huge. My whole life I've seen endless examples of companies realizing their "hot topic" marketing strategy stopped working (or never worked at all) and they just pivot for different strategies without any severe impacts. As long, of course, as the company had actually useful product and the issue was merely with the marketing.
- seydor 1y agocool time to buy some burst protectors
- Cheer2171 1y agoCan't wait for the pop to take out all the grifters and leave us to do the actual work in peace with reasonably priced GPUs.
- anothermathbozo 1y agoGiven how much capital has already been committed to infrastructure development I find it very unlikely that even a Black Monday style market correction will do much to alter the medium and long term outlook for ai development and investment. Too many people talk about a bubble almost wish-casting that such a thing will make this all go away. It’s probably safest to assume your political enemies won’t be hoisted on their own petard anytime soon.
- mrbungie 1y ago> Given how much capital has already been committed to infrastructure development I find it very unlikely that even a Black Monday style market correction will do much to alter the medium and long term outlook for ai development and investment. So let's bet on sunken cost fallacy? That didn't work out during the dotcom era. When people talk about the bubble is mostly about ending the LLM hype, not making everything associated just disappear. The infrastructure, ideas and developments will stay and probably end up being a lot more useful without the noisy hype surrounding it right now.
- gboss 1y agoIt kind of did, Facebook, YouTube, Google, were all enabled by the massive internet cable infrastructure investment laid in the 90s.
- mrbungie 1y agoYep, but the dotcom burst was still was a burst. Ex post success does not matter in that analysis, and in fact, I'm arguing that the dotcom burst was instrumental for companies like Facebook, Youtube and Google to develop as they did.
- mvdtnz 1y agoA bursting bubble doesn't instakill an entire industry. No one is suggesting that. Bursting bubbles are harmful to most market participants and often have a blast radius beyond the industry. It's great that Facebook and YouTube emerged (I suppose) but that doesn't help grandad who lost 35% of his retirement fund.
- jaggs 1y agoIf you get your information from a sad rag like the Telegraph, then you deserve what you receive. :)
- pembrook 1y agoA good sign the bubble is not actually bursting: a mainstream news publication predicting it. [1] It's still 1994. We won't be near the top until the Telegraph publishes an article overly exuberant about AI and saying AGI is here. If every idiot commenting on Reddit, HN, X, and mainstream news publications is pessimistic and constantly shouting "bubble!," then definitionally, we have not reached irrational exuberance and we're not even remotely near the top. [1] https://d.newsweek.com/en/full/566807/theinternetbah3.webp https://d.newsweek.com/en/full/566807/theinternetbah3.webp (1995)
- rootnod3 1y agoAh, so we are only 5 years away from he whole thing bursting? So, the papers in '94 warning about the dangers were just pessimistic idiot outlets? See ya in 5 years then.
- century19 1y agoMaybe it is 2000 in your analogy.
- therobots927 1y agoPretty telling how you dismiss what appears to be the majority opinion online just because it’s a majority opinion. Irrational exuberance is defined in the context of market participants. On a wealth adjusted basis commenters online make up a very small % of shareholders in AI related tech stocks. At least on HN many users are engineers meaning they are close to the metal so to speak whereas the people making investment decisions pride themselves on being detached from technical work even if they pretend to be technically competent in public.
- pembrook 1y agoReddit/HN/X/etc are jam packed with tech workers with $hundreds of thousands of dollars in tech equity. I'm not sure what you're talking about, this board is quite literally the highest income community on the internet. Given the tone of your comment, it doesn't sound like reasoning from first-principles logically, but instead reasoning from an emotional feeling and working backwards. It sounds to be like you're hoping for the AI bubble to burst so you can experience the schadenfreude of the "technically incompetent dumb investors" you despise losing all their money. Hoping for emotional validation is not a very convincing argument that it is happening right now imo.
- turnsout 1y ago> “When will the internet bubble burst?” the cover story of Barron’s asked on March 20 2000. “That unpleasant popping sound is likely to be heard before the end of this year.” Again—the internet was a bubble, and yet it eventually far surpassed even the frothiest expectations. If you're investing for the short-term, do what you gotta do. The AI bubble will burst and lots of superficial companies will be washed away. But we're just getting started. This next wave will make a new round of companies like Netflix, Amazon, Apple, etc.
- rootnod3 1y agoThe internet as a platform or network survived, but most of the big players in the bubble went down. Only the veeeeery big ones survived due to enough residual funds and the smaller players that didn't have a big enough claim yet.
- turnsout 1y agoExactly—it's going to be the same this time. That's how bubbles do. What I'm trying to express is that when people say "AI is a bubble," the don't understand that AI will actually survive that bubble, even if many "AI companies" do not.
- rootnod3 1y agoI don't think so. Most companies that went under in the 90's bubble are definitely not doing well today. Lycos? The stuff that survived was 99% stuff that didn't have to rely on the bubble to begin with. MS or Oracle were doing fine even with the bubble bursting because their core business was not relying on it. But if the AI bubble burst, the AI shops are gonna go bye bye.
- turnsout 1y agoIf you read my comment, I agree with you; the AI bubble is going to burst, and AI companies will go out of business. And yet, AI will be more important than ever 10-15 years from now. Just because the bubble is going to burst does not mean the technology will go away. That didn't happen to the internet, and it won't happen to AI.
- f1shy 1y agoRelated: https://m.youtube.com/watch?v=mjB6HDot1Uk https://m.youtube.com/watch?v=mjB6HDot1Uk
- timmg 1y agoThe funny thing about bubbles is that they are impossible to predict. My sense is that they always go on longer than is at all rational. (Assuming this is a bubble, who knows.) I’m still waiting for the crypto “bubble” to burst. Seems like we are years overdue ;)
- Havoc 1y agoReally dislike the "AI bubble" term conceptually. The mostly probable outcome here (imo) is absolute bloodbath among the startups that are essentially wrappers while the core tech keeps going without missing a beat and does eventually deliver.
- crystaln 1y agoYes bubbles always have survivors. They will be hurt and also one day worth much more than they are now.
- throwawayqqq11 1y agoThey will keep going until VC runs out, wants to see profits or the stellar promises die out. Time will tell, but one thing is for sure, not even the biggest players are exempt from any of the above.
- crystaln 1y agoBubbles burst when the media and public are finally bought in that they burst. This article is a good sign we aren’t there yet.
- rrrrrrrrrrrryan 1y agoIt'll burst in the same way crypto burst. The NFTs and the shitcoins and the grifters and the bandwagon hoppers all got washed out, but Bitcoin is still hitting record highs today. All the smaller AI companies will have to quickly figure out a way to make a profit, or die. The behemoths and the ones backed by behemoths (Google, Microsoft/OpenAI, Meta, Amazon/Anthropic) will take a good hit but will power through.
- tomasphan 1y agoWe’re on our way down to the through of disillusionment. See you on the other side.
- deepfriedchokes 1y agoIt would seem we’re speed running the hype cycle, so the other side might be sooner than we think.
- xnx 1y agoWhat portion of AI spend is from non-hyperscalers? That feels like the most irrational part of this hype.
- mmaunder 1y agoNVidia’s PE is below 60 and they have 100% year over year revenue growth. A bubble is typically based on future earnings potential Nvidia is a money printing growth creating machine.
- youngtaff 1y agoNVidia is selling “shovels to gold prospectors”
- mvdtnz 1y agoOne indicator there may be a bubble is when internet investors are bragging about a P/E "under 60" like it's a safe pair of hands.
- MacsHeadroom 1y agoIf you believe their earnings will continue increase at the same rate for next two years then it's more like getting in early on a P/E under 15. No bubble, just solid growth expectations.
- ChrisArchitect 1y ago[dupe] Discussions: Tech, chip stock sell-off continues as AI bubble fears mount https://news.ycombinator.com/item?id=44965187 https://news.ycombinator.com/item?id=44965187 Is the A.I. Sell-Off the Start of Something Bigger? https://news.ycombinator.com/item?id=44963715 https://news.ycombinator.com/item?id=44963715 Say farewell to the AI bubble, and get ready for the crash https://news.ycombinator.com/item?id=44964548 https://news.ycombinator.com/item?id=44964548
- streetsmartai 1y agoAll you have to do for next 3 years is just put blinkers on and remain laser focussed. Ignore everything they throw at you and remain committed in this once in a life opportunity to be part of the movement that will change the world.
- tim333 1y agoWhat do I do after I have my blinkers on?
- YeGoblynQueenne 1y agoStopper your ears and scream "NAHNAHNAH".
- dns_snek 1y agoThat sounds less like a business plan and more like a cult.
- mvdtnz 1y agoWhich cryptocurrency did you lose you shirt on?
- daft_pink 1y agoThe fact that we’re talking about warning signs the bubble is about to burst indicates the bubble is not about to burst lol.
- mvdtnz 1y agoCan you expand on that?
- amy214 1y agodude is saying the bubble will burst when people least expect it. if there's people expecting it then that's not the right bursting condition
- piva00 1y agoLol, your kind of comment was also common in 2006-2007 when warnings about a housing bubble were brewing, no one can time it but the signs are always there in retrospect.
- onesociety2022 1y agoEven if AGI never happens, the existing models are already incredibly useful. I’ve switched to OpenAI Plus plan and almost never use Google search anymore. I pay $10/mo for GitHub Copilot for coding. So search and coding use cases are already seeing big improvements. But this same thing needs to happen to pretty much every product. So I think in the worst case they can just divert all of the training resources to just inference and be just fine. Sure the insane valuation multiples will drop if that happens and they will be valued as any other SaaS business.
- throwaway290 1y ago> I’ve switched to OpenAI Plus plan and almost never use Google search anymore A paid product is better than a free one! Who knew it could be!
- bgribble 1y agoAs it turns out, the magic sauce that makes everything taste better is just ketchup. It's good (maybe even indispensable) for some things. Please don't go "ketchup native" on my ice cream.