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The biggest sign of an AI bubble is starting to appear – debt

zerosizedweasle 1y ago
https://archive.ph/rou3t https://archive.ph/rou3t
ramesh31 1y ago
>Meta seeks $29 billion via private capital for its AI data center buildout. This would be worrisome if they didn't have the cash to pay for it, but that's peanuts to Meta. It seems more like tax avoidance schemes than anything else.
piker 1y ago
> "SPVs mean companies like Meta do not need to show the debt as their debt," Perkins writes in a note. He likens today's financing tactics to the subprime era when firms shifted risk off the books to reassure investors. But it's not? If the SPV is doing its job as a limited liability entity, Meta should be bankruptcy remote from the SPV. Presumably accounting rules would look through that SPV if Meta was actually reachable. It doesn't make a good comparison to GFC where everyone was nominally on the hook but had that risk "insured" with CDSs, etc.
- JCM9 1y ago
  Perkins’ point is valid. It’s still shareholder assets and resources at the end of the day even if via a SPV. The banks did this sort of thing in the financial crisis with all sorts of subsidiaries and circular funding. “Hey it’s OK that mortgage side business is going belly up but we bought that special insurance.” “Cool, so who sells that insurance?” “Um, actually I think we do via our other SPV” “$&@!” Not 100% analogy here but similar shenanigans where company A is taking out debt, to build a datacenter, to buy GPUs, to sell services to startup B that Company A gave cash to to buy said services. Startup B has no viable business model and implodes. Company A goes from looking like a genius to a financial nuclear waste dump almost overnight. It’s financial shell games all over again.
- piva00 1y ago
  Isn't the problem the creditors exposed to the SPVs though? Meta, and others might be shielded from it but there's someone on the other end of these debts, if the SPVs are accruing massive amounts of debt and go bankrupt there are lots of obligations that will go unfulfilled, bringing the whole house down. It's quacking very similar to other accounting tricks, caham, financial engineering, to hide bad numbers somewhere else. CDSs and CDOs were a different mechanism with the same purpose: hide risk away into overly complex instruments.
JCM9 1y ago
The current bubble is getting scary. When this thing pops the blast it’s going to be a real mess. The big tech firms will hurt, fire some execs in a show of “making changes,” do a bunch of layoffs across “AI” teams to show the market they’re pivoting and getting costs in order, and move on. The startups ecosystem will suffer extensive and catastrophic damage. The funding ecosystem will be set back years as this wipes out a bunch of VCs and investors. Some of the “AI startups” will be sold in fire sales for parts so investors can at least minimize losses and most of the rest will vaporize, the likes of which we haven’t seen since financial firms imploded in 2008. I hope I’m wrong, but the most experienced trusted folks I know are already repositioning themselves to weather the upcoming storm.
- philipwhiuk 1y ago
  The real question is if enough fails to cause systemic risk. Hopefully the GSIBs ( https://en.wikipedia.org/wiki/List_of_systemically_important_banks https://en.wikipedia.org/wiki/List_of_systemically_important... ) aren't too badly exposed.
  - zerosizedweasle 1y ago
    I think the debt is what makes the risk systemic. Sure it can be overvalued, but alone that won't cause a generationally painful economic meltdown. It's the spending and debt that make something that is a bubble into something truly dangerous. All the exotic private credit and structured finance that is powering this thing along with the lack of any viable revenue stream to keep up with the debt plus interest that make this thing so dangerous. Sure maybe Meta can take a huge hit and limp away (it's still gonna be very painful for them and people who own a lot of its stock) but can OpenAI, can CoreWeave or any of the firms that lent to them? It's a domino effect. The fact that Meta is doing this is a huge red flag. The problem is the market is rewarding this endless cash burn without any way to generate the appropriate revenue. Once reality catches up there are a ton of knock on effects.
- diggan 1y ago
  > I hope I’m wrong I kind of hope you're right. Any "hyped" industry/sector is bound to eventually needing to get back to reality, and focus on things that actually work, rather than spraying and praying prototypes and over-hyping them. The individuals and companies building real products that actually improve something will stick around, either as they are, or at least as ideas, and most of the interesting stuff tends to happen when the hype dies down, as the builders continue as they were, but all the rest of the riffraff disappears. There will still be a community and the ideas won't magically disappear, just smaller and more focused, which to me sounds like a much needed improvement over the current state of things.
zwnow 1y ago
B... bb... bbbut i thought we are so close to AGI and all the AI companies can easily make bazillions off of targeted advertising and and AI can do all my employees jobs for 1/1000th their salary and and...
- tnel77 1y ago
  Hey now! I can’t raise money telling VCs the truth!
thechao 1y ago
Dang. My kids are just getting the hang of using ChatGPT as a way to generate random quizzes and additional homework problems; to the point where both of them just automatically use the AI to "fill in the gaps" each evening. (Prior to AI, additional HW was met with less enthusiasm than you'd think!) I told my wife that the billionaire class spent the last few decades cheating the tax system (and, thus, the education system) just to weirdly dump a trillion dollars into the AI ecosystem to build the world's finest tutors. I really hope that doesn't Go Away™.
- topherhunt 1y ago
  Don't worry about this. There's no way these tools are going away. If this bubble bursts it may wipe out the incentive to continue this frenzied race to build novel AI, but ChatGPT et al won't be shut down, and even if they were, the open-source LLMs comparable to the cutting-edge of 6 months ago will still be online and available. Plus, even if AI progress froze solid tomorrow, I think it would take decades before we'd start to anywhere-near-saturate the potential space of applications & use cases to really do the current tech level justice. (Also, even post-bubble, AI progress would not freeze solid, to put it mildly)
- SamPatt 1y ago
  It absolutely won't go away. Even if OpenAI folds, the open source stuff is good enough that someone will build a compelling tutor platform in their place. It probably already exists.
- SoftTalker 1y ago
  Are you paying anything for it?
TrackerFF 1y ago
The thing is, the models do work. They add value to me each and every day, to a degree almost no other tech has done before. But that doesn't take away the fact that this is extremely expensive stuff (not for me, but for the companies pushing the envelope), far too expensive. And it is really taking its toll on other resources, like electricity.
- nitwit005 1y ago
  A bubble doesn't imply the product is bad. We all need homes, but there have definitely been housing bubbles.
- infecto 1y ago
  I think the thing that most of the folks miss is exactly that. AI is adding value and it’s here to stay. Absolutely the OpenAI story is looking concerning but I am not sure it is this doomsday AI winter.
  - 369548684892826 1y ago
    If revenue doesn't catch up with the cost of developing and running these huge LLMs then the only way to avoid an AI winter is to find a way to make them way cheaper to develop.
    - infecto 1y ago
      Inference costs are largely break even and profitable. Now yes there is absolutely questions on the training side. You could turn off the switch today though and most of your leading models could keep the lights on.
      - algorithmmonkey 1y ago
        I keep seeing everyone guessing what the margin is on inference. You say that it's largely break even. We have this person in the thread claim 80% margin (https://news.ycombinator.com/item?id=45462442 https://news.ycombinator.com/item?id=45462442). These numbers are complete make believe.
vessenes 1y ago
META free cashflow last year : $20bn. Cash on Hand: $47bn. "Worrying" Debt: $15bn sought. ORCL, the other company they're talking about: $20bn in Cash from Operations, $21bn in capital expenditures, ORCL Cash on Hand: $11bn. ORCL's recent debt flotation: $18bn. ORCL has 40 years to pay back; demand was reportedly $88bn for the offering. I imagine pricing was close to T-bills. These flotations posit that demand for compute will continue to increase over the next 40 years, and that infra providers who can get there early will do better than Treasuries. Calling it a bubble just because the numbers are big is the weakest of financial journalism. Now, do you think inference and datacenter demand will drop? If so, it's worth asking if and when these datacenter will pay, and if they don't, who will take the hit. That would be useful analysis. I'm pro these plays -- right now inference has an 80% margin; that's after paying the fully capitalized costs of datacenters + compute + the datacenter margin. To the extent a company controls its own inference stack and can do so with a 5% cost of capital, they should do it.
- vslira 1y ago
  > Calling it a bubble just because the numbers are big is the weakest of financial journalism Yeah, exactly. The current AI investment wave could be a bubble. Or not. If anyone knows, there are millions to be made in the stock market. The answer depends on the actual expectations for those investments and how actual business metrics are tracking them. But pointing to ambiguous “evidence” just adds noise. If someone screams fire in a movie theater journalist should report if there’s a fire or at least smoke, not write articles showing concern about how flammable all the furniture is
- latchkey 1y ago
  > right now inference has an 80% margin I'm curious about this. Source?
xyst 1y ago
The job market is already a joke. 2026 is going to look very bleak.
infecto 1y ago
Is there a bubble? Maybe. Will all of the current companies exist 5 years from now? Probably not. Is AI generating value and here to stay. Absolutely.
- MarcelOlsz 1y ago
  Can "AI" make me a React component that doesn't blow up in my fucking face? Absolutely not.
  - infecto 1y ago
    That itself is not proof that AI is not here to stay. It’s a short minded world view. Value is absolutely being generated but of course not everywhere and I am certainly not defending valuations.
    - MarcelOlsz 1y ago
      Value is being generated for owners. Not for me. I don't care at all about "value". I don't know what perspective you are thinking from. Are you rich? AI and crypto and every flavor of the year tech garbage are just siphons. Judging the tech on its own merits is missing the forest for the trees.
      - infecto 1y ago
        Dismissing an entire technology because you personally haven’t figured out how to make it useful is a cope, not an argument. Am I rich? What are you even on about. I can now spend a few dollars and classify a large dataset that would have taken me real time before. I can again spend a few dollars and turn unstructured data into structure. There absolutely is value to be found in the current gen of tech. Comparing it to crypto is a weak argument. Just because you don’t find value does not mean other organizations and people are not.
        MarcelOlsz 1y ago
        >Am I rich? What are you even on about. The only people I find harping on about some amorphous "value" floating around in the air are typically people with portfolios. >I can again spend a few dollars and turn unstructured data into structure. Saving 5 seconds on a 10 second task using an infinite amount more energy is not "value", it's garbage propped up by VC money and regular people are going to be paying for it when it inevitably goes tits up. Like we've paid for everything. There's your "value".
thelastgallon 1y ago
First Brands and Tricolor Are Signs of What's to Come: https://www.bloomberg.com/opinion/articles/2025-09-29/first-brands-and-tricolor-show-why-private-credit-lenders-should-worry https://www.bloomberg.com/opinion/articles/2025-09-29/first-... Archive: https://archive.is/rwJuP https://archive.is/rwJuP $1.6T Credit Bubble Bursts as Two “Healthy” U.S. Firms Collapse: https://www.youtube.com/watch?v=51DmcBx6BI0 https://www.youtube.com/watch?v=51DmcBx6BI0
epolanski 1y ago
The entire US stock market and economy is being prompted by AI since 2022. I think that the Economist posted some months ago a study that indicated that without datacenter capex booming the US economy would otherwise be flat. At some point there will be major shakeups.
- zerosizedweasle 1y ago
  It's just gotten so out of hand that there are multiple levels of pain. There's all the debt financing / private credit deals on infrastructure costs that will be defaulted on. There are the losses that most people will feel when the overvalued shares drop. There is the pain of tech companies having spent so many resources with very little in terms of viable revenue streams. It's gonna hit a lot of places in the economy.
siva7 1y ago
The only people talking all the time about AI bubble are those on HN. I seriously wonder how this place got so huge in the valley.
htrp 1y ago
Not sure starting to appear is the right word Coreweave had a huge chunk of debt and gpu financing was a thing even last year
EcommerceFlow 1y ago
- ChatGPT still lags for me daily and I'm on a PRO subscription. - SORA is usable but extremely slow and constrained. - Image gen same thing, but getting a bit quicker and less constrained. This is with agents not having taken off yet, and the vast portion of the world economy not interacting with LLM Ai? Agents alone will require ungodly amounts of compute. Bullish
- diggan 1y ago
  > ChatGPT still lags for me daily What exactly are you referring to? Their UI seems to have troubles to load the list of conversations since like a week back, otherwise it seems fine? I mean, UX could be a lot better, but I'm experiencing anything I'd describe as "lag".
  - EcommerceFlow 1y ago
    Outputting code mostly, especially compared to Gemini and Grok Fast. I'm using normal thinking mode, not extended or PRO.
  - tencentshill 1y ago
    >list of conversations How many bytes could that entire list possibly be? Surely less than your average webpage ad.
    - diggan 1y ago
      Yeah, especially considering it's only fetching ~10 items at a time :) I'm guessing some index somewhere is wrong or something, as I probably have a couple of conversations through the years of using it almost daily...
NoboruWataya 1y ago
> "SPVs mean companies like Meta do not need to show the debt as their debt," Perkins writes in a note. He likens today's financing tactics to the subprime era when firms shifted risk off the books to reassure investors. The article doesn't explain how Meta are actually using SPVs. The suggestion is that the debt is in fact Meta's debt but the use of an SPV somehow means they don't need to show it on their balance sheet. Traditionally if you're using an SPV it genuinely means it's not your debt, in that you won't go bankrupt if the deal flops and the assets are underwater. (And they're not your assets, either.) There are valid concerns about debt fuelling outsized investments in AI, but this article isn't really saying anything of substance. Plenty of non-bubbles attract significant debt investment as well. Ultimately, debt is a way to transfer risk. It becomes an issue if it results in a lot of risk being transferred to parts of the economy that can't really afford it (like retail investors, or systemically important banks). As long as the people taking on the risk know what they're getting into and we won't need to bail them out if they lose their shirt, it's not really a problem.
geye1234 1y ago
This will have a big effect on those in passive index funds I think? Tech made up about a third of the S&P last time I checked, but the AI hype is also affecting non-tech sectors.
svara 1y ago
When you look at total real returns over longer time scales, the current period in time is not unusual. https://totalrealreturns.com/s/SPY https://totalrealreturns.com/s/SPY We're not far from the long term trend of 6.15%/yr on the S&P500, just slightly above. The deviation above the long-term trend was much larger in the run-up to 2001. It's like we're in 1997 now. Not saying a correction isn't likely, just that it's easy to scare yourself by looking at linear, non-inflation adjusted plots.
throwacct 1y ago
The bubble will burst with a vengeance when big corporations and startups start deploying and utilizing LLM models on-premises instead of the "pay-as-you-go" trap.
deleted 1y ago
[deleted]
Mattgregory3 1y ago
[dead]

https://archive.ph/rou3t https://archive.ph/rou3t

>Meta seeks $29 billion via private capital for its AI data center buildout. This would be worrisome if they didn't have the cash to pay for it, but that's peanuts to Meta. It seems more like tax avoidance schemes than anything else.

piker 1y ago

> "SPVs mean companies like Meta do not need to show the debt as their debt," Perkins writes in a note. He likens today's financing tactics to the subprime era when firms shifted risk off the books to reassure investors. But it's not? If the SPV is doing its job as a limited liability entity, Meta should be bankruptcy remote from the SPV. Presumably accounting rules would look through that SPV if Meta was actually reachable. It doesn't make a good comparison to GFC where everyone was nominally on the hook but had that risk "insured" with CDSs, etc.

JCM9 1y ago
Perkins’ point is valid. It’s still shareholder assets and resources at the end of the day even if via a SPV. The banks did this sort of thing in the financial crisis with all sorts of subsidiaries and circular funding. “Hey it’s OK that mortgage side business is going belly up but we bought that special insurance.” “Cool, so who sells that insurance?” “Um, actually I think we do via our other SPV” “$&@!” Not 100% analogy here but similar shenanigans where company A is taking out debt, to build a datacenter, to buy GPUs, to sell services to startup B that Company A gave cash to to buy said services. Startup B has no viable business model and implodes. Company A goes from looking like a genius to a financial nuclear waste dump almost overnight. It’s financial shell games all over again.
piva00 1y ago
Isn't the problem the creditors exposed to the SPVs though? Meta, and others might be shielded from it but there's someone on the other end of these debts, if the SPVs are accruing massive amounts of debt and go bankrupt there are lots of obligations that will go unfulfilled, bringing the whole house down. It's quacking very similar to other accounting tricks, caham, financial engineering, to hide bad numbers somewhere else. CDSs and CDOs were a different mechanism with the same purpose: hide risk away into overly complex instruments.

JCM9 1y ago

The current bubble is getting scary. When this thing pops the blast it’s going to be a real mess. The big tech firms will hurt, fire some execs in a show of “making changes,” do a bunch of layoffs across “AI” teams to show the market they’re pivoting and getting costs in order, and move on. The startups ecosystem will suffer extensive and catastrophic damage. The funding ecosystem will be set back years as this wipes out a bunch of VCs and investors. Some of the “AI startups” will be sold in fire sales for parts so investors can at least minimize losses and most of the rest will vaporize, the likes of which we haven’t seen since financial firms imploded in 2008. I hope I’m wrong, but the most experienced trusted folks I know are already repositioning themselves to weather the upcoming storm.

philipwhiuk 1y ago
The real question is if enough fails to cause systemic risk. Hopefully the GSIBs ( https://en.wikipedia.org/wiki/List_of_systemically_important_banks https://en.wikipedia.org/wiki/List_of_systemically_important... ) aren't too badly exposed.
- zerosizedweasle 1y ago
  I think the debt is what makes the risk systemic. Sure it can be overvalued, but alone that won't cause a generationally painful economic meltdown. It's the spending and debt that make something that is a bubble into something truly dangerous. All the exotic private credit and structured finance that is powering this thing along with the lack of any viable revenue stream to keep up with the debt plus interest that make this thing so dangerous. Sure maybe Meta can take a huge hit and limp away (it's still gonna be very painful for them and people who own a lot of its stock) but can OpenAI, can CoreWeave or any of the firms that lent to them? It's a domino effect. The fact that Meta is doing this is a huge red flag. The problem is the market is rewarding this endless cash burn without any way to generate the appropriate revenue. Once reality catches up there are a ton of knock on effects.
diggan 1y ago
> I hope I’m wrong I kind of hope you're right. Any "hyped" industry/sector is bound to eventually needing to get back to reality, and focus on things that actually work, rather than spraying and praying prototypes and over-hyping them. The individuals and companies building real products that actually improve something will stick around, either as they are, or at least as ideas, and most of the interesting stuff tends to happen when the hype dies down, as the builders continue as they were, but all the rest of the riffraff disappears. There will still be a community and the ideas won't magically disappear, just smaller and more focused, which to me sounds like a much needed improvement over the current state of things.

zwnow 1y ago

B... bb... bbbut i thought we are so close to AGI and all the AI companies can easily make bazillions off of targeted advertising and and AI can do all my employees jobs for 1/1000th their salary and and...

tnel77 1y ago
Hey now! I can’t raise money telling VCs the truth!

thechao 1y ago

Dang. My kids are just getting the hang of using ChatGPT as a way to generate random quizzes and additional homework problems; to the point where both of them just automatically use the AI to "fill in the gaps" each evening. (Prior to AI, additional HW was met with less enthusiasm than you'd think!) I told my wife that the billionaire class spent the last few decades cheating the tax system (and, thus, the education system) just to weirdly dump a trillion dollars into the AI ecosystem to build the world's finest tutors. I really hope that doesn't Go Away™.

topherhunt 1y ago
Don't worry about this. There's no way these tools are going away. If this bubble bursts it may wipe out the incentive to continue this frenzied race to build novel AI, but ChatGPT et al won't be shut down, and even if they were, the open-source LLMs comparable to the cutting-edge of 6 months ago will still be online and available. Plus, even if AI progress froze solid tomorrow, I think it would take decades before we'd start to anywhere-near-saturate the potential space of applications & use cases to really do the current tech level justice. (Also, even post-bubble, AI progress would not freeze solid, to put it mildly)
SamPatt 1y ago
It absolutely won't go away. Even if OpenAI folds, the open source stuff is good enough that someone will build a compelling tutor platform in their place. It probably already exists.
SoftTalker 1y ago
Are you paying anything for it?

TrackerFF 1y ago

The thing is, the models do work. They add value to me each and every day, to a degree almost no other tech has done before. But that doesn't take away the fact that this is extremely expensive stuff (not for me, but for the companies pushing the envelope), far too expensive. And it is really taking its toll on other resources, like electricity.

nitwit005 1y ago
A bubble doesn't imply the product is bad. We all need homes, but there have definitely been housing bubbles.
infecto 1y ago
I think the thing that most of the folks miss is exactly that. AI is adding value and it’s here to stay. Absolutely the OpenAI story is looking concerning but I am not sure it is this doomsday AI winter.
- 369548684892826 1y ago
  If revenue doesn't catch up with the cost of developing and running these huge LLMs then the only way to avoid an AI winter is to find a way to make them way cheaper to develop.
  - infecto 1y ago
    Inference costs are largely break even and profitable. Now yes there is absolutely questions on the training side. You could turn off the switch today though and most of your leading models could keep the lights on.
    - algorithmmonkey 1y ago
      I keep seeing everyone guessing what the margin is on inference. You say that it's largely break even. We have this person in the thread claim 80% margin (https://news.ycombinator.com/item?id=45462442 https://news.ycombinator.com/item?id=45462442). These numbers are complete make believe.

vessenes 1y ago

META free cashflow last year : $20bn. Cash on Hand: $47bn. "Worrying" Debt: $15bn sought. ORCL, the other company they're talking about: $20bn in Cash from Operations, $21bn in capital expenditures, ORCL Cash on Hand: $11bn. ORCL's recent debt flotation: $18bn. ORCL has 40 years to pay back; demand was reportedly $88bn for the offering. I imagine pricing was close to T-bills. These flotations posit that demand for compute will continue to increase over the next 40 years, and that infra providers who can get there early will do better than Treasuries. Calling it a bubble just because the numbers are big is the weakest of financial journalism. Now, do you think inference and datacenter demand will drop? If so, it's worth asking if and when these datacenter will pay, and if they don't, who will take the hit. That would be useful analysis. I'm pro these plays -- right now inference has an 80% margin; that's after paying the fully capitalized costs of datacenters + compute + the datacenter margin. To the extent a company controls its own inference stack and can do so with a 5% cost of capital, they should do it.

vslira 1y ago
> Calling it a bubble just because the numbers are big is the weakest of financial journalism Yeah, exactly. The current AI investment wave could be a bubble. Or not. If anyone knows, there are millions to be made in the stock market. The answer depends on the actual expectations for those investments and how actual business metrics are tracking them. But pointing to ambiguous “evidence” just adds noise. If someone screams fire in a movie theater journalist should report if there’s a fire or at least smoke, not write articles showing concern about how flammable all the furniture is
latchkey 1y ago
> right now inference has an 80% margin I'm curious about this. Source?

xyst 1y ago

The job market is already a joke. 2026 is going to look very bleak.

infecto 1y ago

Is there a bubble? Maybe. Will all of the current companies exist 5 years from now? Probably not. Is AI generating value and here to stay. Absolutely.

MarcelOlsz 1y ago
Can "AI" make me a React component that doesn't blow up in my fucking face? Absolutely not.
- infecto 1y ago
  That itself is not proof that AI is not here to stay. It’s a short minded world view. Value is absolutely being generated but of course not everywhere and I am certainly not defending valuations.
  - MarcelOlsz 1y ago
    Value is being generated for owners. Not for me. I don't care at all about "value". I don't know what perspective you are thinking from. Are you rich? AI and crypto and every flavor of the year tech garbage are just siphons. Judging the tech on its own merits is missing the forest for the trees.
    - infecto 1y ago
      Dismissing an entire technology because you personally haven’t figured out how to make it useful is a cope, not an argument. Am I rich? What are you even on about. I can now spend a few dollars and classify a large dataset that would have taken me real time before. I can again spend a few dollars and turn unstructured data into structure. There absolutely is value to be found in the current gen of tech. Comparing it to crypto is a weak argument. Just because you don’t find value does not mean other organizations and people are not.
      - MarcelOlsz 1y ago
        >Am I rich? What are you even on about. The only people I find harping on about some amorphous "value" floating around in the air are typically people with portfolios. >I can again spend a few dollars and turn unstructured data into structure. Saving 5 seconds on a 10 second task using an infinite amount more energy is not "value", it's garbage propped up by VC money and regular people are going to be paying for it when it inevitably goes tits up. Like we've paid for everything. There's your "value".

thelastgallon 1y ago

First Brands and Tricolor Are Signs of What's to Come: https://www.bloomberg.com/opinion/articles/2025-09-29/first-brands-and-tricolor-show-why-private-credit-lenders-should-worry https://www.bloomberg.com/opinion/articles/2025-09-29/first-... Archive: https://archive.is/rwJuP https://archive.is/rwJuP $1.6T Credit Bubble Bursts as Two “Healthy” U.S. Firms Collapse: https://www.youtube.com/watch?v=51DmcBx6BI0 https://www.youtube.com/watch?v=51DmcBx6BI0

epolanski 1y ago

The entire US stock market and economy is being prompted by AI since 2022. I think that the Economist posted some months ago a study that indicated that without datacenter capex booming the US economy would otherwise be flat. At some point there will be major shakeups.

zerosizedweasle 1y ago
It's just gotten so out of hand that there are multiple levels of pain. There's all the debt financing / private credit deals on infrastructure costs that will be defaulted on. There are the losses that most people will feel when the overvalued shares drop. There is the pain of tech companies having spent so many resources with very little in terms of viable revenue streams. It's gonna hit a lot of places in the economy.

siva7 1y ago

The only people talking all the time about AI bubble are those on HN. I seriously wonder how this place got so huge in the valley.

htrp 1y ago

Not sure starting to appear is the right word Coreweave had a huge chunk of debt and gpu financing was a thing even last year

EcommerceFlow 1y ago

- ChatGPT still lags for me daily and I'm on a PRO subscription. - SORA is usable but extremely slow and constrained. - Image gen same thing, but getting a bit quicker and less constrained. This is with agents not having taken off yet, and the vast portion of the world economy not interacting with LLM Ai? Agents alone will require ungodly amounts of compute. Bullish

diggan 1y ago
> ChatGPT still lags for me daily What exactly are you referring to? Their UI seems to have troubles to load the list of conversations since like a week back, otherwise it seems fine? I mean, UX could be a lot better, but I'm experiencing anything I'd describe as "lag".
- EcommerceFlow 1y ago
  Outputting code mostly, especially compared to Gemini and Grok Fast. I'm using normal thinking mode, not extended or PRO.
- tencentshill 1y ago
  >list of conversations How many bytes could that entire list possibly be? Surely less than your average webpage ad.
  - diggan 1y ago
    Yeah, especially considering it's only fetching ~10 items at a time :) I'm guessing some index somewhere is wrong or something, as I probably have a couple of conversations through the years of using it almost daily...

NoboruWataya 1y ago

> "SPVs mean companies like Meta do not need to show the debt as their debt," Perkins writes in a note. He likens today's financing tactics to the subprime era when firms shifted risk off the books to reassure investors. The article doesn't explain how Meta are actually using SPVs. The suggestion is that the debt is in fact Meta's debt but the use of an SPV somehow means they don't need to show it on their balance sheet. Traditionally if you're using an SPV it genuinely means it's not your debt, in that you won't go bankrupt if the deal flops and the assets are underwater. (And they're not your assets, either.) There are valid concerns about debt fuelling outsized investments in AI, but this article isn't really saying anything of substance. Plenty of non-bubbles attract significant debt investment as well. Ultimately, debt is a way to transfer risk. It becomes an issue if it results in a lot of risk being transferred to parts of the economy that can't really afford it (like retail investors, or systemically important banks). As long as the people taking on the risk know what they're getting into and we won't need to bail them out if they lose their shirt, it's not really a problem.

geye1234 1y ago

This will have a big effect on those in passive index funds I think? Tech made up about a third of the S&P last time I checked, but the AI hype is also affecting non-tech sectors.

svara 1y ago

When you look at total real returns over longer time scales, the current period in time is not unusual. https://totalrealreturns.com/s/SPY https://totalrealreturns.com/s/SPY We're not far from the long term trend of 6.15%/yr on the S&P500, just slightly above. The deviation above the long-term trend was much larger in the run-up to 2001. It's like we're in 1997 now. Not saying a correction isn't likely, just that it's easy to scare yourself by looking at linear, non-inflation adjusted plots.

throwacct 1y ago

The bubble will burst with a vengeance when big corporations and startups start deploying and utilizing LLM models on-premises instead of the "pay-as-you-go" trap.

deleted 1y ago

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Mattgregory3 1y ago

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