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Any big bust will have broader market implications, but I don’t think this has the broad systemic impact that the financial crisis did. It will likely be really

by JCM9 1y ago

Any big bust will have broader market implications, but I don’t think this has the broad systemic impact that the financial crisis did. It will likely be really ugly for those caught up in it, but a news story and minor blip to the 401k of everyone else. If you are well diversified keep your head down and keep going. If you’re a VC that heavily invested in AI, I suggest preparing for a Cat 5 hurricane now. The biggest impact the average person will see is that the days of VC funded cheap AI will be over. If they want to use AI to cheat on their essay they’ll need to pay a lot more.

fhd2 1y ago
Well, that sounds pretty good to me, hope you're right.
peterkap 1y ago
https://www.slickcharts.com/sp500 https://www.slickcharts.com/sp500 NVDIA makes up 7.5% of the S&P500. It will not be a minor blip to 401ks if it collapses.
- bluGill 1y ago
  NVDIA has plenty of other business and will not drop to 0. Even if they drop 75%, than is still only a 2-3% (the math on percentages is weird and I don't feel like doing it - and I shouldn't because a 75% drop is just a random number and so I have no significant figures to work with) drop in my 401k. Of course other companies will be hit as well, but still my 401k will not drop and more than any other stock market crash, and there is every reason to think it will recover. It might stop my plans to retire in the next 10 years (but they were of questionable realism anyway), but any longer than that and odds are it will recover.
  - Tadpole9181 1y ago
    That's literally one company being used to make a point. At least 25% of the S&P is composed of highly AI-leveraged companies. And you're acting like massive market changes don't propagate and won't cause ripple affects across the economy that impact other markets and change the view of financial risk.
    - bluGill 1y ago
      Most companies have non ai business. They will fall but it won't be to zero. Bubbles have poped before, and they have been leveraged too. There will be some bad years - but in 15 years things will have recovered and we will be on the next bubble
alephnerd 1y ago
I'd say you are underestimating the industries being propped up by the AI Boom. To name a few examples - Construction (the industry pivoted to DCs) [0], the entire hardware industry (from personal experience CHIPS act recipients pivoted to AI-hype because of slow reimbursement rates), whatever tech hiring that even exists in the US at this point is itself looped into and justified by the AI boom or capital that is 1-2 degrees removed from the AI boom, the entire energy industry is tied to the AI boom [1], and the renewables industry in the US is increasingly AI-washed now as well [2] because of the ending of IRA and IIJA disbursements under Trump. This wouldn't be a 2008 sized event, but it would be a bloodbath comparable to the Telecom Bust (2001) and the Dot Com Bust (2001). I would trust that every HNer would be worried about such a situation because of how existential a risk it would be for the entire tech industry - which employs most people on this forum. [0] - https://www.mckinsey.com/featured-insights/themes/whos-funding-the-ai-data-center-boom https://www.mckinsey.com/featured-insights/themes/whos-fundi... [1] - https://www.politico.com/news/magazine/2025/08/05/energy-industry-ai-boom-debra-kahn-column-00492879 https://www.politico.com/news/magazine/2025/08/05/energy-ind... [2] - https://www.bloomberg.com/news/articles/2025-09-26/ai-boom-will-boost-us-renewables-despite-trump-fortescue-says https://www.bloomberg.com/news/articles/2025-09-26/ai-boom-w...
nitwit005 1y ago
I would caution that people who think they've diversified are not. A huge portion of the S&P 500 is the top handful of companies, so an index fund may mostly end up heavily invested in those firms. Some people have shifted investments around to fix that, but I'm sure many people will be quite surprised.
- ndiddy 1y ago
  Agreed. If you look at what's in the S&P 500, 7.49% is nVidia, 6.33% is Microsoft, 4.88% is Google, 3.86% is Amazon, and 2.95% is Meta. That's over 25% of the S&P 500 in companies that will see their share prices fall heavily if there's yet another AI winter.
  - nyantaro1 1y ago
    Right. And that without considering semiconductor manufacturing/design (AMD, TSMC, Broadcom, etc.) and other second order effects.
- rsync 1y ago
  Under diversification, as you are describing, is the first ingredient… I suspect the second ingredient is US boomers right on the edge of retirement or otherwise shifting to fixed income… And a normal correction causes all of them to divest simultaneously from equities. There is a potential for a stampede out of US equities.

by JCM9 1y ago

fhd2 1y ago

Well, that sounds pretty good to me, hope you're right.

peterkap 1y ago

https://www.slickcharts.com/sp500 https://www.slickcharts.com/sp500 NVDIA makes up 7.5% of the S&P500. It will not be a minor blip to 401ks if it collapses.

bluGill 1y ago
NVDIA has plenty of other business and will not drop to 0. Even if they drop 75%, than is still only a 2-3% (the math on percentages is weird and I don't feel like doing it - and I shouldn't because a 75% drop is just a random number and so I have no significant figures to work with) drop in my 401k. Of course other companies will be hit as well, but still my 401k will not drop and more than any other stock market crash, and there is every reason to think it will recover. It might stop my plans to retire in the next 10 years (but they were of questionable realism anyway), but any longer than that and odds are it will recover.
- Tadpole9181 1y ago
  That's literally one company being used to make a point. At least 25% of the S&P is composed of highly AI-leveraged companies. And you're acting like massive market changes don't propagate and won't cause ripple affects across the economy that impact other markets and change the view of financial risk.
  - bluGill 1y ago
    Most companies have non ai business. They will fall but it won't be to zero. Bubbles have poped before, and they have been leveraged too. There will be some bad years - but in 15 years things will have recovered and we will be on the next bubble

alephnerd 1y ago

I'd say you are underestimating the industries being propped up by the AI Boom. To name a few examples - Construction (the industry pivoted to DCs) [0], the entire hardware industry (from personal experience CHIPS act recipients pivoted to AI-hype because of slow reimbursement rates), whatever tech hiring that even exists in the US at this point is itself looped into and justified by the AI boom or capital that is 1-2 degrees removed from the AI boom, the entire energy industry is tied to the AI boom [1], and the renewables industry in the US is increasingly AI-washed now as well [2] because of the ending of IRA and IIJA disbursements under Trump. This wouldn't be a 2008 sized event, but it would be a bloodbath comparable to the Telecom Bust (2001) and the Dot Com Bust (2001). I would trust that every HNer would be worried about such a situation because of how existential a risk it would be for the entire tech industry - which employs most people on this forum. [0] - https://www.mckinsey.com/featured-insights/themes/whos-funding-the-ai-data-center-boom https://www.mckinsey.com/featured-insights/themes/whos-fundi... [1] - https://www.politico.com/news/magazine/2025/08/05/energy-industry-ai-boom-debra-kahn-column-00492879 https://www.politico.com/news/magazine/2025/08/05/energy-ind... [2] - https://www.bloomberg.com/news/articles/2025-09-26/ai-boom-will-boost-us-renewables-despite-trump-fortescue-says https://www.bloomberg.com/news/articles/2025-09-26/ai-boom-w...

nitwit005 1y ago

I would caution that people who think they've diversified are not. A huge portion of the S&P 500 is the top handful of companies, so an index fund may mostly end up heavily invested in those firms. Some people have shifted investments around to fix that, but I'm sure many people will be quite surprised.

ndiddy 1y ago
Agreed. If you look at what's in the S&P 500, 7.49% is nVidia, 6.33% is Microsoft, 4.88% is Google, 3.86% is Amazon, and 2.95% is Meta. That's over 25% of the S&P 500 in companies that will see their share prices fall heavily if there's yet another AI winter.
- nyantaro1 1y ago
  Right. And that without considering semiconductor manufacturing/design (AMD, TSMC, Broadcom, etc.) and other second order effects.
rsync 1y ago
Under diversification, as you are describing, is the first ingredient… I suspect the second ingredient is US boomers right on the edge of retirement or otherwise shifting to fixed income… And a normal correction causes all of them to divest simultaneously from equities. There is a potential for a stampede out of US equities.