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That's right. By the same argument, I don't think it's right to say without AI, GDP growth would be flat. That cash would likely go into other investments. Th

That's right. By the same argument, I don't think it's right to say without AI, GDP growth would be flat. That cash would likely go into other investments. The question is if AI will make a return on the investment or not.

BoredPositron 1y ago
If you look at the last 10 years you have to admit that the statement wouldn't be true. No tech company spent like they do now they rather opted for stock buybacks.
- zerosizedweasle 1y ago
  This is just a very expensive buyback. At the heart this is all Nvidia doing round about the same mechanism of pushing the share price up. This started out as a useful idea, and it’s mutated into something that is destroying the economy
  - pj_mukh 1y ago
    Except NVIDIA is turning the roundabout investments into real silicon, data centers and extraneous software investments (see: IsaacSim, autonomy stack etc). They may not have the returns all the investors are expecting but they are an extreme net good for the ecosystem. I think the comparison to stock buybacks is ludicrous.
    - teiferer 1y ago
      > they are an extreme net good for the ecosystem. Evidence? Perhaps depends on what you mean with "ecosystem". Within the AI tech/hype, sure, there it's good. But for the economy as a whole? Is it that good? There are probably some benefits, but do they match the current valuations? Most likely they don't, because hype cycles inherently overvaluate things for a while because they don't know what will stick. If things were not dramatically overvalued right now then investors would not be acting in their best interest.
      - pj_mukh 1y ago
        Their investments in robotics over the long term will lead to massive unlocks in productivity that hasn’t moved in some industries for decades eg sim2real tech leading to construction robots being used to build housing with 1/3 of the human labor needed now in an industry with widespread labor shortage [1] Will it match a certain valuation within a certain time period? I guess I don’t really care, I’m not an investor. [1] https://www.mckinsey.com/capabilities/operations/our-insights/delivering-on-construction-productivity-is-no-longer-optional https://www.mckinsey.com/capabilities/operations/our-insight...
- graemep 1y ago
  If the tech companies spent the money on stock buybacks, it would not have disappeared. It would have been reinvested elsewhere.
  - surgical_fire 1y ago
    Or they would be parked in things such as gold, bonds, etc.
    - graemep 1y ago
      That requires buying those investments, which means the person who sold them has to invest that money somewhere. It still does not disappear. I love the way I keep getting downvoted on HN whenever I say anything about a subject about which I know a lot more about than the average person here (usually investment and finance).
      - surgical_fire 1y ago
        > That requires buying those investments, which means the person who sold them has to invest that money somewhere. It still does not disappear. I also didn't say that the money disappear, I said the money may just end up getting parked in the modern day equivalent of dragon hoards. There's plenty of things to park idle money in hopes of returns. I was just pointing out that the idea thaf it would just become investment in other parts of the economy is naive. > I love the way I keep getting downvoted I hadn't downvoted you, but I will do so now. I always downvote people that are butthurt about internet points.
        graemep 1y ago
        > I also didn't say that the money disappear, I said the money may just end up getting parked in the modern day equivalent of dragon hoards. There's plenty of things to park idle money in hopes of returns. You miss the point. What does the person who sold the assets in which the money is "parked" do with it? If they buy a bonds what does the seller of the bonds do with the money? Leave it in a bank account? The bank will lend the money to someone who will either spend the money (stimulating the economy) or reinvest it. They might buy another asset. If that asset is newly issued shares or bonds, the money will then go to a company planning to reinvest it. Anything else and it just pushes it another step to another person. Eventually it goes back into the economy. > I was just pointing out that the idea thaf it would just become investment in other parts of the economy is naive. The naive assumption is that "parked" money somehow leaves the economy. its "parked" from the point of view of the person making the investment, but it has to go somewhere. > I hadn't downvoted you, but I will do so now. I always downvote people that are butthurt about internet points. How mature and charmingly expressed! My point is that there is a lot of Dunning–Kruger in HN discussions of economics and finance.
- rich_sasha 1y ago
  Buybacks are essentially dividends. The cash went to investors who did something with it. Did they park it in bonds over the past 10 years? I doubt it. Interest rates were ~0, VC funding was crazy, the money taps were open. They would have been less open without these buybacks. It's not necessarily 1:1, it seems people are more willing to spend the cash on AI than they were on other things. But it's not 1:0 either.

BoredPositron 1y ago

If you look at the last 10 years you have to admit that the statement wouldn't be true. No tech company spent like they do now they rather opted for stock buybacks.

zerosizedweasle 1y ago
This is just a very expensive buyback. At the heart this is all Nvidia doing round about the same mechanism of pushing the share price up. This started out as a useful idea, and it’s mutated into something that is destroying the economy
- pj_mukh 1y ago
  Except NVIDIA is turning the roundabout investments into real silicon, data centers and extraneous software investments (see: IsaacSim, autonomy stack etc). They may not have the returns all the investors are expecting but they are an extreme net good for the ecosystem. I think the comparison to stock buybacks is ludicrous.
  - teiferer 1y ago
    > they are an extreme net good for the ecosystem. Evidence? Perhaps depends on what you mean with "ecosystem". Within the AI tech/hype, sure, there it's good. But for the economy as a whole? Is it that good? There are probably some benefits, but do they match the current valuations? Most likely they don't, because hype cycles inherently overvaluate things for a while because they don't know what will stick. If things were not dramatically overvalued right now then investors would not be acting in their best interest.
    - pj_mukh 1y ago
      Their investments in robotics over the long term will lead to massive unlocks in productivity that hasn’t moved in some industries for decades eg sim2real tech leading to construction robots being used to build housing with 1/3 of the human labor needed now in an industry with widespread labor shortage [1] Will it match a certain valuation within a certain time period? I guess I don’t really care, I’m not an investor. [1] https://www.mckinsey.com/capabilities/operations/our-insights/delivering-on-construction-productivity-is-no-longer-optional https://www.mckinsey.com/capabilities/operations/our-insight...
graemep 1y ago
If the tech companies spent the money on stock buybacks, it would not have disappeared. It would have been reinvested elsewhere.
- surgical_fire 1y ago
  Or they would be parked in things such as gold, bonds, etc.
  - graemep 1y ago
    That requires buying those investments, which means the person who sold them has to invest that money somewhere. It still does not disappear. I love the way I keep getting downvoted on HN whenever I say anything about a subject about which I know a lot more about than the average person here (usually investment and finance).
    - surgical_fire 1y ago
      > That requires buying those investments, which means the person who sold them has to invest that money somewhere. It still does not disappear. I also didn't say that the money disappear, I said the money may just end up getting parked in the modern day equivalent of dragon hoards. There's plenty of things to park idle money in hopes of returns. I was just pointing out that the idea thaf it would just become investment in other parts of the economy is naive. > I love the way I keep getting downvoted I hadn't downvoted you, but I will do so now. I always downvote people that are butthurt about internet points.
      - graemep 1y ago
        > I also didn't say that the money disappear, I said the money may just end up getting parked in the modern day equivalent of dragon hoards. There's plenty of things to park idle money in hopes of returns. You miss the point. What does the person who sold the assets in which the money is "parked" do with it? If they buy a bonds what does the seller of the bonds do with the money? Leave it in a bank account? The bank will lend the money to someone who will either spend the money (stimulating the economy) or reinvest it. They might buy another asset. If that asset is newly issued shares or bonds, the money will then go to a company planning to reinvest it. Anything else and it just pushes it another step to another person. Eventually it goes back into the economy. > I was just pointing out that the idea thaf it would just become investment in other parts of the economy is naive. The naive assumption is that "parked" money somehow leaves the economy. its "parked" from the point of view of the person making the investment, but it has to go somewhere. > I hadn't downvoted you, but I will do so now. I always downvote people that are butthurt about internet points. How mature and charmingly expressed! My point is that there is a lot of Dunning–Kruger in HN discussions of economics and finance.
rich_sasha 1y ago
Buybacks are essentially dividends. The cash went to investors who did something with it. Did they park it in bonds over the past 10 years? I doubt it. Interest rates were ~0, VC funding was crazy, the money taps were open. They would have been less open without these buybacks. It's not necessarily 1:1, it seems people are more willing to spend the cash on AI than they were on other things. But it's not 1:0 either.