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AI, while undeniably powerful and transformative, is in the midst of the biggest, most insane tech bubble we have ever seen. And nearly all of that money is end

AI, while undeniably powerful and transformative, is in the midst of the biggest, most insane tech bubble we have ever seen. And nearly all of that money is ending up, directly or indirectly, in GPU data centers. And NVIDIA is the largest cost (profit maker) there. When that investment firehouse gets turned off, the AI providers will stop building new data centers. Likely for some years. That revenue stream for NVIDIA will go to zero so fast… The unknown, as with any bubble, is timing.

chii 1y ago
> most insane tech bubble we have ever seen. the current "bubble" hasn't surpassed the dot-com boom yet.
- adastra22 1y ago
  The total aggregate loss of value from top to bottom of the dotcom crash was about $5 trillion. That’s the current market cap of NVIDIA alone, to say nothing of other AI companies. So yeah, it has.
  - chii 1y ago
    that number back in 2000 is about $9.7 trillion adjusted for inflation. You can't merely just compare the numbers at that time with a number today. It's meaningless. You have to compare forward earnings to share-price ratios.
    - adastra22 1y ago
      I think you missed that I'm comparing a single company to the entire market crash in 2000. What about OpenAI, Anthropic, xAI and the other foundation labs that have collectively raised trillions? What Microsoft, Amazon, Google, and Meta, which would likely survive but maybe lose up to a trillion each in valuation? What about the very long tail of venture-backed AI companies that will go bust? You might complain that the dotcom number was just public companies, but back in 2000 everything was a public company. A company with thousands of high-earning employees going bust matters to the greater economy whether or not it is Nasdaq listed or not. If a single company represents the entire dollar amount of the dotcom bust, or half when inflation-adjusted, and that valuation is entirely predicated on that growth continuing at historically unprecedented rates.. yeah we're in a bubble, and the damage when it bursts is going to be big. That was the point I was making, and I fail to see how forward earnings to share-price ratios has any relevance here. The whole point of a bubble popping is that the market suddenly finds out those forward revenues were a mirage, a house of cards, and are very much made up.
      - chii 1y ago
        > fail to see how forward earnings to share-price ratios has any relevance here. the relevance is that these earnings expectations are lower than when the dotcom bubble happened. The fact that a single company can have a market cap today that is greater than the losses from the dotcom bust is irrelevant. We have more wealth today than back in 2000, and these market caps reflect that.
        WastedCucumber 1y ago
        >the relevance is that these earnings expectations are lower than when the dotcom bubble happened. [citation needed]
        chii 1y ago
        cant find the forward earnings chart, but PE is close proximation https://www.macrotrends.net/2577/sp-500-pe-ratio-price-to-earnings-chart https://www.macrotrends.net/2577/sp-500-pe-ratio-price-to-ea... The dotcom bubble peaked at around 46, while we are currently at 30. Will it grow? Who knows. But the bubble certainly isn't as big as claimed by the grandparent comment.
        ethbr1 1y ago
        PE ratio spikes are a lagging indicator though. The spikes are after recessions. Markets collapse, investments slow/stop, orders dry up, suddenly stocks must be valued on future hypothetical orders post-recession (same company, eventually the economy will turn and someone will buy), current PE values spike as current earnings become decoupled from stock price
    - Libidinalecon 1y ago
      You also can't just leave out the bond market.The dotcom bubble sat on top of the 10 year bond at 5%. The US had a balanced budget and 10X less debt than now. It was the peak of the unipolar moment. Part of the AI bubble is the lack of safe investments to act as a flight to safety. I just don't think they are really comparable. The AI bubble could certainly be more destructive given the circumstances and concentration when it pops, even if not bigger. The other main difference is we actually had the internet in place. So much of what is fueling the AI bubble doesn't even exist.
dtagames 1y ago
Demand for chips has only increased since their invention and never gone down, much less "to zero." Chips are a critical part of the tech business for the foreseeable future, regardless of what happens with AI or any other use case for them. They're raw material for computing, and computing use only goes up.
- fun444555 1y ago
  Man, I feel old. I remember feeling this way during dot-com bubble. The few months of unemployment grounded me. Anyway, better positioned this time. History is a good teacher.
  - mikkupikku 1y ago
    This time the bubble has companies firing tens of thousands of employees because they think AI has made then redundant. When the bubble popped the first time, the internet thing stuck around and was a permanent change, popping the bubble wasn't a return to the status quo. I wonder how it will work out this time.
  - signatoremo 1y ago
    Feeling which way? Demand for chips are much higher than it was at the peak of the dot-com bubble. That was a painful period, but only a blip in the history. Everything considered “hype” back then has become reality, at a scale that was beyond any dot-com era expectation.
    - deleted 1y ago
      [deleted]
- vel0city 1y ago
  Demand for networking equipment has only increased since their invention and never gone down, much less "to zero". I'm sure that same phrase was echoed at Nortel and more offices in the 90s. It's all hot stuff until you have a few billion dollars worth of inventory manufactured that you can barely give away for a million dollars one day. Sure it's not zero, but you're still pretty fucked in the end.
positron26 1y ago
Maybe the most insane tech bubble you've seen. We'll have to wait and see how the superbowl goes.

chii 1y ago

> most insane tech bubble we have ever seen. the current "bubble" hasn't surpassed the dot-com boom yet.

adastra22 1y ago
The total aggregate loss of value from top to bottom of the dotcom crash was about $5 trillion. That’s the current market cap of NVIDIA alone, to say nothing of other AI companies. So yeah, it has.
- chii 1y ago
  that number back in 2000 is about $9.7 trillion adjusted for inflation. You can't merely just compare the numbers at that time with a number today. It's meaningless. You have to compare forward earnings to share-price ratios.
  - adastra22 1y ago
    I think you missed that I'm comparing a single company to the entire market crash in 2000. What about OpenAI, Anthropic, xAI and the other foundation labs that have collectively raised trillions? What Microsoft, Amazon, Google, and Meta, which would likely survive but maybe lose up to a trillion each in valuation? What about the very long tail of venture-backed AI companies that will go bust? You might complain that the dotcom number was just public companies, but back in 2000 everything was a public company. A company with thousands of high-earning employees going bust matters to the greater economy whether or not it is Nasdaq listed or not. If a single company represents the entire dollar amount of the dotcom bust, or half when inflation-adjusted, and that valuation is entirely predicated on that growth continuing at historically unprecedented rates.. yeah we're in a bubble, and the damage when it bursts is going to be big. That was the point I was making, and I fail to see how forward earnings to share-price ratios has any relevance here. The whole point of a bubble popping is that the market suddenly finds out those forward revenues were a mirage, a house of cards, and are very much made up.
    - chii 1y ago
      > fail to see how forward earnings to share-price ratios has any relevance here. the relevance is that these earnings expectations are lower than when the dotcom bubble happened. The fact that a single company can have a market cap today that is greater than the losses from the dotcom bust is irrelevant. We have more wealth today than back in 2000, and these market caps reflect that.
      - WastedCucumber 1y ago
        >the relevance is that these earnings expectations are lower than when the dotcom bubble happened. [citation needed]
        chii 1y ago
        cant find the forward earnings chart, but PE is close proximation https://www.macrotrends.net/2577/sp-500-pe-ratio-price-to-earnings-chart https://www.macrotrends.net/2577/sp-500-pe-ratio-price-to-ea... The dotcom bubble peaked at around 46, while we are currently at 30. Will it grow? Who knows. But the bubble certainly isn't as big as claimed by the grandparent comment.
        ethbr1 1y ago
        PE ratio spikes are a lagging indicator though. The spikes are after recessions. Markets collapse, investments slow/stop, orders dry up, suddenly stocks must be valued on future hypothetical orders post-recession (same company, eventually the economy will turn and someone will buy), current PE values spike as current earnings become decoupled from stock price
  - Libidinalecon 1y ago
    You also can't just leave out the bond market.The dotcom bubble sat on top of the 10 year bond at 5%. The US had a balanced budget and 10X less debt than now. It was the peak of the unipolar moment. Part of the AI bubble is the lack of safe investments to act as a flight to safety. I just don't think they are really comparable. The AI bubble could certainly be more destructive given the circumstances and concentration when it pops, even if not bigger. The other main difference is we actually had the internet in place. So much of what is fueling the AI bubble doesn't even exist.

dtagames 1y ago

Demand for chips has only increased since their invention and never gone down, much less "to zero." Chips are a critical part of the tech business for the foreseeable future, regardless of what happens with AI or any other use case for them. They're raw material for computing, and computing use only goes up.

fun444555 1y ago
Man, I feel old. I remember feeling this way during dot-com bubble. The few months of unemployment grounded me. Anyway, better positioned this time. History is a good teacher.
- mikkupikku 1y ago
  This time the bubble has companies firing tens of thousands of employees because they think AI has made then redundant. When the bubble popped the first time, the internet thing stuck around and was a permanent change, popping the bubble wasn't a return to the status quo. I wonder how it will work out this time.
- signatoremo 1y ago
  Feeling which way? Demand for chips are much higher than it was at the peak of the dot-com bubble. That was a painful period, but only a blip in the history. Everything considered “hype” back then has become reality, at a scale that was beyond any dot-com era expectation.
  - deleted 1y ago
    [deleted]
vel0city 1y ago
Demand for networking equipment has only increased since their invention and never gone down, much less "to zero". I'm sure that same phrase was echoed at Nortel and more offices in the 90s. It's all hot stuff until you have a few billion dollars worth of inventory manufactured that you can barely give away for a million dollars one day. Sure it's not zero, but you're still pretty fucked in the end.

positron26 1y ago

Maybe the most insane tech bubble you've seen. We'll have to wait and see how the superbowl goes.