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Google boss says AI investment boom has 'elements of irrationality'

335 points by jillesvangurp 11mo ago

ZYbCRq22HbJ2y7 11mo ago
Except, yes, they will. Not immune, maybe, but pretty well off if they didn't buy in.
WarOnPrivacy 11mo ago
I'm okay with being victim to RAM and NVME prices returning to pre-skyrocket levels.
- general1465 11mo ago
  And GPUs being available again for normal prices.
aurareturn 11mo ago
Is it really a bubble about to burst when literally everyone is talking about AI being in a bubble and maybe bursting soon? To me, we're clearly not peak AI exuberance. AI agents are just getting started and getting so freaking good. Just the other day, I used Vercel's v0 to build a small business website for a relative in 10 minutes. It looked fantastic and very mobile friendly. I fed the website to ChatGPT5.1 and asked it to improve the marketing text. I fed those improvements back to v0. Finished in 15 minutes. Would have taken me at least one week in the past to do a design, code it, test it for desktop/mobile, write the copy. The way AI has disrupted software building in 3 short years is astonishing. Yes, code is uniquely great for LLM training due to open source code and documentation but as other industries catch up on LLM training, they will change profoundly too.
- zerosizedweasle 11mo ago
  Let him cook
- watwut 11mo ago
  > Is it really a bubble about to burst when literally everyone is talking about AI being in a bubble and maybe bursting soon? Yes, it is even one of necessary components. Everybody is twitchy afraid of the pop, but immediate returns are too tempting so they keep money in. The bubble pops when something happens and they all start to panicking at the same time. They all need to be sufficiently stressed for that mass run to happen.
  - aurareturn 11mo ago
    So after the bubble pops, do you think the AI market will still be bigger in November 2025? In other words, do you think we're in 1995 of the dotcom or 2000?
- camillomiller 11mo ago
  This is a very biased example. Also, it is possible only because right now the tools you've used are heavily subsidised by investors' money. A LOT of it. Nobody questions the utility of what you just mentioned, but nodoby stops to ask if this would be viable if you were to pay the actual cost of these models, nor what it means for 99.9% of all the other jobs that AI companies claim can be automated, but in reality are not even close to be displaced by their technology.
  - aurareturn 11mo ago
    Why is it biased? So what if it's subsidized and companies are in market share grab? Is it going to cost $40 instead of $20 that I paid? Big deal. It still beats the hell out of $2k - $3k that it would have taken before and weeks in waiting time. 100x cheaper, 1000x faster delivery. Further more, v0 and ChatGPT together for sure did much better than the average web designer and copy writer. Lastly, OpenAI has already stated a few times that they are "very profitable" in inference. There was an analysis posted on HN showing that inference for open source models like Deepseek are also profitable on a per token basis.
    - ido 11mo ago
      LLMs are particularly good at web development (granted that's a big market), probably due to a lot of the training material being that.
    - qcnguy 11mo ago
      We don't know what AI should cost but if you look at the numbers then 2x more expensive is much too low. Think about the pricing. OpenAI fixed everyone's prices to free and/or roughly the cost of a Netflix subscription, which in turn was pinned to the cost of a cable TV subscription (originally). These prices were made up to sound good to his friends, they weren't chosen based on sane business modelling. Then everyone had to follow. So Anthropic launched Claude Code at the same price point, before realizing that was deadly and overnight the price went up by an order of magnitude. From $20 to $200/month, and even that doesn't seem to be enough. If the numbers leaked to Ed Zitron are true then they aren't profitable on inference. But even if that were true, so what? It's a meaningless statement, just another way of saying they're still under-pricing their models. Inferencing and model licensing are their only revenue streams! That has to cover everything including training, staff costs, data licensing, lawsuits, support, office costs etc. Maybe OpenAI can launch an ad network soon. That's their only hope of salvation but it's risky because if they botch it users might just migrate to Grok or Gemini or Claude.
- StopDisinfo910 11mo ago
  I think you are missing the fundamental point here. The question is not really if AI has some value. That much is obvious and the exemple you give, increasing developer productivity, is a good one. The question is: is the value generated by AI aligned with the market projected value as currently priced in AI companies valuation? That's what's more difficult to assess. The gap between fundamental financial data and valuations is very large. The risk is a brutal reassessment of these prices. That's what people call a bubble bursting and it doesn't mean the underlying technology has no value. The internet bubble burst yet the internet is probably the most significant innovation of the past twenty years.
  - Xelbair 11mo ago
    Well it all started with usual SV style "growth hacking"(price dumping as a SaaS) of "gather users now, monetize later" by OpenAI - which works only if you attain virtual monopoly(basically dominance over segment of a market, with competition not really competing with you) over segment of the market. The problem is no one attained that position, price expectations are set and it turns out that wishful thinking of reducing costs of running the models by orders of magnitude wasn't fruitful. Is AI useful? of course. Are the real costs of it justified? in most cases no.
  - aurareturn 11mo ago
    The question is: is the value generated by AI aligned with the market projected value as currently priced in AI companies valuation? That's what's more difficult to assess. I agree it is difficult to assess. Right now, competitive pressure is causing big players to go all in or get left behind. That said, I don't think the bubble is done growing nor do I think it is about to burst. I personally think we are in 1995 of the dotcom bubble equivalent. When it bursts, it will still be much bigger than in November 2025.
  - SchemaLoad 11mo ago
    There's also a lot of debate over how long a GPU lasts. If a GPU loses most of it's value after 2 years because a newer model is much better/cheaper, that destroys the economics of the companies who have spent billions on now obsolete hardware.
- TrackerFF 11mo ago
  It's not that the AI models or products don't work. It's how much money is being poured into it, how much of the money that is just changing hands between the big players, the revenue, and the valuations.
  - aurareturn 11mo ago
    Well, do you have a model for this? Or is it just regurgitating mass media that it's a bubble? If hyperscalers keep buying GPUs and Chinese companies keep saying they don't have enough GPUs, especially advanced ones, why should we believe someone that it's a bubble based on "feel"?
    - nixosbestos 11mo ago
      > why should we believe someone that it's a bubble based on "feel"? because leaders in the space also keep saying it? And then making financial moves that us pleebs can't even dream of, which back that up? This whole "the media keeps reporting it" as a point against the credibility of something is utterly silly and illogical.
      - aurareturn 11mo ago
        The same people who are saying it are also the same people increasing capex?
      - antonvs 11mo ago
        > because leaders in the space also keep saying it? They have a lot of reasons for saying that, including to give themselves cover in the event of a crash. What’s happening now is a classic land grab. You’re always going to get inflated prices in that situation, and it’s always going to correct at some point. It’s difficult to predict when, though.
  - jennyholzer 11mo ago
    to be fair, they don't work
- checker659 11mo ago
  The economics of it is what's the problem, not the power of LLMs.
  - aurareturn 11mo ago
    So tell us the economics of it? The vast majority of AI doomers in the mass media have never used tools like v0 or Cursor. How would they know that AI is overvalued?
    - checker659 11mo ago
      Are the companies making a profit on every prompt I give it (factoring in the cost of upgrading GPUs every year or two)?
      - aurareturn 11mo ago
        According to OpenAI, yes. They're "very profitable" on inference. It is the training and capex (driven by competition) that is driving loss.
        PessimalDecimal 11mo ago
        https://www.wheresyoured.at/oai_docs/ https://www.wheresyoured.at/oai_docs/ offers a different point of view on OAI's profitability on inference.
        aurareturn 11mo ago
        https://news.ycombinator.com/item?id=45050415 https://news.ycombinator.com/item?id=45050415
        checker659 11mo ago
        But isn't that their "moat"? If the moat is the source of losses, then yes, they're operating at a huge loss.
      - 11mo ago
rvz 11mo ago
Most of all of Big Tech, especially Google are doing just fine, making $100B a quarter. Startups and other unprofitable companies however...
- marcyb5st 11mo ago
  After COVID they were still making a killing, but axed 12k people anyway. So, if someone starts doing layoffs and the market reacts well profitable companies will do layoffs as well
- gizajob 11mo ago
  You do have to question the usefulness of Big Tech burning all that profit to the ground in order to buy GPUs though.
thisislife2 11mo ago
In other words - "We will be firing many of you when the bubble bursts."
yawpitch 11mo ago
It’s not a matter of if, it’s a matter of when.
donkeylazy456 11mo ago
Now they are talking like Wall Street greedy bankers back in subprime crisis.
- Ekaros 11mo ago
  Also it seems like Wall Street greedy bankers might have an other subprime crisis on their hands at same time... I wonder which one will be saved again...
TrackerFF 11mo ago
Sounds like "We're too big to fail. If we go down, everyone goes down. It is your choice." But unlike 08 crisis, we're getting a heads up to bring out the lube.
- franktankbank 11mo ago
  I hope it goes down. Its really not a very powerful threat.
nabla9 11mo ago
Google, Meta, Microsoft, and Amazon will get through easily. They don't have excessive debt. They can afford to lose their investments into AI. Their valuations will take a hit. Nvidia will lose revenue and profits, stock will go down by 60% or more, but it will also survive. Oracle will likely fail. It funded its AI pivot with debt. The Debt-to-Revenue ratio is 1.77, the Debt-to-Equity ratio D/E is 520, and it has a free cash flow problem. OpenAI, Anthropic, and others will be bought for cents on the dollar.
- tow21 11mo ago
  Google, Meta, Microsoft and Amazon might get through easily as companies. I don't think all G/M/M/A staff will get through easily.
  - conartist6 11mo ago
    Microsoft is in a pickle. They put AI lipstick on top of decades of unfixed tech debt and their relationship with their userbase isn't great. Their engineering culture is clearly not healthy. For their size and financial resources, their position in the market right now is very delicate.
    - StopDisinfo910 11mo ago
      I don't think so. They are one of the few companies actually making money with AI as they have intelligently leveraged the position of Office 365 in companies to sell Copilot. Their AI investment plans are, well, plans which could be scaled down easily. Worst case scenario for them is their investment in OpenAI becoming worthless. It would hurt but is hardly life threatening. Their revenue driver is clearly their position at the heart of entreprise IT and they are pretty much untouchable here.
      - thewebguyd 11mo ago
        > Worst case scenario for them is their investment in OpenAI becoming worthless. And even then, if that happens when the bubble pops, they'll likely just acquire OpenAI on the cheap. Thanks to the current agreement, it already runs on Azure, they already have access to OpenAI's IP, and Microsoft has already developed all their Copilots on top of it. It would be near-zero cost for Microsoft at that point to just absorb them and continue on as they are today. Microsoft isn't going anywhere, for better or for worse. Despite them pissing off users with Windows, what HN forgets, is they aren't Microsoft's customer. The individual user/consumer never was. We may not want what MS is selling, but their enterprise customers definitely do.
throwawayffffas 11mo ago
Obviously, at least in the US the AI bubble is the only thing keeping the economy afloat. If it wasn't for the bubble the US would be in a recession. Not sure how the situation is in Europe and Asia, but I would guess about the same.
- mr_toad 11mo ago
  Is there any significant AI investment outside the US? (I know of a few companies, but they’re tiny tiny minnows compared to the big AI companies listed in the US).
clickety_clack 11mo ago
Sounds like something an extortionist would say in a movie. “We’re all dirty here!”
- project2501a 11mo ago
  Yeah, exactly: it is an implied threat: "If I go, I am taking you down with me"
  - SpicyLemonZest 11mo ago
    The context makes it clear that it's not any sort of implied threat. Pichai made his statement in response to an interview question about whether Google might be so well positioned that they're immune to the impact of an AI bubble. (But I don't blame you for being misled - like most headlines these days, this would have been intensely optimized for virality over accuracy, and making tech CEOs sound like supervillains is great for virality.)
- cindyllm 11mo ago
  [dead]
- pixl97 11mo ago
  I mean this commonly happens in business/economies. Businesses that are dirty can make more money, at least temporarily out competing those around them. If they play it right they can drive their good competitors out of business or buy them up. Moreso, the crash at the end of a bubble will just as likely drive the good businesses out as the bad.
- lo_zamoyski 11mo ago
  "But everybody's doing it!"
- jordanb 11mo ago
  They really are shameless aren't they? Makes one think that this was the plan all along. I think they saw how SVB went down and realize that if they're reckless and irresponsible at a big enough scale they can get the government to just transfer money to them. It's almost like this is their new business model "we're selling exposure to the $XX trillion dollar bailout industry."
lesuorac 11mo ago
> He told the BBC that the company owns what he called a “full stack” of technologies, from chips to YouTube data to models and frontier science research. This integrated approach, he suggested, would help the company weather any market turbulence better than competitors. I guess but is it better for an investor to own 2 shares of Google or 1 share of OpenAI and 1 share of TSMC? Like I have no doubt that being vertically integrated as a single company has lot of benefits but one can also create a trust that invests vertically as well.
- jmalicki 11mo ago
  There may be firm specific risk etc., but there is also a concept of double marginalization, where monopolies that exist across the vertical layers of a production chain will be less efficient than a single monopoly, because you only get a single layer of dead weight loss rather than multiple. https://en.wikipedia.org/wiki/Double_marginalization?wprov=sfla1 https://en.wikipedia.org/wiki/Double_marginalization?wprov=s...
- pphysch 11mo ago
  OpenAI going poof would have a negative impact on TSMC demand (revenue), right?
  - wmf 11mo ago
    Yeah, TSMC demand might go down from 300% to 100%.
    - jaennaet 11mo ago
      So yes, it would have an effect; even with your imaginary numbers that'd be a 3x drawdown
      - convolvatron 11mo ago
        it might bring in the schedules, but since it probably wouldn't cause there to be an actual hole, its really more about long term fab build plans than anything else
hat_monger 11mo ago
[flagged]
ghostpepper 11mo ago
Does anyone really think it’s “if” and not “when” ?
- burnte 11mo ago
  Agreed, it's when. They're hoping to stave it off or maybe stretch out the pop into a correction by all hedging together with all these incestuous deals, but you can't hold back the tide. They debuted this tech way too early, promised way too much, and now the market is wary about buying AI products until more noise settles out of the system.
  - ares623 11mo ago
    It’s going to pop as soon as they get confirmation the govt will bail them out. Until then they’re going to give it their all to keep it growing.
    - pksebben 11mo ago
      I think they already have that confirmation. When we bailed the banks out in 08 we basically said "If you're big enough that we'd be screwed without you then take whatever risks you like with impunity". That's a reduction of complexity, of course, but the core of the lesson is there. We have actually kept on with all the practices that led to the housing crash (MBS, predatory lending, Mixing investment and traditional banking).
      - n8cpdx 11mo ago
        > If you're big enough that we'd be screwed without you then take whatever risks you like with impunity". I know financially it will be bad because number not go up and number need go up. But do we actually depend on generative/agentic AI at all in meaningful ways? I’m pretty sure all LLMs could be Thanos snapped away and there would be near zero material impact. If the studies are at all reliable all the programmers will be more efficient. Maybe we’d be better off because there wouldn’t be so much AI slop. It is very far from clear that there is any real value being extracted from this technology. The government should let it burn. Edit: I forgot about “country girls make do”. Maybe gen AI is a critical pillar of the economy after all.
burnte 11mo ago
And there we have the reason for all of these interdependent deals between all these firms, they're all hedging with each other they can keep this set of plates spinning. They can't, not firever. Bubbles pop.
- nickff 11mo ago
  How is what they’re doing a ‘hedge’? It seems more like alternative financing, or keiretsu.
  - burnte 11mo ago
    Keiretsu are ways to hedge against loss, you form interlocking relationships that spread both risk and success around. In this case no one is sending actual money, they're sharing obligations with each other.
ath3nd 11mo ago
[dead]
viccis 11mo ago
Very cool and healthy for the CEO of a company investing massive amounts into a given technology to casually refer to it as a "bubble" at the same time. I guess he softens the statement a bit by calling it "an AI bubble" instead of the "the AI bubble", but it's still interesting to see everyone involved in this economic mess start to acknowledge it.
- TulliusCicero 11mo ago
  Unironically agreed that it's good for a CEO to remain relatively level headed and clear eyed. The comparison made to the dotcom bubble is apt. It was a bubble, but that didn't mean that all the internet and e-commerce ideas were wrong, it was more a matter of investing too much too early. When the AI bubble pops or deflates, progress on AI models will continue on.
  - viccis 11mo ago
    Yeah but imagine being one of the dotcom CEOs, knowing it was gonna pop, and being like "hey guys this is a bubble, also, we're pivoting to it as much as possible". The smart ones cashed out like Mark Cuban did.
sgroppino 11mo ago
It’s not a bubble until it bursts
- barbazoo 11mo ago
  Gave our kids a bath last night, can confirm, a bubble is a bubble even before it pops.
jmount 11mo ago
Tons of companies survived the dot com bubble pop. Corrections are when the market does some sorting.
- estimator7292 11mo ago
  Wow, this is such a unique and beautiful insight literally nobody has ever heard before. Good job!
  - gizajob 11mo ago
    10x more useful than your retort.
- rl1987 11mo ago
  The strongest few did. The likes of pets.com did not.
- lizknope 11mo ago
  The company may survive but there are still thousands of layoffs. I just wrote in another comment that in 1999 I was getting 5 recruiter calls a week. In all of 2001 I got zero.
giancarlostoro 11mo ago
I think it will pop but not in the way everyone thinks it will pop. There's plenty that's not going to go away / anywhere, but I'm sure lots of startups will fail and close their doors.
- hypeatei 11mo ago
  What way do you envision it popping? Nvidia has tons of investments on their books in smaller companies. If a couple of them start showing poor earnings, it could cause a death spiral for NVDA because 1) their investment just tanked, and 2) those companies are no longer buying chips from them therefore reducing revenue. Nvidia also makes up ~7% of the S&P 500 so if their stock price falls substantially, that's a big chunk of capital just... gone for a lot of people.
- lelanthran 11mo ago
  > I think it will pop but not in the way everyone thinks it will pop. Everyone thinks it will pop the way the dotcom bubble popped > There's plenty that's not going to go away / anywhere, but I'm sure lots of startups will fail and close their doors. Just like the dotcom bubble pop - IOW, just like the way everyone thinks it will pop.
  - giancarlostoro 11mo ago
    I guess I was too young during that bubble to really have it as a point of reference, is there a solid write up of it somewhere?
    - lelanthran 11mo ago
      I dunno; never looked. I worked through that, and when it popped I was, literally overnight, out of a job. Company owner (startup) met us at the door to the office, said sorry but investors pulled out (or something), gave us all a cheque for the current month salary, and we walked off. Luckily I got hired at a non-dotcom (not web-based) business after about a month. In spite of maybe 90% of the dot-coms folding, some still stayed around (Amazon, Google, etc). When the bubble pops, some hang on.
rchaud 11mo ago
Most bubbles occur due to excessive levels of credit offered too cheaply, resulting in a whole bunch of defaults happening at the same time. All the major AI players have borrowed money to buy GPUs and build data centers and have used Special Purpose Vehicles to do it so the debt doesn't fall on their own balance sheet, probably using a certain amount of stock as collateral. If the SPV defaults, could that trigger a big sell-off?
- vineyardmike 11mo ago
  The question is, a sell off for who? If they’ve securitized and sold their data center buildout, will the big clouds and AI labs actually face any severe impact? While the sums are huge, most of these companies have the cash on hand to pay down the debt. The big AI labs have said their models earn enough to cover the cost to train themselves, just not the next one. This means they could at any time walk away from the compute spend for training. With the heavy securitization of all these deals, will the “bubble pop” just hurt the financial industry? If a company like CoreWeaver sees their SPV for a Microsoft-specific data center go bankrupt, that means MSFT decided to walk away from the deal. Red flag for the industry, but also a sign of fiscal restraint. Someone else can swoop in and buy the DC for cheap, while MSFT avoids the Opex hit. Seems like the losers will be whoever bought that SPV debt, which probably isn’t a tech company.
  - Irishsteve 11mo ago
    It’s an insurance company so basically pensions.
    - nradov 11mo ago
      Right, insurance companies are the new "financial dark matter". The next financial crisis will probably be triggered when a few large life and property insurers fail because they purchased debt assets which were highly rated but turn out to be junk. (Medical and auto insurers aren't exposed here because they operate on much shorter timeframes.)
scottLobster 11mo ago
Silicon Valley! Unprofitable debt and marketing all the way up until you get bailed out by the taxpayers, apparently.
- Barrin92 11mo ago
  I'm not seeing that happening. Unlike banking and housing there's not much systemic or political risk in letting these companies crash. It's mostly going to hit a very small number of high net worth people who don't have a lot of clout and are oddly disconnected from the rest of the economy.
  - bogomipz 11mo ago
    This is incorrect. A lot of these companies are raising debt to pay for these datacenter build outs. And that debt has already been sold to pension funds. The risk has already been spread. See Blue Owl Capital and how Meta is financing its Hyperion datacenter. They raised 30 billion in debt. Main street is already exposed as those bonds are in funds offered by the usual players BlackRock, Invesco, Pimco etc.
  - scottLobster 11mo ago
    Virtually everyone's 401k is overexposed to these companies due to their insane market caps and the hype around them. If they go every S&P 500 and total US market ETF goes with them, right as the Boomers start retiring en-masse. Even Vanguard's Total World Index, VT, is roughly 15% MAG 7. That's not even getting into who's financing whom for what and to whom that debt may be sold to.
badgersnake 11mo ago
Every CEO is reading from the same script right now. It might be a bubble but it’s just like the internet, it’s still going to be relevant and it’s just the crap companies and grifters who will die. I wonder who’s writing the script.
partiallypro 11mo ago
I think AI is a bubble, but I don't think we're close to the peak yet.
- hylaride 11mo ago
  Ever literally blow bubbles? You never really know how big each one will be. My biggest worry is that what will be left standing after all of this is the organizations that are quietly all the AI slop everywhere, be it the normal web or YouTube.
  - partiallypro 11mo ago
    The biggest worry are companies taking on debt or issuing equity in order to build data centers. It's a massive gamble (they are very very expensive to build.) There is a backlog for now, but in 5 years? I don't know, you might end up just sitting on a pile of chips and buildings that no one can use or wants. That would massively reverberate through the economy, maybe not akin to housing but it would definitely blow up some companies. For now, I think the math works, but I can't see into the future and that's where the risk is.
helterskelter 11mo ago
I'm curious what HN is doing with their portfolios right about now. I'd be dumping NVDA and reallocating to more bonds for the time being.
- josefritzishere 11mo ago
  This sub is the most important question in the thread. Where do you put your money to hedge against an AI market crash?
  - hirako2000 11mo ago
    Commodities.
  - ajross 11mo ago
    You can't hedge against a whole market. And you can't time bubble pop events anyway. You can dump NVDA today, sure, because it's overvalued at $180. And most of us agree. But that won't prevent it from going to $300 before it pops (which is totally reasonable too!), so dumping it today might hurt as much as it helps. Run-ups at the end of a speculative bubble are by definition irrational and produce in-hindsight-ridiculous numbers. If you're young and invested for the long term, just leave all your junk in broad index securities. You can't do better than that, you just have to ride the bumps. On the other hand, I'm approaching retirement and looking seriously at when to pull the trigger. The aggregate downside to me of a large market drop or whatever is much higher than it is to a 20-something, because losing out on (to make a number up) an extra 30% of net worth is minor when compared to "now you have to work another three years before retiring" (or alternate framings like "you have to retire in Houston and not Miami", etc...). So most of my assets are moving out of volatiles entirely.
    - _zoltan_ 11mo ago
      into? bonds?
      - ajross 11mo ago
binary132 11mo ago
if only there were some way for THE ENTIRE MARKET to not have quite so much exposure to hype bubbles
OptionOfT 11mo ago
Interestingly I think if the AI succeed at the level that a lot of these CEOs hope we're not much better off either. And the sentiment that goes around is more: reduce the amount of people needed to do the same amount of work: https://www.theregister.com/2025/10/09/mckinsey_ai_monetization/ https://www.theregister.com/2025/10/09/mckinsey_ai_monetizat... > McKinsey says, while quoting an HR executive at a Fortune 100 company griping: "All of these copilots are supposed to make work more efficient with fewer people, but my business leaders are also saying they can't reduce head count yet." The problem becomes that eventually all these people who are laid off are not going to find new roles. Who is going to be buying the products and services if no-one has money to throw around?
- jmkni 11mo ago
  There's a karma element too Maybe I can make things more efficient by getting rid of you and replacing you with AI, but how long until my boss has the same idea?
- thewebguyd 11mo ago
  > Who is going to be buying the products and services if no-one has money to throw around? The same people who are buying products and services right now. Just 10% of the US population is responsible for nearly 50% of consumption. We are just going to bifurcate even more into the haves and have-nots. Maybe that 10% now becomes responsible for 70+% of consumption and everyone else is fighting for scraps. It won't be sustainable and we need UBI. A bunch of unemployed, hungry citizens with nothing left to lose is a combo that equals violent revolution.
  - Eisenstein 11mo ago
    I posit that the consumption is the problem.
  - ben_w 11mo ago
    The top 10% income bracket of the US is broad enough to include basically all US software developers, isn't it? If all jobs evaporate, what does the economy look like when just based on interest and dividend payments?
guytv 11mo ago
Every cent poured into this boom is building Google’s future competitors. Of course he’s nervous - what else would you expect him to say?
mtrovo 11mo ago
Assuming this is irrational and must come back to reality at some point, I'm not convinced this is connected to the common man economy as other bubbles in the past were. This round of investment is mostly being funded by exuberant cash flow accumulated over the years that was otherwise used as stock buybacks by a small number of stocks and some private credit deals that are not that accessible to the general public. This is looking more like a crypto crash kind of effect rather than a 2008 one.
- somewhereoutth 11mo ago
  However 'normal people' buying into the stock market via 401ks or otherwise likely (and arguably sensibly) will be in index funds, that of course are exposed to the bubble via (grossly?) inflated tech stocks. Effectively their current pension/savings contributions are being clipped by whatever the delta is between now and post bubble. Time in the market and all that, but still it might be a hefty haircut.
beanjuiceII 11mo ago
will gamers be eatin' good?
- s1mplicissimus 11mo ago
  i hope so, its been a while
HardwareLust 11mo ago
...says the man guilty of said irrationality.
outside1234 11mo ago
About twice a day I think about how I am basically reinforcement learning my replacement. Thank goodness I am 53.
avadodin 11mo ago
People predicting a crash and pulling back due to a bubble indicates the beginning of the bubble. If I were the gambling man, I would grab my PETS.AI stock and sit tight.
- aurareturn 11mo ago
  I'm inclined to agree. I don't think we're anywhere near the 2000 peak. At least let OpenAI IPO, and then a few of the LLM wrapper companies to IPO with a ton of hype first. We're calling the top without an OpenAI IPO first? That seems crazy to me.
bryanrasmussen 11mo ago
isn't that basically the definition of a bubble, a boom with elements of irrationality?
willis936 11mo ago
Forget the talk about bubbles and corrections. Can someone explain to me the rationale of investing in a product, marketing it, seeing that it drives consumers away from your product and erodes trust, and then you continue to invest at an accelerating rate? Good business would have driven us very far away from this point years ago. This is very deep in the "because we can" territory. It's not FOMO.
- voidfunc 11mo ago
  Because the investor class is drunk on their own wine.
- Ancapistani 11mo ago
  > Can someone explain to me the rationale of investing in a product, marketing it, seeing that it drives consumers away from your product and erodes trust, and then you continue to invest at an accelerating rate? Sure! Google began investing heavily in AI (LLMs, actually) to catch up to the other frontier labs, which had already produced a product that was going to eviscerate Google Search (and therefore, Google ad revenue). They recognized this, and set about becoming a leader in the emerging field. Is it not better to be a leader in the nascent industry that is poised to kill your profitability? This is the same approach that Google took with smartphones. They saw Apple as a threat not because they had a product that was directly competing, but because they recognized that allowing Apple to monopolize mobile computing would put them in a position to take Google’s ad revenue — or allow them to extract rent in the form of payments to ensure Apple didn’t direct their users to a competing service. Android was not initially intended to be a revenue source, at least not most importantly. It was intended to limit the problem that Apple represented. Later, once Google had a large part of the market, they found ways to monetize the platform via both their ad network and an app store. AI is no different. If Google does nothing, they lose. If they catch up and take the lead, they limit the size of the future threat and if all goes well, will be able to monetize their newfound market share down the road - but monetization is a problem for future Google. Today’s Google’s problem is getting the market share.
  - m463 11mo ago
zeruch 11mo ago
That language feels like it came from a fever dream of Alan Greenspan.
rockemsockem 11mo ago
There's a weird gleefulness about AI being a bubble that'll pop any day now both in this thread and in the world at large. It's kinda weird and I find most of the predictions about the result of such a bubble popping to sound highly exaggerated.
- stingraycharles 11mo ago
  I think it’s because a lot of people feel like AI is being pushed from the top a lot with all kinds of spectacular claims / expectations, while it’s actually still difficult to apply to a lot of problems. The AI bubble bursting would be somewhat of an “I told you so!” moment for a lot of people. And there’s also a large group that’s genuinely afraid to lose their job because of it, so for that group it’s very much understandable. Whether or not the predictions of the bubble popping are exaggerated or not, I cannot tell; it feels like most companies investing in AI know that the expectations are huge and potentially unrealistic (AGI/ASI in the next few years), but they have money to burn and the cost of missing out on this opportunity would be tremendous. I know that this is the position that both Meta and Google shared with their investors. So it all seems to be a very well calculated risk.
  - rockemsockem 11mo ago
    I do agree that there seems to be a bubble, imo it's largely in the application space with the likes of cursor being valued at $23B+, but I don't see GPU purchases going down anytime soon and I don't even see usage going down. If these overhyped apps fail then it seems like something else will take their place. The power that LLMs provide is just too promising. It seems like those predicting things like a global economic crisis or the new big model-providers like OpenAI going to 0 just think that AI is like NFTs with no real intrinsic value.
    - balder1991 11mo ago
      > I don’t even see usage going down Depends on the price to use these cloud LLMs.
- 11mo ago
captainkrtek 11mo ago
It feels like AI investment and product focus is now a religion or cult. You have to be so fully invested, blind from any data, and throwing billions of dollars at it, otherwise you’re not “in”. Meanwhile, no one in my sphere of tech and non tech people is wanting “more AI” and sees the pros/cons of chatgpt, using it as kinda fancy google search.. Where’s the “killer app” that’ll generate literally trillions in revenue to offset the costs? How do the economics work, especially when GPUs are depreciating?
- jennyholzer 11mo ago
  the killer app is "kinda fancy google search" now go produce 300% as much as you did last year, slave
captainkrtek 11mo ago
It feels as if every CEO used ChatGPT once and said “wow this is incredible, pivot hard to make our product use AI”, and that’s about all the thought has matured to.
- an0malous 11mo ago
  Maybe even moreso VCs who advised their startups to become AI native products even if customers weren’t asking for or using those features.
  - deleted 11mo ago
    [deleted]
  - jcgrillo 11mo ago
    The problem is entitled, lazy, sociopathic bastards who think everyone else is an idiot who should be killed and replaced with a robot. They're seeing a thing which confirms these biases, and reacting predictably. Unfortunately people like this are found in higher concentrations the further up the class hierarchy you go.
    - captainkrtek 11mo ago
      This too. Also the amount of group think between the tech CEOs is evident in this and other trends.
LarsDu88 11mo ago
Investor in leading frontier LLM that automates software production says stuff to try to reduce funding for LLM startups...
donperignon 11mo ago
Google cannot ignore LLMs, I don’t remember last time I used Google to search instead of using ChatGPT.maybe a combination of factors, one being Google destroying their own search engine in order to milk advertisers money, the other the LLMs being so good at synthesizing information. Anyways either they improve or surf the AI wave, otherwise they are doomed
- 1970-01-01 11mo ago
  Why? Google has killed so many, many other working and successful ideas. Why are LLMs to be considered safe from the graveyard? I bet they can ignore them just as soon as they become yesterday's technology.
zerosizedweasle 11mo ago
I don't think people in tech and AI have any idea, just how viciously politics is going to turn on them in 2026 going forward. AI is going to be politically orphaned.
- fragmede 11mo ago
  I mean, I want to walk away from it all and go live in the woods too, but AI creates newspaper articles and videos, so I'm not sure how it's going to become an orphan except to become boring and commonplace eg the Xerox copy machine became a boring ole business. One that's gotten fucked by private equity and greed and capitalism. Hey you want it tomorrow on special paper that we already have? That'll be a handling fee of $29.99 plus $3.99 per page to load that paper and hit print tomorrow. Extra special rush fee if it's in the morning if I'm already at work fee of $59.99.
  - zerosizedweasle 11mo ago
    Don't have to take my word for it. https://www.bloomberg.com/news/audio/2025-11-19/odd-lots-the-politics-of-ai-are-about-to-explode-podcast https://www.bloomberg.com/news/audio/2025-11-19/odd-lots-the... This is going to a backlash like no other. Better prepare. https://www.bloomberg.com/news/articles/2025-11-19/how-the-politics-of-ai-will-shape-2028-s-election https://www.bloomberg.com/news/articles/2025-11-19/how-the-p... A tsunami of rage.
    - fragmede 11mo ago
      I'm not saying you're wrong about AI, I'm saying that because it generates the words we read, the things we watch, and the podcasts we hear, we're going to stop talking about it like we stopped stopped talking about the Xerox machine. If I need thirty copies of something to pass out to the class, the machine I used to make those copies stopped being relevant to mainstream conversation a long time ago. FedEx Kinkos did $88 billion in revenue for 2024. That includes their shipping business and they don't break it out though.
p1dda 11mo ago
Oh, an article from the BBC, I won't read it because they are liars.
- Ylpertnodi 11mo ago
  And paedo's. (Won't someone think of the children).
v3xro 11mo ago
Just like the digits of PI...
jacquesm 11mo ago
No shit. But it works, if you're stupid. If you're not then you will end up frustrated because it will be as if you have an over-eager trainee that is only slightly less dumb than a box of rocks when it comes to actual thinking but that has near perfect recall about a massive amount of information. A sort of idiot-savant. I gave it a try for a practical problem to see how long it would take to converge on a solution. It did not, because its reasoning powers simply are not that strong. But it gave me an endless runaround about solutions that this time really would work and never mind all the previous times we did the same thing and it did not work. Between the over enthusiastic tone, the ridiculous confidence level and the jumping-to-conclusions mode that you just simply can't switch off I found the whole exercise more than a little bit frustrating. It never, for even a second expressed any doubt. It never warned when what it responded with was at best extremely low confidence and possibly very wrong (or even dangerous). And this was for a problem where I already knew the solution, it was in some ways entertaining to see the AI blunder about while in full possession of all of the information to see the solution. 'Great, that narrows it down' 'Now I see the problem' 'Got it' 'Ah - perfect' etc, etc... If your job involves actual thinking I don't believe you are in danger just yet.
- jennyholzer 11mo ago
  [flagged]
  - diggyhole 11mo ago
    There are billions of us. ;-)
- carefulfungi 11mo ago
  Having experienced plenty of this but also having regularly experienced Claude Code writing correct, useful programs - it is reasonably possible that coding agents are the beginning of a disruption in how we code. They'll continue to improve (and we'll continue to surround them with tools and languages that feed that improvement cycle). Combining early, faulty "worse is better" technology with a change in cost structure (tokens vs. programers) and capability (programs in minutes not days) often wins. Even when it sucks at first.
lateforwork 11mo ago
Says the CEO of the company that is most threatened by AI chat.
notepad0x90 11mo ago
They're betting on squeezing more dollars out of the ordinary person's wallet when B2B should have been their main focus. They lay off because of interest rates but gamble like there is still ZIRP. Their anti-social tendency is the core problem, remember when they were laying off everyone in tech just because it was a trend? here too, they want to reduce head count instead of increase the value of their products and services to generate more revenue. AI has lots of value for sure. Monetizing that without increasing head count would have been sensible. Instead of getting rid of people, they could focus on freeing up the time of existing people so they can do more work and generate value/wealth for the company. Of course, companies like Google are doing exactly what I'm suggesting to the most part (that I know of), but the vast majority on the ai bandwagon are just there to see if they can make more revenue by having less people. I don't doubt some big companies in this space will fail, but will that trigger a panic/sell-off? And can the US, after cutting off its allies and alienating the whole world recover? What are the social and geopolitical implications of not recovering?
1970-01-01 11mo ago
Nothing would make me happier than seeing all this AI investing go bust, followed by no bailout whatsoever. I don't want to watch the world burn, but I do wish for a cleansing fire to reshape the landscape.
strikefo 11mo ago
Man who helped inspire irrational people says people are irrational

335 points by jillesvangurp 11mo ago

ZYbCRq22HbJ2y7 11mo ago

Except, yes, they will. Not immune, maybe, but pretty well off if they didn't buy in.

WarOnPrivacy 11mo ago

I'm okay with being victim to RAM and NVME prices returning to pre-skyrocket levels.

general1465 11mo ago
And GPUs being available again for normal prices.

aurareturn 11mo ago

Is it really a bubble about to burst when literally everyone is talking about AI being in a bubble and maybe bursting soon? To me, we're clearly not peak AI exuberance. AI agents are just getting started and getting so freaking good. Just the other day, I used Vercel's v0 to build a small business website for a relative in 10 minutes. It looked fantastic and very mobile friendly. I fed the website to ChatGPT5.1 and asked it to improve the marketing text. I fed those improvements back to v0. Finished in 15 minutes. Would have taken me at least one week in the past to do a design, code it, test it for desktop/mobile, write the copy. The way AI has disrupted software building in 3 short years is astonishing. Yes, code is uniquely great for LLM training due to open source code and documentation but as other industries catch up on LLM training, they will change profoundly too.

zerosizedweasle 11mo ago
Let him cook
watwut 11mo ago
> Is it really a bubble about to burst when literally everyone is talking about AI being in a bubble and maybe bursting soon? Yes, it is even one of necessary components. Everybody is twitchy afraid of the pop, but immediate returns are too tempting so they keep money in. The bubble pops when something happens and they all start to panicking at the same time. They all need to be sufficiently stressed for that mass run to happen.
- aurareturn 11mo ago
  So after the bubble pops, do you think the AI market will still be bigger in November 2025? In other words, do you think we're in 1995 of the dotcom or 2000?
camillomiller 11mo ago
This is a very biased example. Also, it is possible only because right now the tools you've used are heavily subsidised by investors' money. A LOT of it. Nobody questions the utility of what you just mentioned, but nodoby stops to ask if this would be viable if you were to pay the actual cost of these models, nor what it means for 99.9% of all the other jobs that AI companies claim can be automated, but in reality are not even close to be displaced by their technology.
- aurareturn 11mo ago
  Why is it biased? So what if it's subsidized and companies are in market share grab? Is it going to cost $40 instead of $20 that I paid? Big deal. It still beats the hell out of $2k - $3k that it would have taken before and weeks in waiting time. 100x cheaper, 1000x faster delivery. Further more, v0 and ChatGPT together for sure did much better than the average web designer and copy writer. Lastly, OpenAI has already stated a few times that they are "very profitable" in inference. There was an analysis posted on HN showing that inference for open source models like Deepseek are also profitable on a per token basis.
  - ido 11mo ago
    LLMs are particularly good at web development (granted that's a big market), probably due to a lot of the training material being that.
  - qcnguy 11mo ago
    We don't know what AI should cost but if you look at the numbers then 2x more expensive is much too low. Think about the pricing. OpenAI fixed everyone's prices to free and/or roughly the cost of a Netflix subscription, which in turn was pinned to the cost of a cable TV subscription (originally). These prices were made up to sound good to his friends, they weren't chosen based on sane business modelling. Then everyone had to follow. So Anthropic launched Claude Code at the same price point, before realizing that was deadly and overnight the price went up by an order of magnitude. From $20 to $200/month, and even that doesn't seem to be enough. If the numbers leaked to Ed Zitron are true then they aren't profitable on inference. But even if that were true, so what? It's a meaningless statement, just another way of saying they're still under-pricing their models. Inferencing and model licensing are their only revenue streams! That has to cover everything including training, staff costs, data licensing, lawsuits, support, office costs etc. Maybe OpenAI can launch an ad network soon. That's their only hope of salvation but it's risky because if they botch it users might just migrate to Grok or Gemini or Claude.
StopDisinfo910 11mo ago
I think you are missing the fundamental point here. The question is not really if AI has some value. That much is obvious and the exemple you give, increasing developer productivity, is a good one. The question is: is the value generated by AI aligned with the market projected value as currently priced in AI companies valuation? That's what's more difficult to assess. The gap between fundamental financial data and valuations is very large. The risk is a brutal reassessment of these prices. That's what people call a bubble bursting and it doesn't mean the underlying technology has no value. The internet bubble burst yet the internet is probably the most significant innovation of the past twenty years.
- Xelbair 11mo ago
  Well it all started with usual SV style "growth hacking"(price dumping as a SaaS) of "gather users now, monetize later" by OpenAI - which works only if you attain virtual monopoly(basically dominance over segment of a market, with competition not really competing with you) over segment of the market. The problem is no one attained that position, price expectations are set and it turns out that wishful thinking of reducing costs of running the models by orders of magnitude wasn't fruitful. Is AI useful? of course. Are the real costs of it justified? in most cases no.
- aurareturn 11mo ago
  The question is: is the value generated by AI aligned with the market projected value as currently priced in AI companies valuation? That's what's more difficult to assess. I agree it is difficult to assess. Right now, competitive pressure is causing big players to go all in or get left behind. That said, I don't think the bubble is done growing nor do I think it is about to burst. I personally think we are in 1995 of the dotcom bubble equivalent. When it bursts, it will still be much bigger than in November 2025.
- SchemaLoad 11mo ago
  There's also a lot of debate over how long a GPU lasts. If a GPU loses most of it's value after 2 years because a newer model is much better/cheaper, that destroys the economics of the companies who have spent billions on now obsolete hardware.
TrackerFF 11mo ago
It's not that the AI models or products don't work. It's how much money is being poured into it, how much of the money that is just changing hands between the big players, the revenue, and the valuations.
- aurareturn 11mo ago
  Well, do you have a model for this? Or is it just regurgitating mass media that it's a bubble? If hyperscalers keep buying GPUs and Chinese companies keep saying they don't have enough GPUs, especially advanced ones, why should we believe someone that it's a bubble based on "feel"?
  - nixosbestos 11mo ago
    > why should we believe someone that it's a bubble based on "feel"? because leaders in the space also keep saying it? And then making financial moves that us pleebs can't even dream of, which back that up? This whole "the media keeps reporting it" as a point against the credibility of something is utterly silly and illogical.
    - aurareturn 11mo ago
      The same people who are saying it are also the same people increasing capex?
    - antonvs 11mo ago
      > because leaders in the space also keep saying it? They have a lot of reasons for saying that, including to give themselves cover in the event of a crash. What’s happening now is a classic land grab. You’re always going to get inflated prices in that situation, and it’s always going to correct at some point. It’s difficult to predict when, though.
- jennyholzer 11mo ago
  to be fair, they don't work
checker659 11mo ago
The economics of it is what's the problem, not the power of LLMs.
- aurareturn 11mo ago
  So tell us the economics of it? The vast majority of AI doomers in the mass media have never used tools like v0 or Cursor. How would they know that AI is overvalued?
  - checker659 11mo ago
    Are the companies making a profit on every prompt I give it (factoring in the cost of upgrading GPUs every year or two)?
    - aurareturn 11mo ago
      According to OpenAI, yes. They're "very profitable" on inference. It is the training and capex (driven by competition) that is driving loss.
      - PessimalDecimal 11mo ago
        https://www.wheresyoured.at/oai_docs/ https://www.wheresyoured.at/oai_docs/ offers a different point of view on OAI's profitability on inference.
        aurareturn 11mo ago
        https://news.ycombinator.com/item?id=45050415 https://news.ycombinator.com/item?id=45050415
      - checker659 11mo ago
        But isn't that their "moat"? If the moat is the source of losses, then yes, they're operating at a huge loss.
    - 11mo ago

rvz 11mo ago

Most of all of Big Tech, especially Google are doing just fine, making $100B a quarter. Startups and other unprofitable companies however...

marcyb5st 11mo ago
After COVID they were still making a killing, but axed 12k people anyway. So, if someone starts doing layoffs and the market reacts well profitable companies will do layoffs as well
gizajob 11mo ago
You do have to question the usefulness of Big Tech burning all that profit to the ground in order to buy GPUs though.

thisislife2 11mo ago

In other words - "We will be firing many of you when the bubble bursts."

yawpitch 11mo ago

It’s not a matter of if, it’s a matter of when.

donkeylazy456 11mo ago

Now they are talking like Wall Street greedy bankers back in subprime crisis.

Ekaros 11mo ago
Also it seems like Wall Street greedy bankers might have an other subprime crisis on their hands at same time... I wonder which one will be saved again...

TrackerFF 11mo ago

Sounds like "We're too big to fail. If we go down, everyone goes down. It is your choice." But unlike 08 crisis, we're getting a heads up to bring out the lube.

franktankbank 11mo ago
I hope it goes down. Its really not a very powerful threat.

nabla9 11mo ago

Google, Meta, Microsoft, and Amazon will get through easily. They don't have excessive debt. They can afford to lose their investments into AI. Their valuations will take a hit. Nvidia will lose revenue and profits, stock will go down by 60% or more, but it will also survive. Oracle will likely fail. It funded its AI pivot with debt. The Debt-to-Revenue ratio is 1.77, the Debt-to-Equity ratio D/E is 520, and it has a free cash flow problem. OpenAI, Anthropic, and others will be bought for cents on the dollar.

tow21 11mo ago
Google, Meta, Microsoft and Amazon might get through easily as companies. I don't think all G/M/M/A staff will get through easily.
- conartist6 11mo ago
  Microsoft is in a pickle. They put AI lipstick on top of decades of unfixed tech debt and their relationship with their userbase isn't great. Their engineering culture is clearly not healthy. For their size and financial resources, their position in the market right now is very delicate.
  - StopDisinfo910 11mo ago
    I don't think so. They are one of the few companies actually making money with AI as they have intelligently leveraged the position of Office 365 in companies to sell Copilot. Their AI investment plans are, well, plans which could be scaled down easily. Worst case scenario for them is their investment in OpenAI becoming worthless. It would hurt but is hardly life threatening. Their revenue driver is clearly their position at the heart of entreprise IT and they are pretty much untouchable here.
    - thewebguyd 11mo ago
      > Worst case scenario for them is their investment in OpenAI becoming worthless. And even then, if that happens when the bubble pops, they'll likely just acquire OpenAI on the cheap. Thanks to the current agreement, it already runs on Azure, they already have access to OpenAI's IP, and Microsoft has already developed all their Copilots on top of it. It would be near-zero cost for Microsoft at that point to just absorb them and continue on as they are today. Microsoft isn't going anywhere, for better or for worse. Despite them pissing off users with Windows, what HN forgets, is they aren't Microsoft's customer. The individual user/consumer never was. We may not want what MS is selling, but their enterprise customers definitely do.

throwawayffffas 11mo ago

Obviously, at least in the US the AI bubble is the only thing keeping the economy afloat. If it wasn't for the bubble the US would be in a recession. Not sure how the situation is in Europe and Asia, but I would guess about the same.

mr_toad 11mo ago
Is there any significant AI investment outside the US? (I know of a few companies, but they’re tiny tiny minnows compared to the big AI companies listed in the US).

clickety_clack 11mo ago

Sounds like something an extortionist would say in a movie. “We’re all dirty here!”

project2501a 11mo ago
Yeah, exactly: it is an implied threat: "If I go, I am taking you down with me"
- SpicyLemonZest 11mo ago
  The context makes it clear that it's not any sort of implied threat. Pichai made his statement in response to an interview question about whether Google might be so well positioned that they're immune to the impact of an AI bubble. (But I don't blame you for being misled - like most headlines these days, this would have been intensely optimized for virality over accuracy, and making tech CEOs sound like supervillains is great for virality.)
cindyllm 11mo ago
[dead]
pixl97 11mo ago
I mean this commonly happens in business/economies. Businesses that are dirty can make more money, at least temporarily out competing those around them. If they play it right they can drive their good competitors out of business or buy them up. Moreso, the crash at the end of a bubble will just as likely drive the good businesses out as the bad.
lo_zamoyski 11mo ago
"But everybody's doing it!"
jordanb 11mo ago
They really are shameless aren't they? Makes one think that this was the plan all along. I think they saw how SVB went down and realize that if they're reckless and irresponsible at a big enough scale they can get the government to just transfer money to them. It's almost like this is their new business model "we're selling exposure to the $XX trillion dollar bailout industry."

lesuorac 11mo ago

> He told the BBC that the company owns what he called a “full stack” of technologies, from chips to YouTube data to models and frontier science research. This integrated approach, he suggested, would help the company weather any market turbulence better than competitors. I guess but is it better for an investor to own 2 shares of Google or 1 share of OpenAI and 1 share of TSMC? Like I have no doubt that being vertically integrated as a single company has lot of benefits but one can also create a trust that invests vertically as well.

jmalicki 11mo ago
There may be firm specific risk etc., but there is also a concept of double marginalization, where monopolies that exist across the vertical layers of a production chain will be less efficient than a single monopoly, because you only get a single layer of dead weight loss rather than multiple. https://en.wikipedia.org/wiki/Double_marginalization?wprov=sfla1 https://en.wikipedia.org/wiki/Double_marginalization?wprov=s...
pphysch 11mo ago
OpenAI going poof would have a negative impact on TSMC demand (revenue), right?
- wmf 11mo ago
  Yeah, TSMC demand might go down from 300% to 100%.
  - jaennaet 11mo ago
    So yes, it would have an effect; even with your imaginary numbers that'd be a 3x drawdown
    - convolvatron 11mo ago
      it might bring in the schedules, but since it probably wouldn't cause there to be an actual hole, its really more about long term fab build plans than anything else

hat_monger 11mo ago

[flagged]

ghostpepper 11mo ago

Does anyone really think it’s “if” and not “when” ?

burnte 11mo ago
Agreed, it's when. They're hoping to stave it off or maybe stretch out the pop into a correction by all hedging together with all these incestuous deals, but you can't hold back the tide. They debuted this tech way too early, promised way too much, and now the market is wary about buying AI products until more noise settles out of the system.
- ares623 11mo ago
  It’s going to pop as soon as they get confirmation the govt will bail them out. Until then they’re going to give it their all to keep it growing.
  - pksebben 11mo ago
    I think they already have that confirmation. When we bailed the banks out in 08 we basically said "If you're big enough that we'd be screwed without you then take whatever risks you like with impunity". That's a reduction of complexity, of course, but the core of the lesson is there. We have actually kept on with all the practices that led to the housing crash (MBS, predatory lending, Mixing investment and traditional banking).
    - n8cpdx 11mo ago
      > If you're big enough that we'd be screwed without you then take whatever risks you like with impunity". I know financially it will be bad because number not go up and number need go up. But do we actually depend on generative/agentic AI at all in meaningful ways? I’m pretty sure all LLMs could be Thanos snapped away and there would be near zero material impact. If the studies are at all reliable all the programmers will be more efficient. Maybe we’d be better off because there wouldn’t be so much AI slop. It is very far from clear that there is any real value being extracted from this technology. The government should let it burn. Edit: I forgot about “country girls make do”. Maybe gen AI is a critical pillar of the economy after all.

burnte 11mo ago

And there we have the reason for all of these interdependent deals between all these firms, they're all hedging with each other they can keep this set of plates spinning. They can't, not firever. Bubbles pop.

nickff 11mo ago
How is what they’re doing a ‘hedge’? It seems more like alternative financing, or keiretsu.
- burnte 11mo ago
  Keiretsu are ways to hedge against loss, you form interlocking relationships that spread both risk and success around. In this case no one is sending actual money, they're sharing obligations with each other.

ath3nd 11mo ago

[dead]

viccis 11mo ago

Very cool and healthy for the CEO of a company investing massive amounts into a given technology to casually refer to it as a "bubble" at the same time. I guess he softens the statement a bit by calling it "an AI bubble" instead of the "the AI bubble", but it's still interesting to see everyone involved in this economic mess start to acknowledge it.

TulliusCicero 11mo ago
Unironically agreed that it's good for a CEO to remain relatively level headed and clear eyed. The comparison made to the dotcom bubble is apt. It was a bubble, but that didn't mean that all the internet and e-commerce ideas were wrong, it was more a matter of investing too much too early. When the AI bubble pops or deflates, progress on AI models will continue on.
- viccis 11mo ago
  Yeah but imagine being one of the dotcom CEOs, knowing it was gonna pop, and being like "hey guys this is a bubble, also, we're pivoting to it as much as possible". The smart ones cashed out like Mark Cuban did.

sgroppino 11mo ago

It’s not a bubble until it bursts

barbazoo 11mo ago
Gave our kids a bath last night, can confirm, a bubble is a bubble even before it pops.

jmount 11mo ago

Tons of companies survived the dot com bubble pop. Corrections are when the market does some sorting.

estimator7292 11mo ago
Wow, this is such a unique and beautiful insight literally nobody has ever heard before. Good job!
- gizajob 11mo ago
  10x more useful than your retort.
rl1987 11mo ago
The strongest few did. The likes of pets.com did not.
lizknope 11mo ago
The company may survive but there are still thousands of layoffs. I just wrote in another comment that in 1999 I was getting 5 recruiter calls a week. In all of 2001 I got zero.

giancarlostoro 11mo ago

I think it will pop but not in the way everyone thinks it will pop. There's plenty that's not going to go away / anywhere, but I'm sure lots of startups will fail and close their doors.

hypeatei 11mo ago
What way do you envision it popping? Nvidia has tons of investments on their books in smaller companies. If a couple of them start showing poor earnings, it could cause a death spiral for NVDA because 1) their investment just tanked, and 2) those companies are no longer buying chips from them therefore reducing revenue. Nvidia also makes up ~7% of the S&P 500 so if their stock price falls substantially, that's a big chunk of capital just... gone for a lot of people.
lelanthran 11mo ago
> I think it will pop but not in the way everyone thinks it will pop. Everyone thinks it will pop the way the dotcom bubble popped > There's plenty that's not going to go away / anywhere, but I'm sure lots of startups will fail and close their doors. Just like the dotcom bubble pop - IOW, just like the way everyone thinks it will pop.
- giancarlostoro 11mo ago
  I guess I was too young during that bubble to really have it as a point of reference, is there a solid write up of it somewhere?
  - lelanthran 11mo ago
    I dunno; never looked. I worked through that, and when it popped I was, literally overnight, out of a job. Company owner (startup) met us at the door to the office, said sorry but investors pulled out (or something), gave us all a cheque for the current month salary, and we walked off. Luckily I got hired at a non-dotcom (not web-based) business after about a month. In spite of maybe 90% of the dot-coms folding, some still stayed around (Amazon, Google, etc). When the bubble pops, some hang on.

rchaud 11mo ago

Most bubbles occur due to excessive levels of credit offered too cheaply, resulting in a whole bunch of defaults happening at the same time. All the major AI players have borrowed money to buy GPUs and build data centers and have used Special Purpose Vehicles to do it so the debt doesn't fall on their own balance sheet, probably using a certain amount of stock as collateral. If the SPV defaults, could that trigger a big sell-off?

vineyardmike 11mo ago
The question is, a sell off for who? If they’ve securitized and sold their data center buildout, will the big clouds and AI labs actually face any severe impact? While the sums are huge, most of these companies have the cash on hand to pay down the debt. The big AI labs have said their models earn enough to cover the cost to train themselves, just not the next one. This means they could at any time walk away from the compute spend for training. With the heavy securitization of all these deals, will the “bubble pop” just hurt the financial industry? If a company like CoreWeaver sees their SPV for a Microsoft-specific data center go bankrupt, that means MSFT decided to walk away from the deal. Red flag for the industry, but also a sign of fiscal restraint. Someone else can swoop in and buy the DC for cheap, while MSFT avoids the Opex hit. Seems like the losers will be whoever bought that SPV debt, which probably isn’t a tech company.
- Irishsteve 11mo ago
  It’s an insurance company so basically pensions.
  - nradov 11mo ago
    Right, insurance companies are the new "financial dark matter". The next financial crisis will probably be triggered when a few large life and property insurers fail because they purchased debt assets which were highly rated but turn out to be junk. (Medical and auto insurers aren't exposed here because they operate on much shorter timeframes.)

scottLobster 11mo ago

Silicon Valley! Unprofitable debt and marketing all the way up until you get bailed out by the taxpayers, apparently.

Barrin92 11mo ago
I'm not seeing that happening. Unlike banking and housing there's not much systemic or political risk in letting these companies crash. It's mostly going to hit a very small number of high net worth people who don't have a lot of clout and are oddly disconnected from the rest of the economy.
- bogomipz 11mo ago
  This is incorrect. A lot of these companies are raising debt to pay for these datacenter build outs. And that debt has already been sold to pension funds. The risk has already been spread. See Blue Owl Capital and how Meta is financing its Hyperion datacenter. They raised 30 billion in debt. Main street is already exposed as those bonds are in funds offered by the usual players BlackRock, Invesco, Pimco etc.
- scottLobster 11mo ago
  Virtually everyone's 401k is overexposed to these companies due to their insane market caps and the hype around them. If they go every S&P 500 and total US market ETF goes with them, right as the Boomers start retiring en-masse. Even Vanguard's Total World Index, VT, is roughly 15% MAG 7. That's not even getting into who's financing whom for what and to whom that debt may be sold to.

badgersnake 11mo ago

Every CEO is reading from the same script right now. It might be a bubble but it’s just like the internet, it’s still going to be relevant and it’s just the crap companies and grifters who will die. I wonder who’s writing the script.

partiallypro 11mo ago

I think AI is a bubble, but I don't think we're close to the peak yet.

hylaride 11mo ago
Ever literally blow bubbles? You never really know how big each one will be. My biggest worry is that what will be left standing after all of this is the organizations that are quietly all the AI slop everywhere, be it the normal web or YouTube.
- partiallypro 11mo ago
  The biggest worry are companies taking on debt or issuing equity in order to build data centers. It's a massive gamble (they are very very expensive to build.) There is a backlog for now, but in 5 years? I don't know, you might end up just sitting on a pile of chips and buildings that no one can use or wants. That would massively reverberate through the economy, maybe not akin to housing but it would definitely blow up some companies. For now, I think the math works, but I can't see into the future and that's where the risk is.

helterskelter 11mo ago

I'm curious what HN is doing with their portfolios right about now. I'd be dumping NVDA and reallocating to more bonds for the time being.

josefritzishere 11mo ago
This sub is the most important question in the thread. Where do you put your money to hedge against an AI market crash?
- hirako2000 11mo ago
  Commodities.
- ajross 11mo ago
  You can't hedge against a whole market. And you can't time bubble pop events anyway. You can dump NVDA today, sure, because it's overvalued at $180. And most of us agree. But that won't prevent it from going to $300 before it pops (which is totally reasonable too!), so dumping it today might hurt as much as it helps. Run-ups at the end of a speculative bubble are by definition irrational and produce in-hindsight-ridiculous numbers. If you're young and invested for the long term, just leave all your junk in broad index securities. You can't do better than that, you just have to ride the bumps. On the other hand, I'm approaching retirement and looking seriously at when to pull the trigger. The aggregate downside to me of a large market drop or whatever is much higher than it is to a 20-something, because losing out on (to make a number up) an extra 30% of net worth is minor when compared to "now you have to work another three years before retiring" (or alternate framings like "you have to retire in Houston and not Miami", etc...). So most of my assets are moving out of volatiles entirely.
  - _zoltan_ 11mo ago
    into? bonds?
    - ajross 11mo ago

binary132 11mo ago

if only there were some way for THE ENTIRE MARKET to not have quite so much exposure to hype bubbles

OptionOfT 11mo ago

Interestingly I think if the AI succeed at the level that a lot of these CEOs hope we're not much better off either. And the sentiment that goes around is more: reduce the amount of people needed to do the same amount of work: https://www.theregister.com/2025/10/09/mckinsey_ai_monetization/ https://www.theregister.com/2025/10/09/mckinsey_ai_monetizat... > McKinsey says, while quoting an HR executive at a Fortune 100 company griping: "All of these copilots are supposed to make work more efficient with fewer people, but my business leaders are also saying they can't reduce head count yet." The problem becomes that eventually all these people who are laid off are not going to find new roles. Who is going to be buying the products and services if no-one has money to throw around?

jmkni 11mo ago
There's a karma element too Maybe I can make things more efficient by getting rid of you and replacing you with AI, but how long until my boss has the same idea?
thewebguyd 11mo ago
> Who is going to be buying the products and services if no-one has money to throw around? The same people who are buying products and services right now. Just 10% of the US population is responsible for nearly 50% of consumption. We are just going to bifurcate even more into the haves and have-nots. Maybe that 10% now becomes responsible for 70+% of consumption and everyone else is fighting for scraps. It won't be sustainable and we need UBI. A bunch of unemployed, hungry citizens with nothing left to lose is a combo that equals violent revolution.
- Eisenstein 11mo ago
  I posit that the consumption is the problem.
- ben_w 11mo ago
  The top 10% income bracket of the US is broad enough to include basically all US software developers, isn't it? If all jobs evaporate, what does the economy look like when just based on interest and dividend payments?

guytv 11mo ago

Every cent poured into this boom is building Google’s future competitors. Of course he’s nervous - what else would you expect him to say?

mtrovo 11mo ago

Assuming this is irrational and must come back to reality at some point, I'm not convinced this is connected to the common man economy as other bubbles in the past were. This round of investment is mostly being funded by exuberant cash flow accumulated over the years that was otherwise used as stock buybacks by a small number of stocks and some private credit deals that are not that accessible to the general public. This is looking more like a crypto crash kind of effect rather than a 2008 one.

somewhereoutth 11mo ago
However 'normal people' buying into the stock market via 401ks or otherwise likely (and arguably sensibly) will be in index funds, that of course are exposed to the bubble via (grossly?) inflated tech stocks. Effectively their current pension/savings contributions are being clipped by whatever the delta is between now and post bubble. Time in the market and all that, but still it might be a hefty haircut.

beanjuiceII 11mo ago

will gamers be eatin' good?

s1mplicissimus 11mo ago
i hope so, its been a while

HardwareLust 11mo ago

...says the man guilty of said irrationality.

outside1234 11mo ago

About twice a day I think about how I am basically reinforcement learning my replacement. Thank goodness I am 53.

avadodin 11mo ago

People predicting a crash and pulling back due to a bubble indicates the beginning of the bubble. If I were the gambling man, I would grab my PETS.AI stock and sit tight.

aurareturn 11mo ago
I'm inclined to agree. I don't think we're anywhere near the 2000 peak. At least let OpenAI IPO, and then a few of the LLM wrapper companies to IPO with a ton of hype first. We're calling the top without an OpenAI IPO first? That seems crazy to me.

bryanrasmussen 11mo ago

isn't that basically the definition of a bubble, a boom with elements of irrationality?

willis936 11mo ago

Forget the talk about bubbles and corrections. Can someone explain to me the rationale of investing in a product, marketing it, seeing that it drives consumers away from your product and erodes trust, and then you continue to invest at an accelerating rate? Good business would have driven us very far away from this point years ago. This is very deep in the "because we can" territory. It's not FOMO.

voidfunc 11mo ago
Because the investor class is drunk on their own wine.
Ancapistani 11mo ago
> Can someone explain to me the rationale of investing in a product, marketing it, seeing that it drives consumers away from your product and erodes trust, and then you continue to invest at an accelerating rate? Sure! Google began investing heavily in AI (LLMs, actually) to catch up to the other frontier labs, which had already produced a product that was going to eviscerate Google Search (and therefore, Google ad revenue). They recognized this, and set about becoming a leader in the emerging field. Is it not better to be a leader in the nascent industry that is poised to kill your profitability? This is the same approach that Google took with smartphones. They saw Apple as a threat not because they had a product that was directly competing, but because they recognized that allowing Apple to monopolize mobile computing would put them in a position to take Google’s ad revenue — or allow them to extract rent in the form of payments to ensure Apple didn’t direct their users to a competing service. Android was not initially intended to be a revenue source, at least not most importantly. It was intended to limit the problem that Apple represented. Later, once Google had a large part of the market, they found ways to monetize the platform via both their ad network and an app store. AI is no different. If Google does nothing, they lose. If they catch up and take the lead, they limit the size of the future threat and if all goes well, will be able to monetize their newfound market share down the road - but monetization is a problem for future Google. Today’s Google’s problem is getting the market share.
- m463 11mo ago

zeruch 11mo ago

That language feels like it came from a fever dream of Alan Greenspan.

rockemsockem 11mo ago

There's a weird gleefulness about AI being a bubble that'll pop any day now both in this thread and in the world at large. It's kinda weird and I find most of the predictions about the result of such a bubble popping to sound highly exaggerated.

stingraycharles 11mo ago
I think it’s because a lot of people feel like AI is being pushed from the top a lot with all kinds of spectacular claims / expectations, while it’s actually still difficult to apply to a lot of problems. The AI bubble bursting would be somewhat of an “I told you so!” moment for a lot of people. And there’s also a large group that’s genuinely afraid to lose their job because of it, so for that group it’s very much understandable. Whether or not the predictions of the bubble popping are exaggerated or not, I cannot tell; it feels like most companies investing in AI know that the expectations are huge and potentially unrealistic (AGI/ASI in the next few years), but they have money to burn and the cost of missing out on this opportunity would be tremendous. I know that this is the position that both Meta and Google shared with their investors. So it all seems to be a very well calculated risk.
- rockemsockem 11mo ago
  I do agree that there seems to be a bubble, imo it's largely in the application space with the likes of cursor being valued at $23B+, but I don't see GPU purchases going down anytime soon and I don't even see usage going down. If these overhyped apps fail then it seems like something else will take their place. The power that LLMs provide is just too promising. It seems like those predicting things like a global economic crisis or the new big model-providers like OpenAI going to 0 just think that AI is like NFTs with no real intrinsic value.
  - balder1991 11mo ago
    > I don’t even see usage going down Depends on the price to use these cloud LLMs.
11mo ago

captainkrtek 11mo ago

It feels like AI investment and product focus is now a religion or cult. You have to be so fully invested, blind from any data, and throwing billions of dollars at it, otherwise you’re not “in”. Meanwhile, no one in my sphere of tech and non tech people is wanting “more AI” and sees the pros/cons of chatgpt, using it as kinda fancy google search.. Where’s the “killer app” that’ll generate literally trillions in revenue to offset the costs? How do the economics work, especially when GPUs are depreciating?

jennyholzer 11mo ago
the killer app is "kinda fancy google search" now go produce 300% as much as you did last year, slave

captainkrtek 11mo ago

It feels as if every CEO used ChatGPT once and said “wow this is incredible, pivot hard to make our product use AI”, and that’s about all the thought has matured to.

an0malous 11mo ago
Maybe even moreso VCs who advised their startups to become AI native products even if customers weren’t asking for or using those features.
- deleted 11mo ago
  [deleted]
- jcgrillo 11mo ago
  The problem is entitled, lazy, sociopathic bastards who think everyone else is an idiot who should be killed and replaced with a robot. They're seeing a thing which confirms these biases, and reacting predictably. Unfortunately people like this are found in higher concentrations the further up the class hierarchy you go.
  - captainkrtek 11mo ago
    This too. Also the amount of group think between the tech CEOs is evident in this and other trends.

LarsDu88 11mo ago

Investor in leading frontier LLM that automates software production says stuff to try to reduce funding for LLM startups...

donperignon 11mo ago

Google cannot ignore LLMs, I don’t remember last time I used Google to search instead of using ChatGPT.maybe a combination of factors, one being Google destroying their own search engine in order to milk advertisers money, the other the LLMs being so good at synthesizing information. Anyways either they improve or surf the AI wave, otherwise they are doomed

1970-01-01 11mo ago
Why? Google has killed so many, many other working and successful ideas. Why are LLMs to be considered safe from the graveyard? I bet they can ignore them just as soon as they become yesterday's technology.

zerosizedweasle 11mo ago

I don't think people in tech and AI have any idea, just how viciously politics is going to turn on them in 2026 going forward. AI is going to be politically orphaned.

fragmede 11mo ago
I mean, I want to walk away from it all and go live in the woods too, but AI creates newspaper articles and videos, so I'm not sure how it's going to become an orphan except to become boring and commonplace eg the Xerox copy machine became a boring ole business. One that's gotten fucked by private equity and greed and capitalism. Hey you want it tomorrow on special paper that we already have? That'll be a handling fee of $29.99 plus $3.99 per page to load that paper and hit print tomorrow. Extra special rush fee if it's in the morning if I'm already at work fee of $59.99.
- zerosizedweasle 11mo ago
  Don't have to take my word for it. https://www.bloomberg.com/news/audio/2025-11-19/odd-lots-the-politics-of-ai-are-about-to-explode-podcast https://www.bloomberg.com/news/audio/2025-11-19/odd-lots-the... This is going to a backlash like no other. Better prepare. https://www.bloomberg.com/news/articles/2025-11-19/how-the-politics-of-ai-will-shape-2028-s-election https://www.bloomberg.com/news/articles/2025-11-19/how-the-p... A tsunami of rage.
  - fragmede 11mo ago
    I'm not saying you're wrong about AI, I'm saying that because it generates the words we read, the things we watch, and the podcasts we hear, we're going to stop talking about it like we stopped stopped talking about the Xerox machine. If I need thirty copies of something to pass out to the class, the machine I used to make those copies stopped being relevant to mainstream conversation a long time ago. FedEx Kinkos did $88 billion in revenue for 2024. That includes their shipping business and they don't break it out though.

p1dda 11mo ago

Oh, an article from the BBC, I won't read it because they are liars.

Ylpertnodi 11mo ago
And paedo's. (Won't someone think of the children).

v3xro 11mo ago

Just like the digits of PI...

jacquesm 11mo ago

No shit. But it works, if you're stupid. If you're not then you will end up frustrated because it will be as if you have an over-eager trainee that is only slightly less dumb than a box of rocks when it comes to actual thinking but that has near perfect recall about a massive amount of information. A sort of idiot-savant. I gave it a try for a practical problem to see how long it would take to converge on a solution. It did not, because its reasoning powers simply are not that strong. But it gave me an endless runaround about solutions that this time really would work and never mind all the previous times we did the same thing and it did not work. Between the over enthusiastic tone, the ridiculous confidence level and the jumping-to-conclusions mode that you just simply can't switch off I found the whole exercise more than a little bit frustrating. It never, for even a second expressed any doubt. It never warned when what it responded with was at best extremely low confidence and possibly very wrong (or even dangerous). And this was for a problem where I already knew the solution, it was in some ways entertaining to see the AI blunder about while in full possession of all of the information to see the solution. 'Great, that narrows it down' 'Now I see the problem' 'Got it' 'Ah - perfect' etc, etc... If your job involves actual thinking I don't believe you are in danger just yet.

jennyholzer 11mo ago
[flagged]
- diggyhole 11mo ago
  There are billions of us. ;-)
carefulfungi 11mo ago
Having experienced plenty of this but also having regularly experienced Claude Code writing correct, useful programs - it is reasonably possible that coding agents are the beginning of a disruption in how we code. They'll continue to improve (and we'll continue to surround them with tools and languages that feed that improvement cycle). Combining early, faulty "worse is better" technology with a change in cost structure (tokens vs. programers) and capability (programs in minutes not days) often wins. Even when it sucks at first.

lateforwork 11mo ago

Says the CEO of the company that is most threatened by AI chat.

notepad0x90 11mo ago

They're betting on squeezing more dollars out of the ordinary person's wallet when B2B should have been their main focus. They lay off because of interest rates but gamble like there is still ZIRP. Their anti-social tendency is the core problem, remember when they were laying off everyone in tech just because it was a trend? here too, they want to reduce head count instead of increase the value of their products and services to generate more revenue. AI has lots of value for sure. Monetizing that without increasing head count would have been sensible. Instead of getting rid of people, they could focus on freeing up the time of existing people so they can do more work and generate value/wealth for the company. Of course, companies like Google are doing exactly what I'm suggesting to the most part (that I know of), but the vast majority on the ai bandwagon are just there to see if they can make more revenue by having less people. I don't doubt some big companies in this space will fail, but will that trigger a panic/sell-off? And can the US, after cutting off its allies and alienating the whole world recover? What are the social and geopolitical implications of not recovering?

1970-01-01 11mo ago

Nothing would make me happier than seeing all this AI investing go bust, followed by no bailout whatsoever. I don't want to watch the world burn, but I do wish for a cleansing fire to reshape the landscape.

strikefo 11mo ago

Man who helped inspire irrational people says people are irrational