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Wall Street sees AI bubble coming and is betting on what pops it
- DivingForGold 10mo agohttps://archive.ph/2G0uD#selection-1219.0-1219.64 https://archive.ph/2G0uD#selection-1219.0-1219.64
- kryllic 10mo agoIf there wasn't an ongoing de facto recession, I would wager that the overvaluation of companies _would_ be at or near dot-com bubble levels. These AI companies have plenty of venture capital, but consumers are probably not as influential as they were back then. I agree we likely won't see a dotcom-like crash, but there will still be fallout that will take months to settle.
- omgJustTest 10mo agoIMO what you are describing is distributed choice vs concentrated choice. It's one of my main arguments against a crash: why would one (1) or a few choose to do that?
- finghin 10mo agoUnless I misunderstand your question, isn’t the obvious answer just short-term profit? No investor has thus far invested something they can’t yet cash out.
- omgJustTest 10mo agoIf there's no better growth story probably people have already trimmed for short term gains. In some ways the technology companies, which such large growth, are their own consumers. Unless they feel pressure from another growth story or a technical monetary effect, and I emphasize story because its about future returns, its unlikely. Additionally this has grown so quickly that there is amazing talent being applied to these problems, its hard to imagine every good person has been sufficiently compensated that progress will stall.
- miohtama 10mo agoI sincerely hope this would kill Oracle with their karma
- oldjim798 10mo agoThis can't happen soon enough. AI is a vacuum sucking up a lot of capital and attention that could and should be put to much much better uses
- barbazoo 10mo agoLike what? Do you have any insight into what money might be spent on instead?
- ishtanbul 10mo agoReal infrastructure and housing
- baq 10mo agoInvestors don't want 5x revenue valuations, they want 30x growth. Make 'real infrastructure' and 'housing' companies attractive products for investors to buy and they'll buy. (No idea how to do that, don't ask me! :))
- swexbe 10mo agoMost investors have more money invested in their house than stocks.
- AndrewDucker 10mo agoThat's the thing. You have to remove the unsustainable nonsense that looks like 30x growth in order for investors to be willing to invest in 5x revenue valuations. (If you have real things that are actually producing 30x growth then that's fine, obvs.)
- saubeidl 10mo agoMaybe markets that optimize for capital growth are just a bad way to allocate resources? Why did we decide that return on capital investment is the metric to optimize for, at the expense of everything else?
- s1mplicissimus 10mo agoI tried figuring out how to bet on the AI bubble popping since the circle investments - that's by the way the one thing the article does not explain. Can someone from the dear HN financially savvy users clarify what kinds of specific bets could be placed to that avail?
- ebiester 10mo agoJust remember that the market can stay irrational longer than you can stay solvent. Consider diversification in your portfolio. Maybe you divert a little more away from the US market, for example, which is heavily dependent on 7 stocks largely tied to AI.
- Ekaros 10mo agoAlso check how diversified the instruments you choose are. Sometimes they are lot less than one will think they are. Mainly due to those 7 stocks being big component in them also.
- nairboon 10mo agoIt really depends on what exactly you want to bet on and on what timeframe. More short term bet? Puts on the AI companies or an AI ETF. Do you assume that the rest of tech stays up even if AI pops? Then you could short some AI ETF and hedge with long QQQ. (=betting that the AI subset of Nasdaq will underperform relative to the Nasdaq.
- infecto 10mo agoWe know over the long term it is exceptionally hard to beat the market, timing the market is near impossible. Everyone keeps talking about a bubble but we don’t know how big of one it is or when/if it will pop. You are better off being in the market than betting on an idea that you don’t know will even happen or when. I definitely think there is over enthusiasm in the space but at the same time I am not convinced that the demand for compute has let off yet. My take is always you could build up some cash reserve in treasuries or somewhere like that and deploy it if a pop does happen. You will miss out on the potential growth but if you wanted to participate that is one way imo.
- deleted 10mo ago[deleted]
- tug2024 10mo ago[dead]
- leviliebvin 10mo agoWhat is missing from the picture with all these articles is the numbers. LLMs already have a few solid use cases as translators, general document processors, coding helpers ...etc. So the first question is, to what extent does this demand support the investment? Would it be enough if basically every SP500 corp provided paid LLM access to their employees? Or is the investment so big, that people are betting on less solid applications, like Agentic AI, with some non-trivial automation?
- sleepyguy 10mo agoListened to Tom Lee on a Prof G Podcast and he made a lot of sense about it all. https://youtu.be/2J_IGuA-IdY?si=uTptx9R-HMhjD9LH&t=1200 https://youtu.be/2J_IGuA-IdY?si=uTptx9R-HMhjD9LH&t=1200 Worth listening to the entire podcast but this is a snip where he speaks about AI valuations. Somewhere in that podcast he brings up the fact that Costco is trading at double future earnings to NVIDIA, let that sink in.....
- baal80spam 10mo ago> Somewhere in that podcast he brings up the fact that Costco is trading at double future earnings to NVIDIA, let that sink in..... English is not my first language, so let me make sure I understand: with this sentence you are suggesting that NVIDIA is undervalued, correct?
- sleepyguy 10mo agoWell according to that metric, Costco has better growth prospects than NVIDIA. In my opinion NVIDIA has better prospects at future growth than Costco, but the market hasn't priced it that way.
- g023 10mo agoI'm thinking that the bubble will be the vortex caused by an abundance of power that becomes freely available locally due to the AI datacenters moving to space.
- OutOfHere 10mo agoNever take Wall Street at their word. They just want to take profit and buy back cheaply. It's not the bubble they're inventing; it's the pop.