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IMHO these signals have more to do with the market than AI. They aren't finding AI to be have less ROI than before - they are requiring higher ROI than before,

IMHO these signals have more to do with the market than AI. They aren't finding AI to be have less ROI than before - they are requiring higher ROI than before, because there is less money remaining to be invested. Managing the total amount of money so that investment bubbles peter out before they get excessively big is supposed to be the central bank's job.

cmiles8 3mo ago
The bond market is measuring the risk of repayment though not the success ROI of the dollars invested by the company (that impacts the stock price but not so much the bond price). The bond markets are hiccuping on AI because there’s growing concern that these loans simply won’t get repaid.
toomuchtodo 3mo ago
Kinda cool to be at a point in the hype cycle where the capital markets are almost exhausted due a to a speculative bubble, pushing up yield demand. Move over tulip mania. https://en.wikipedia.org/wiki/Tulip_mania https://en.wikipedia.org/wiki/Tulip_mania > No of course there isn't enough capital for all of this. Having said that, there is enough capital to do this for a at least a little while longer. -- Gil Luria (Managing Director and Analyst at D.A. Davidson)
lelanthran 3mo ago
> They aren't finding AI to be have less ROI than before - they are requiring higher ROI than before, because there is less money remaining. What ROI? There was no return, and there currently isn't any return on investment, because those companies did not exit yet! The exit plan is to offload overpriced shares, that they paid billions for, onto the public market. If they don't IPO, those investors get nothing.
- ericmay 3mo ago
  > The exit plan is to offload overpriced shares, that they paid billions for, onto the public market. If they don't IPO, those investors get nothing. I keep seeing these unsubstantiated claims. They’re out to get us and just pump and dump on public markets! Yet, before they IPO they have to go around and do what? Who sets the IPO price? Who buys the shares? If the shares tank, the valuation of the company goes down and locked up shares lose value. It’s not really in anyone’s interest for IPOs or investments to fail and while pump-and-dump schemes certainly exist they are not the norm. The conspiracy theory level of distrust and cynicism is not healthy and makes one a very poor investor. If individual investors are buying shares and getting blown up, that’s their problem. Invest and due your own research. Broad market funds exist and have so for decades. Most financial advisors even will put you in to those funds and corporate 401k plans while increasingly allowing for more investment flexibility (freedom is good) default and educate employees by default on target date funds and index funds. There is a wealth of information out there.
  - ceejayoz 3mo ago
    > If the shares tank, the valuation of the company goes down and locked up shares lose value. "Oh no, my $10B became $5B!" They'll still be happy. > If individual investors are buying shares and getting blown up, that’s their problem. Having the general populace fleeced by bad actors is everyone's problem, eventually.
    - ericmay 3mo ago
      The flaw in your thinking here is that you’re assuming these greedy people that you are creating in your head would prefer to lose half the value of the shares instead of doubling them. The entire proposition that you are putting forth has no real basis in reality, and doesn’t even match the expected behaviors of your trope of strawman investors. > Having the general populace fleeced by bad actors is everyone's problem, eventually. Sure. Creating false narratives and parroting unsubstantiated misinformation and fear mongering is everyone’s problem too.
      - ceejayoz 3mo ago
        > The flaw in your thinking here is that you’re assuming these greedy people that you are creating in your head would prefer to lose half the value of the shares instead of doubling them. The flaw in your thinking is assuming it's actually worth the IPO price. If I'm a bullshit artist, $100 is great, $50 is good, and I'm just trying to avoid the $0 scenario.
        ericmay 3mo ago
        > The flaw in your thinking is assuming it's actually worth the IPO price. Then don't buy it at the IPO price? The bullshit artist will have to lower their price until there are takers in the market. > If I'm a bullshit artist, $100 is great, $50 is good, and I'm just trying to avoid the $0 scenario. They're not bullshit artists, they're greedy. If you think you're pulling one over on someone $100 is great but $200 is better - might as well see if you can get $200. Since we're just making up random people and motivations.
- s1artibartfast 3mo ago
  ROI on bank loans to Oracle and corporate bonds. Those will have interest rates and returns. If Oracle is highly leveraged or betting the farm on AI, then their credit worthiness goes down. Alternatively, if money floating around to make loans is drying up, companies have to offer better terms to attract the dwindling supply
  - quickthrowman 3mo ago
    > ROI on bank loans to Oracle and corporate bonds. Those will have interest rates and returns. Those are intrinsically linked to ORCL equity. ORCL needs an ROI to service their debt.
    - s1artibartfast 3mo ago
      what point are you making? I was clairifying what ROI the parent was discussing. There are different ROIs which are not the same, even if related.
jstanley 3mo ago
> there is less money remaining. In what sense? This may be related to the commonly-held fallacy of "cash on the sidelines". Cash is always on the sidelines. Cash is not created or destroyed by buying and selling stocks or bonds. Cash is simply handed from one party to another, but the cash has to be held by somebody.
qeternity 3mo ago
> is supposed to be the central bank's job. What? No it's not, and never has been. Without even getting into the practical vs. theoretical of Fed dual mandate (funding deficits), even the most uncharitable take on modern CBs wouldn't suggest this.
s1artibartfast 3mo ago
Challening bond offerings and higher yields can be a funtion of supply. Downgrade of credit worthiness is different. That depends on how leveraged the company is

cmiles8 3mo ago

The bond market is measuring the risk of repayment though not the success ROI of the dollars invested by the company (that impacts the stock price but not so much the bond price). The bond markets are hiccuping on AI because there’s growing concern that these loans simply won’t get repaid.

toomuchtodo 3mo ago

Kinda cool to be at a point in the hype cycle where the capital markets are almost exhausted due a to a speculative bubble, pushing up yield demand. Move over tulip mania. https://en.wikipedia.org/wiki/Tulip_mania https://en.wikipedia.org/wiki/Tulip_mania > No of course there isn't enough capital for all of this. Having said that, there is enough capital to do this for a at least a little while longer. -- Gil Luria (Managing Director and Analyst at D.A. Davidson)

lelanthran 3mo ago

> They aren't finding AI to be have less ROI than before - they are requiring higher ROI than before, because there is less money remaining. What ROI? There was no return, and there currently isn't any return on investment, because those companies did not exit yet! The exit plan is to offload overpriced shares, that they paid billions for, onto the public market. If they don't IPO, those investors get nothing.

ericmay 3mo ago
> The exit plan is to offload overpriced shares, that they paid billions for, onto the public market. If they don't IPO, those investors get nothing. I keep seeing these unsubstantiated claims. They’re out to get us and just pump and dump on public markets! Yet, before they IPO they have to go around and do what? Who sets the IPO price? Who buys the shares? If the shares tank, the valuation of the company goes down and locked up shares lose value. It’s not really in anyone’s interest for IPOs or investments to fail and while pump-and-dump schemes certainly exist they are not the norm. The conspiracy theory level of distrust and cynicism is not healthy and makes one a very poor investor. If individual investors are buying shares and getting blown up, that’s their problem. Invest and due your own research. Broad market funds exist and have so for decades. Most financial advisors even will put you in to those funds and corporate 401k plans while increasingly allowing for more investment flexibility (freedom is good) default and educate employees by default on target date funds and index funds. There is a wealth of information out there.
- ceejayoz 3mo ago
  > If the shares tank, the valuation of the company goes down and locked up shares lose value. "Oh no, my $10B became $5B!" They'll still be happy. > If individual investors are buying shares and getting blown up, that’s their problem. Having the general populace fleeced by bad actors is everyone's problem, eventually.
  - ericmay 3mo ago
    The flaw in your thinking here is that you’re assuming these greedy people that you are creating in your head would prefer to lose half the value of the shares instead of doubling them. The entire proposition that you are putting forth has no real basis in reality, and doesn’t even match the expected behaviors of your trope of strawman investors. > Having the general populace fleeced by bad actors is everyone's problem, eventually. Sure. Creating false narratives and parroting unsubstantiated misinformation and fear mongering is everyone’s problem too.
    - ceejayoz 3mo ago
      > The flaw in your thinking here is that you’re assuming these greedy people that you are creating in your head would prefer to lose half the value of the shares instead of doubling them. The flaw in your thinking is assuming it's actually worth the IPO price. If I'm a bullshit artist, $100 is great, $50 is good, and I'm just trying to avoid the $0 scenario.
      - ericmay 3mo ago
        > The flaw in your thinking is assuming it's actually worth the IPO price. Then don't buy it at the IPO price? The bullshit artist will have to lower their price until there are takers in the market. > If I'm a bullshit artist, $100 is great, $50 is good, and I'm just trying to avoid the $0 scenario. They're not bullshit artists, they're greedy. If you think you're pulling one over on someone $100 is great but $200 is better - might as well see if you can get $200. Since we're just making up random people and motivations.
s1artibartfast 3mo ago
ROI on bank loans to Oracle and corporate bonds. Those will have interest rates and returns. If Oracle is highly leveraged or betting the farm on AI, then their credit worthiness goes down. Alternatively, if money floating around to make loans is drying up, companies have to offer better terms to attract the dwindling supply
- quickthrowman 3mo ago
  > ROI on bank loans to Oracle and corporate bonds. Those will have interest rates and returns. Those are intrinsically linked to ORCL equity. ORCL needs an ROI to service their debt.
  - s1artibartfast 3mo ago
    what point are you making? I was clairifying what ROI the parent was discussing. There are different ROIs which are not the same, even if related.

jstanley 3mo ago

> there is less money remaining. In what sense? This may be related to the commonly-held fallacy of "cash on the sidelines". Cash is always on the sidelines. Cash is not created or destroyed by buying and selling stocks or bonds. Cash is simply handed from one party to another, but the cash has to be held by somebody.

qeternity 3mo ago

> is supposed to be the central bank's job. What? No it's not, and never has been. Without even getting into the practical vs. theoretical of Fed dual mandate (funding deficits), even the most uncharitable take on modern CBs wouldn't suggest this.

s1artibartfast 3mo ago

Challening bond offerings and higher yields can be a funtion of supply. Downgrade of credit worthiness is different. That depends on how leveraged the company is