3 ms·
Why would this cause a market crash? A supply crunch in AI will push prices up.
by jdm2212 3mo ago
Why would this cause a market crash? A supply crunch in AI will push prices up.
- forshaper 3mo agoCuriously, Richard Fuld, who was the CEO/chairman of Lehman Brothers, now invests in datacenters.
- jdm2212 3mo agoHim and literally everyone else with investable money.
- digdugdirk 3mo agoSo much of the current bubble is predicated on the hype train continuing on its current trajectory. If anything lags behind, the bubble deflates. For one potential path - Less datacenter construction means less GPUs, so less $$$ for Nvidia, which means less for them to spread around to prop up the LLM industrial complex, which means lower valuations, which means OpenAI and Anthropic can't get their trillion dollar valuations, which means VC's race for the exit to cash out, etc, etc.
- jdm2212 3mo agoWhat specifically is the bubble you're talking about? Like which asset is seeing a runaway increase in valuation detached from fundamental value?
- tobinfekkes 3mo ago... All of it? Does a bubble need to be confined to one vertical? It seems like The Bubble is just the sum of a bunch of other individual bubbles.
- jdm2212 3mo agoA bubble is a debt-fueled run-up in asset prices driven by over-optimistic projections of future fundamental value. The housing bubble was people borrowing money (debt-fueled) to buy ever more expensive houses (rising asset prices) on the assumption home values would always keep going up (projection of future value). '90s tech bubble was similar. Where are you seeing that now? Which asset is over-valued?
- adammarples 3mo agoSpacex for one. An AI company they say.
- cdrnsf 3mo agoTheir debt load and infrastructure costs compared to their relatively meager earnings and widespread public distrust is concerning, no?
- jdm2212 3mo agoWho is "they"? NVIDIA? Google? Anthropic?
- cdrnsf 3mo agoOpenAI, Anthropic, Google selling equity for the first time since their IPO, all of the downstream consumers of the frontier labs. NVIDIA is perhaps the only one profiting from actually selling something. Who hits a liquidity event before the house of cards blows over?
- jdm2212 3mo agoThe original claim was "Their debt load and infrastructure costs compared to their relatively meager earnings..." which is just obviously not applicable to Google and NVIDIA, which both crank out more than $100 billion per year in profits. They can literally take on almost a trillion dollars each in debt to finance data centers and still be in reasonably good financial shape. OpenAI and Anthropic are not very profitable (yet!), but rely mostly on equity financing, not debt. So no debt load issue there either.
- cdrnsf 3mo agoOh, wonderful! OpenAI and Anthropic's structural inability to earn a return for there investors should be no problem. What is NVIDIA's outlook should their customers' funding run out? Or what's the long tail outlook on Google killing its search product?
- jdm2212 3mo agoGoogle search only dies if AI wins, in which case there's no shortage of demand for tokens. NVIDIA's revenue just doubled year-over-year; even if token demand cools off and they slow to say 25% growth, they'll be fine. OpenAI and Anthropic not making money would be sad for their shareholders, but that's sort of a different topic from whether the "debt load" you originally cited will be any kind of a systemic problem (it won't).