Some people aren’t mincing their words about it either, calling the deals “circular financing” or even “vendor financing” - where a company invests in or lends to its own customers so they can continue making purchases.
“Yes, the investment loans are unprecedented,” Mr Altman told me on Monday.
But, he added, “it’s also unprecedented for companies to be growing revenue this fast.”
OpenAI’s revenue is growing quickly, but it has never turned a profit.
All it takes is openAI or anthropic to run out of cash, then everyone providing them compute suddenly has giant power sucking white elephants that are basically useless for anything else (maybe crypto mining LMAO). And then they all stop buying more chips from Nvidia (you know, the company whose valuation is 8% of most index funds, and 80% of their revenue and all of their revenue growth over the past two years has been from data center sales).
Kinda crazy how 7 companies, all heavily invested in AI cloud compute, in one way or another, make up about a 1/3rd of the S&P 500.
I mean, good thing the AI bubble couldn’t possible pop any other bubbles. I mean, it’s not like nearly a decade of low interest rates could possibly have built any other bubbles in any other sort of asset markets.
Let it burn! But after the bubble bursts the next Question will be: These idiots, like Sam Altman, Dario Amodel, Zuckerberg and Elon musk, do they get a juicy government bailout at the expense of the public or do they get punished for their stupidity?
I wonder what the next grift will be. Maybe big money billionaires will technofy religion.
Given what Peter Thiel’s been talking about lately, that’s not all that far fetched.
All it takes is one major player to want their payout.
One. I will bet you anything it will be a bank or hedge fund.
Or like, anyone one of the massively cash negative companies with in the bubble being unable to secure more money.
Hey, how’s that deal between SoftBank and OpenAI doing? You know, the one where they get the liquidity they need to keep operating if they convert to a for profit company before the end of the year? Yah? So … they managed to convert to a fire profit company yet? No? Oh, damn, I sure they’ll figure out that incredibly complicated and dubiously legal process by the end of the fiscal year.
As someone who works in tech, I’m surprised it hasn’t happened already.
Part of my job is to oversee and arrange in some capacity for licensing of digital products, especially office 365, and I can count the number of people who have a copilot subscription on one hand, out of nearly, if not more than 1000 users across various clients.
I know some are using competing products, mainly chat GPT, and I don’t always have visibility to that, but still… The rate of adoption and the speed at which all of this is being developed and invested into… Does not bode well.
The only way the AI bubble won’t burst will be its complete integration into the military industrial complex and surveillance state, which is already underway.
AI traffic correlation for deanonymizing VPN users, ai tracking of all cellphone users across the US carrier networks, tracking of all people across all security cameras,…
This is just the beginning. And its all propped up by military spending from the US government.
“Data is the new oil” and all that? Is about undermining any 4th amendment right against unreasonable search and seizure. And AI is the latest (glitchy) tool to automate all of this.
But consumer facing side? Yeah, that’s gonna burst.
LLMs can’t do most of those things and traffic analysis and other techniques already can but sometimes lack the data due to data sharing limitations.
You don’t need GPUs to do traffic analysis you just need more Five Eyes, TIA, room 641A stuff.
Exactly right. Parent poster is conflating the investment in “AI” since 2022 (almost exclusively meant to mean LLMs, like ChatGPT) and specialized “AI” systems (almost exclusively “machine learning” systems).
A LLM is just about useless for any sort of surveillance or data analysis tasks. The bigger fear with LLM proliferation is as a propaganda machine, astrotufing the whole Internet with mass LLM-generated bullshit.
You don’t need GPUs to do traffic analysis you just need more Five Eyes, TIA, room 641A stuff.
Oh, entirely. But that also theoretically benefits from AI: https://www.sciencedirect.com/org/science/article/pii/S1546221824004636
Hence things like: https://mullvad.net/en/vpn/daita
But further? I’d encourage you to explore what Gospel and Lavender are.
So which stock do I short sell - Nvidia, Oracle, or Microsoft?
The challenge, as always, is to never underestimate a bubble’s capacity to outlast your solvency. I personally know people who have been heading against the housing “bubble” in Canada bursting since 1999. They’ve spent a lot of money with nothing to show for it, yet, and missed out on housing prices, like, quadrupling? Quintupling?
So, good luck. Buying out-of-market puts might be a safer bet, since you’re most likely to “just” lose all your money, with a small chance of a massive payout of it “properly” crashes.
unfortunately you can’t really get rich from knowing a bubble will happen. things like shorting, put options, bear certificates, and etfs with inverse leverage either have terrible risk reward ratios (you can basically lose infinite money from shorting, that’s what the whole gamestop/amc thing was about) or very bad long-term gains (bear certificates and inverse etfs usually only track day-to-day changes and generally fall in value when the stock they’re tracking fluctuates in price).
of course, if you know when the crash is gonna happen, it’s a completely different story. then you can buy shorts/puts/etc just before the bubble bursts and laugh yourself to the bank (assuming the firms on the wrong end of those assets haven’t gone bankrupt, which is also a very real risk in a situation like this)
I told you so.
“It is very hard to time a bubble,” Prof Admati told me. “And you can’t say with certainty you were in one until after the bubble has burst.”
No, we can definitely say with certainty right at this very moment that we’re in a bubble.
Its OK, ihave an AI fund manager… (British sarcasm)
Smart money re-diversifies into more stable markets.
This will help fulfill the bubble prophesy that much faster.
