> * Valuation of the sp500, the hyperscalers and Nvidia is (mostly) reasonable based on earnings
That is a hell of a statement to make (their earnings are mostly negative, after all, except nvidia). Would require exceptional evidence, which doesn't seem to be there.
> * Build out of infrastructure is demand-driven, hyperscalers are not building just for future demand that would not materialize
> * OpenAI, anthropic & co can be overvalued but that does not mean there's a systemic bubble
OK? It could also mean there is.
> I think this underestimates contagion effects and the fact that demand appears to be subsidized and may disappear quickly, but it's just MHO.
Even with subsidized demand Microsoft still ended up cancelling over a gigawatt(!) of planned datacenters already back in 2024. But yeah, their arguments are missing a lot.
I think the earnings are suspect and exaggerated. Hardware manufacturers are making real money now, but there is a big question if any of these AI companies can deliver profitability to match their current valuation let alone future valuations when they go public.
Hyperscalers are in big trouble if the build out suddenly stalls. Even Nvidia and Micron are going to see their value significantly trimmed if it looks like growth is stalling. With such concentration at the top of the S&P among tech companies and with SpaceX, Anthropic, and Open AI, three companies that probably burn a combined 50+ billion a year. The whole stock market will be a tinderbox.
The whole thing is so private capital can get their exit. Default rates of private capital are already at 6%. Banks are exposed so they are on board with the fraud.
> Hyperscalers are in big trouble if the build out suddenly stalls.
How would you define stalled? Hardly anything has been built in the last 2 years (and most of those juicy new GPUs must be sitting in a warehouse somewhere waiting to be installed, together with all of our RAM and HDDs).
But the stock market is not priced for what is happening. It is priced for what investors think will happen. And investors think companies are going to make a lot of profit in the next 3-5 years from AI. If investors lose confidence it will happen those stocks could see a 20 - 40 percent pull back. The companies will obviously be fine, but the stock will take a beating.
* Valuation of the sp500, the hyperscalers and Nvidia is (mostly) reasonable based on earnings
Based on earnings that mainly include all the circular tricks to generate business with each other.
How much is really left once you remove all of those?
You know, many people groan about consumerism and advocate being a creator... but at a certain point, someone has to consume all of those creations, otherwise it's just navel-gazing slop being churned out for one's own self-satisfaction.
I agree. Inexperienced people (not necessarily "dumb") are likely to accept everything at face value, not apply critical thinking skills, and not even check the AI generated output.
This was far more of an option in the 1980s and earlier; a CEO being compensated 20-30x a line employee was pretty standard around then; now it's closer to 250-300x. I think there's more optionality than we may assume, we've just left the structural incentives that drive that difference in place.
My son is really into soccer, so I wanted to get the latest ~~Fifa~~ FC game. Oh it has anticheat and doesn't run, at all. Frustrating because I wouldn't want to play online anyway.
Happy to not give EA any money if they're so set on shoving online play and therefore anticheat down the players throats.
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