Comment by conartist6
Comment by conartist6 14 hours ago
It's not that the investments just won't pay off, it's that the global markets are likely to crash like happened with the subprime mortgage crisis.
Comment by conartist6 14 hours ago
It's not that the investments just won't pay off, it's that the global markets are likely to crash like happened with the subprime mortgage crisis.
We are starting to see larger economic exposure to AI.
Banks are handing out huge loans to the neocloud companies that are being collateralized with GPUs. These loans could easily go south if the bottom falls out of the GPU market. Hopefully it’s a very small amount of liquidity tied up in those loans.
Tech stocks make up a significant part of the stock market now. Where the tech stocks go, the market will follow. Everyday consumers invested in index funds will definitely see a hit to their portfolios if AI busts.
The dot com boom involved silly things like Pets.com IPOing pre-revenue. Claude code hit $500m in ARR in 3 months.
The fact people don't see the difference between the two is unreal. Hacker news has gone full r* around this topic, you find better nuance even on Reddit than here.
Do you mean pre-profit/without ever making a profit? I found an article about their IPO:
> Pets.com lost $42.4 million during the fourth quarter last year on $5.2 million in sales. Since the company's inception in February of last year, it has lost $61.8 million on $5.8 million in sales.
https://www.cnet.com/tech/tech-industry/pets-com-raises-82-5...
They had sales, they were just making a massive loss. Isn’t that pretty similar to AI companies, just on a way smaller scale?
We haven’t seen AI IPOs yet, but it’s not hard to imagine one of them going public before making profit IMO.
You'd think after all this time nerds would stop obsessing about profit. Profit doesn't matter. It hasn't mattered for a long time because tech companies have such fat margins they can go profitable in months if they wanted to.
Yes, $5m in sales. That's effectively pre-revenue for a tech company.
What you're missing is how that value comes about. People seem to think it's an infinite fountain but it's more like strip mining the commons.
We also know that AI hype is holding up most of the stock market this point, including the ticker symbols which you don't think of as being for "AI companies". Market optimism at large is coming from the idea that companies won't need employees soon, or that they can keep using AI to de-leverage and de-skill their workforce
They're not claiming that it's like the dot com boom because no one is actually making money. They're claiming that this is more like the dot com boom than the housing bubble, which I think is true. The dot com crash didn't cause Jane-on-the-street to lose her house while she worked a factory job, though the housing crisis did have those kinds of consumer-affecting outcomes.
But it does involve a ton of commercial real estate investment, as well as a huge shakeup in the energy market. People may not lose their homes, but we'll all be paying for this one way or another.
The fed could still push the real value of stocks quite a bit by destroying the USD, if they want, by pinning interest rates near 0 and forcing a rush to the exits to buy stock and other asset classes.
By the time it catches up with them they will have IPO’d and dumped their problem onto the public market. The administration will probably get a golden share and they will get a bail out in an effort to soften the landing for their campaign donors that also have huge positions. All the rich people will be made whole and the US tax payer will pay the price of the bail out.
And Microsoft or whoever will absorb the remains of their technology.
This is much closer to the dotcom boom than the subprime stuff. The dotcom boom/bust affected tech more than anything else. It didn’t involve consumers like the housing crash did.