With an AI bubble implosion now all but inevitable, the shift of the key players behind the scenes has focused on making this seem too big to fail and thus needing a bailout.
The “it’s dangerous, regulate us please” angle as an out for explaining terrible financial performance doesn’t seem to be working. The final Hail Mary pass is the “if we fail you fail” play.
However all data indicates the risk here is fairly concentrated in private markets. It will be painful but it’s unlikely to take the whole economy out with it. Some VCs are in for a world of hurt and private credit markets will lose their shirts, but the average person would see limited direct impact.
With everything going on in the datacenter space a bailout for AI seems incredibly unlikely. The general sentiment amongst the masses seems to be “let it burn.”
You underestimate the corruption of the White House. I've no doubt there will be a massive bailout of the guys who sat up there on the dais during his inauguration. Zuck, Musk, Pichar... He's hosted Altman and Amodei recently, too, right?
As many have commented, not really. Shorting is about exact timing as much as knowing the inevitable outcome. Get the timing just a bit wrong and you can be right and broke. The Big Short portrays that quite well.
> Some VCs are in for a world of hurt and private credit markets will lose their shirts,
They will walk out only rich rather then super rich. They will talk about it as if they were poor, but nope, they will still have toms of power and money.
If AI share crashes, that’s actually good for the public because all the value is now captured by them instead of companies. This is because a crash can only happen if prices go down (which is good) or Chinese models become as good as frontier (which is also good).
The question is, if this happens then how do you incentivise more R and D? Which investor would invest without the returns?
Edit: not surprisingly people don’t understand the point.
Would you rather NVIDIA and OpenAI get rich and capture the value or the public? Such a strange thing to see people rooting for the big companies.
In the short term things tend to freeze up as those with funds to invest lock down the hatches and weather the storm. But fairly quickly after yes funds start flowing elsewhere as money chases the next big thing.
AI is here to stay, but the market needs a big forest fire to wipe most things out. A few strong plants survive to build a better future.
It’s a cycle that keeps repeating, and we’re overdue for a big forest fire in tech.
They can't properly meet the current demand. A crash will primarily hit NVIDIA, AMD and other AI chip makers as they have oversold already and the cards are sitting in storage waiting for the needed data centers and the power needed to run them.
Its like a gold rush where half of the picks are sitting in storage because there are not enough miners to wield them.
> This is because a crash can only happen if prices go down (which is good) or Chinese models become as good as frontier (which is also good).
No... This is not accurate at all. AI valuations are based on high future growth. Prices could stay the same but growth slows and that could cause a crash by itself.
False. They are based on future revenues that companies can capture. If the companies can’t capture the value and there’s no moat, then the public stands to gain from it.
Every crisis is an opportunity. Maybe we could build something where we don't have ridiculous power and wealth concentration at the expense of the public - to the point where the world's richest man literally took over the US government to cut aid to the world's poorest.
surely the working man won't pay the price for this one too, like every other crash
Working man? You can replace them with agents!
Then you somehow still need to get rid of the working man, though...
Honestly a crash upward is more devastating for the working man
Too big to fail, by intention
Who would have guessed ?
Pretty much everyone knows this is going to crash and make life difficult for everyday people. It’s a cash grab by desperate liars.
With an AI bubble implosion now all but inevitable, the shift of the key players behind the scenes has focused on making this seem too big to fail and thus needing a bailout.
The “it’s dangerous, regulate us please” angle as an out for explaining terrible financial performance doesn’t seem to be working. The final Hail Mary pass is the “if we fail you fail” play.
However all data indicates the risk here is fairly concentrated in private markets. It will be painful but it’s unlikely to take the whole economy out with it. Some VCs are in for a world of hurt and private credit markets will lose their shirts, but the average person would see limited direct impact.
With everything going on in the datacenter space a bailout for AI seems incredibly unlikely. The general sentiment amongst the masses seems to be “let it burn.”
You underestimate the corruption of the White House. I've no doubt there will be a massive bailout of the guys who sat up there on the dais during his inauguration. Zuck, Musk, Pichar... He's hosted Altman and Amodei recently, too, right?
You can make billions overnight if you think it is inevitable.
As many have commented, not really. Shorting is about exact timing as much as knowing the inevitable outcome. Get the timing just a bit wrong and you can be right and broke. The Big Short portrays that quite well.
How? I would like to! And don't say shorting because, well inevitable doesn't mean imminent.
“Markets can remain irrational longer than you can remain solvent."
Why do you think all of them want to be in the S&P 500?
> Some VCs are in for a world of hurt and private credit markets will lose their shirts,
They will walk out only rich rather then super rich. They will talk about it as if they were poor, but nope, they will still have toms of power and money.
Some yes. But it’s no secret that there are a lot of folks way in over their head at the moment with no clear way out.
If AI share crashes, that’s actually good for the public because all the value is now captured by them instead of companies. This is because a crash can only happen if prices go down (which is good) or Chinese models become as good as frontier (which is also good).
The question is, if this happens then how do you incentivise more R and D? Which investor would invest without the returns?
Edit: not surprisingly people don’t understand the point.
Would you rather NVIDIA and OpenAI get rich and capture the value or the public? Such a strange thing to see people rooting for the big companies.
The real question is if the money leaves AI stocks where does it go.
Cash because no AI bubble means the market is cooked for a decade or so
Would a correction unlock funds for other interesting and important ideas, even in AI space (not just LLM). I guess only time will tell.
In the short term things tend to freeze up as those with funds to invest lock down the hatches and weather the storm. But fairly quickly after yes funds start flowing elsewhere as money chases the next big thing.
AI is here to stay, but the market needs a big forest fire to wipe most things out. A few strong plants survive to build a better future.
It’s a cycle that keeps repeating, and we’re overdue for a big forest fire in tech.
They can't properly meet the current demand. A crash will primarily hit NVIDIA, AMD and other AI chip makers as they have oversold already and the cards are sitting in storage waiting for the needed data centers and the power needed to run them.
Its like a gold rush where half of the picks are sitting in storage because there are not enough miners to wield them.
> This is because a crash can only happen if prices go down (which is good) or Chinese models become as good as frontier (which is also good).
No... This is not accurate at all. AI valuations are based on high future growth. Prices could stay the same but growth slows and that could cause a crash by itself.
False. They are based on future revenues that companies can capture. If the companies can’t capture the value and there’s no moat, then the public stands to gain from it.
Why is this controversial?
In what world is a global financial crash good for the public? At least short-term this will be painful for everyone.
At some point out becomes a case of least worst I think.
If a crash unlocks capital and eases the compute price squeeze, it might be worth the pain.
Every crisis is an opportunity. Maybe we could build something where we don't have ridiculous power and wealth concentration at the expense of the public - to the point where the world's richest man literally took over the US government to cut aid to the world's poorest.
Wouldn't be so bad if shitty companies were allowed to fail.
Weird that you're downvoted. It would suck very hard indeed if your pension portfolio matured the day after a crash.
Why do you discount the immense gains due to AI that the public can use cheaply?
There has to be a name for this fallacy.
Because if you can no longer pay your rent from your pension portfolio, AI capabilities matter much less to you.
https://archive.ph/dAI6p
AI build out goes on until the universe is filled with AI robots reporting back to us