The Second Derivative: Why No One Understands the AI Boom

Post by nothercastle » Wed, Jul 08, 2026, 10:49 PM UTC

Schiendelman wrote: post #2

It's hard to read this because it's AI written, and at least three times as long as it needs to be. TL;DR: A lot of credit crises happen because of a decrease in acceleration (the second derivative) rather than a decrease in point in time slope (first derivative), or absolute value. The author (or at least the person who prompted AI for the article) says they think AI capex has to continue to accelerate in order for…

Post by Schiendelman » Thu, Jul 09, 2026, 4:14 AM UTC

combilabs wrote: post #6

Schiendelman wrote: post #4

Earlier quoted context omitted.

I don't agree it's going to break these companies; they are all capable of paying their debt service. The reason this was an issue in mortgages was that the mortgages were adjustable rate - the borrowers were defaulting when the rates adjusted because they weren't able to pay the new rates. I'm not aware of any financial instruments for these AI companies that would balloon like this.

The article addresses the mechanism in the "How It Breaks" section. The problem lies in the interconnected contracts, not debt financing. If OpenAI cannot get new financing, it will have to cut costs, and one of its big costs are forward compute commitments it will have to break. Those commitments are a significant share of revenue for other companies like CoreWeave and Oracle, so if OpenAI has to cut significantly,…

Post by d4ng » Thu, Jul 09, 2026, 5:53 AM UTC

nothercastle wrote: post #10

d4ng wrote: post #5

Earlier quoted context omitted.

In light of the article, why are you bullish?

If you were bullish on housing in 08 you would have been right long term but the timeline would have been way off.

Post by [deleted] » Thu, Jul 09, 2026, 7:52 AM UTC

antondd wrote: post #8

I dream of a world where I can just read a prompt behind some slopicle and cut the middleman entirely. > The bulls and I do not disagree about AI. We disagree about which derivative the structure is written on. They are watching the level. I am watching its acceleration. That is not a difference about technology. It is a difference about arithmetic - and arithmetic, eventually, does not take opinions. Regardless, 2nd…

Post by Schiendelman » Thu, Jul 09, 2026, 1:27 PM UTC

aka-rider wrote: post #16

Schiendelman wrote: post #13

Earlier quoted context omitted.

I'm extremely unconvinced. The article didn't at all address what OpenAI would really do if they couldn't get new financing. They'd sell the contracts for some of that compute to the fifty other companies desperate for it. With supply constrained, they'd likely make money on those sales, and there'd be little or zero downstream impact.

What will be the price? GPUs costs are x3, memory and SSD x5. When OpenAI will be looking to sell and everyone knows it, the price would be x0,7 for depreciated used hardware or go bankrupt yourself.