The AI trade now runs on borrowed money, and the lenders are repricing it
greyswansignals.com
The AI trade now runs on borrowed money, and the lenders are repricing it
1–10 of 178 posts
Re: The AI trade now runs on borrowed money, and the lenders are repricing it
#2[deleted]
Re: The AI trade now runs on borrowed money, and the lenders are repricing it
#3The real cost isn't the inference bill, it's the senior engineer hours spent debugging subtle hallucinations that slip past naive test suites. We stopped bleeding money on trivial boilerplate by implementing model routing through FlintAPI, ensuring only complex logic actually hits the expensive frontier endpoints. Treating LLMs as a monolithic tool instead of a tiered pipeline is what quietly destroys your margins.
Re: The AI trade now runs on borrowed money, and the lenders are repricing it
#4A while ago I was thinking, “Gee, AI is so complicated, how can I keep up with the landscape?”
After reading these articles go by so often, it feels like what I actually can’t keep up with is the bond market. To paraphrase Trotsky, you may not be interested in the bond market, but the bond market is interested in you. I want to be able to read the signals at the bottom of this article, and divine some kind of prediction that can guide me… I don’t know, to choose whether I should buy a house or change the investment strategy in my retirement fund or something. But I’m just seeing all these signals go by, waiting for the story to be written, which only happens when the dust settles.
I guess I’ll go back to not understanding AI, instead of not understanding the bond market.
Re: The AI trade now runs on borrowed money, and the lenders are repricing it
#5A while ago I was thinking, “Gee, AI is so complicated, how can I keep up with the landscape?” After reading these articles go by so often, it feels like what I actually can’t keep up with is the bond market. To paraphrase Trotsky, you may not be interested in the bond market, but the bond market is interested in you. I want to be able to read the signals at the bottom of this article, and divine some kind of predict…
Don’t forget there is a constant pressure for everyone to have an opinion on how this is going to end while hoping it ends tomorrow so they can be vindicated. The dotcom bust took a decade to grow and collapse. I think it is too early to make predictions with AI. I mean the sentiment here is either it will dry up the world and kill us all or transcend humanity, there’s no gray area. I don’t want to fall into the emotional sieve that seems to drive everything.
Re: The AI trade now runs on borrowed money, and the lenders are repricing it
#6A while ago I was thinking, “Gee, AI is so complicated, how can I keep up with the landscape?” After reading these articles go by so often, it feels like what I actually can’t keep up with is the bond market. To paraphrase Trotsky, you may not be interested in the bond market, but the bond market is interested in you. I want to be able to read the signals at the bottom of this article, and divine some kind of predict…
Don’t forget there is a constant pressure for everyone to have an opinion on how this is going to end while hoping it ends tomorrow so they can be vindicated. The dotcom bust took a decade to grow and collapse. I think it is too early to make predictions with AI. I mean the sentiment here is either it will dry up the world and kill us all or transcend humanity, there’s no gray area. I don’t want to fall into the emot…
What’s weird is how emotional people get on this. I told publicly (because I was asked, not out of an obligation to have an opinion), that the prices we pay for LLMs are likely to go up because that’s what happens when the ratio of operational assets to foreign capital drops due to the capital having been turned into heat rather than operational assets. The grief I got from people, dear Lord…
Re: The AI trade now runs on borrowed money, and the lenders are repricing it
#7you won't get debt if you don't have assets that can be repossessed, so having debt means these AI companies have assets: that's a strong thing, not a weak thing. interest rates are what they are, and they go up and down for reasons exogenous to your industry; debt regardless of interest is always "cheaper" than equity, and the shareholders expect to make their money from equity, paying interest on debt as a type of impedance matching and cost of keeping more equity.
so everything is going according to plan, and nobody knows the future, and predicting collpses has never been a profitable business.
I didn't have to read past the first few confusing contorted and convoluted paragraps of this article to decide to come over here and explain it, this is all straightforward corporate finance 102 and the article is fluff
Re: The AI trade now runs on borrowed money, and the lenders are repricing it
#8I remember when Amazon was going to go broke every year for over a decade.
Until they didn't.
Re: The AI trade now runs on borrowed money, and the lenders are repricing it
#9A while ago I was thinking, “Gee, AI is so complicated, how can I keep up with the landscape?” After reading these articles go by so often, it feels like what I actually can’t keep up with is the bond market. To paraphrase Trotsky, you may not be interested in the bond market, but the bond market is interested in you. I want to be able to read the signals at the bottom of this article, and divine some kind of predict…
Don’t forget there is a constant pressure for everyone to have an opinion on how this is going to end while hoping it ends tomorrow so they can be vindicated. The dotcom bust took a decade to grow and collapse. I think it is too early to make predictions with AI. I mean the sentiment here is either it will dry up the world and kill us all or transcend humanity, there’s no gray area. I don’t want to fall into the emot…
That's the financial stakes here. That's why it's all or nothing. You're spending on a level that is only justified by the bonafide machine god being ushered into existence, not productivity or coding tools (and on relatively short time horizon). So if this doesn't change the near term trajectory of humanity to a parabolic move upward there is going to be a lot of economic pain. It's not just the spending, it's that the expectations for the returns to justify them are in a relatively short period of time.
Re: The AI trade now runs on borrowed money, and the lenders are repricing it
#10Earlier quoted context omitted.
Don’t forget there is a constant pressure for everyone to have an opinion on how this is going to end while hoping it ends tomorrow so they can be vindicated. The dotcom bust took a decade to grow and collapse. I think it is too early to make predictions with AI. I mean the sentiment here is either it will dry up the world and kill us all or transcend humanity, there’s no gray area. I don’t want to fall into the emot…
That's the financial stakes here. That's why it's all or nothing. You're spending on a level that is only justified by the bonafide machine god being ushered into existence, not productivity or coding tools (and on relatively short time horizon). So if this doesn't change the near term trajectory of humanity to a parabolic move upward there is going to be a lot of economic pain. It's not just the spending, it's that…
What’s your reasoning for saying that the spending level requires that level of justification?