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The AI trade now runs on borrowed money, and the lenders are repricing it

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Re: The AI trade now runs on borrowed money, and the lenders are repricing it

#31

Post by tehjoker »

onion2k wrote: post #25
defactor wrote: post #15

Warren Buffet way Revolutionary technology + massive adoption ≠ good investment Investors have poured money into a bottomless pit, attracted by the growth and glamour of the industry. The airline industry since its birth has had a collective net loss, in aggregate, despite moving hundreds of millions of people. Commodity Product, no switching costs. Infinite competition

The airline industry since its birth has had a collective net loss, in aggregate, despite moving hundreds of millions of people. The industrialisation essentially socializes the cost across a lot more people though, so even though it doesn't make a profit it does mean people can have air travel without it costing millions per flight for the few people who can afford it. Essentially the economies of scale from having…

in the case of airplanes the only thing thats the private market is the planes and the ticket, the entire system of airports, safety, navigation is state subsidized and when the market fails it gets bailed out. the oil is subsidized by constant warfare. it's just an illusion for reganomics so a few rich ppl can make a buck off of a public utility.

Re: The AI trade now runs on borrowed money, and the lenders are repricing it

#32

Post by vanagandr »

mrloopex wrote: post #5
klodolph wrote: post #4

A 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…

How do you stay out of it all, if at all?

Re: The AI trade now runs on borrowed money, and the lenders are repricing it

#33

Post by refurb »

mapping365 wrote: post #14
klodolph wrote: post #10

Earlier quoted context omitted.

What’s your reasoning for saying that the spending level requires that level of justification?

I think these large numbers are casually thrown about, but the real meaning is mind boggling. 1 trillion dollars is the entire US defense budget - aircraft carriers, nuclear submarines, health care, salaries, stealth fighters ect. The hidden AI debt alone is more than that https://asia.nikkei.com/business/technology/five-us-tech-gia... just for five tech giants (not to mention all the other smaller players like neocl…

By that measure it doesn’t sound like that much.

You’re talking about about an amount that is a 13% of the total US government spending, of which is 20% of the entire US GDP.

I’m not saying it’s insignificant but it’s only a few percent of the US GDP and it represents spending over several years.

Re: The AI trade now runs on borrowed money, and the lenders are repricing it

#34

Post by matwood »

mapping365 wrote: post #14
klodolph wrote: post #10

Earlier quoted context omitted.

What’s your reasoning for saying that the spending level requires that level of justification?

I think these large numbers are casually thrown about, but the real meaning is mind boggling. 1 trillion dollars is the entire US defense budget - aircraft carriers, nuclear submarines, health care, salaries, stealth fighters ect. The hidden AI debt alone is more than that https://asia.nikkei.com/business/technology/five-us-tech-gia... just for five tech giants (not to mention all the other smaller players like neocl…

1T is big in the absolute sense, but that's simply the scale these big tech companies operate at. Go back to 2024 or 2025 and you'll see as a group they are making a net income of $400B+. The scale at which these companies do anything is just staggering.

Re: The AI trade now runs on borrowed money, and the lenders are repricing it

#35

Post by danans »

mapping365 wrote: post #9
mrloopex wrote: post #5

Earlier 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…

> 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

"trajectory of humanity to a parabolic move upward" is poorly defined here. Whether we are headed to a machine god ruled scenario or "just" incredibly powerful productivity tools, there will be a lot of economic pain for some (most) and a lot of economic gain for a few.

I've yet to a see an LLM/agent-based business plan in where scaling with an order fewer workers than before LLMs is not a central part of the value proposition.

Re: The AI trade now runs on borrowed money, and the lenders are repricing it

#36

Post by abtinf »

aurareturn wrote: post #29
orwin wrote: post #26

Earlier quoted context omitted.

But who needs SOTA models, really? It was necessary 10 months ago, but now?

All things equal, let's say your SaaS startup uses GPT 5.0 (release 10 months ago) and my business uses Fable 5. We have the same business goals, same talent level, same strategies. I think the chance of my business winning against yours is higher. I can't prove it. It's just my opinion.

Ceteris paribus, all other things are never equal.

Re: The AI trade now runs on borrowed money, and the lenders are repricing it

#37

Post by okzgn »

Key reports to understand the root problem (no ROI):

- Gen AI: Too Much Spend, Too Little Benefit?: https://www.goldmansachs.com/insights/top-of-mind/gen-ai-too... (Goldman Sachs)

- AI’s $600 Billion Question: https://sequoiacap.com/article/ais-600b-question/ (Sequoia Capital)

- The Simple Macroeconomics of AI: https://www.nber.org/system/files/working_papers/w32487/w324... (MIT / Daron Acemoglu)

Re: The AI trade now runs on borrowed money, and the lenders are repricing it

#38

Post by mapping365 »

refurb wrote: post #33
mapping365 wrote: post #14

Earlier quoted context omitted.

I think these large numbers are casually thrown about, but the real meaning is mind boggling. 1 trillion dollars is the entire US defense budget - aircraft carriers, nuclear submarines, health care, salaries, stealth fighters ect. The hidden AI debt alone is more than that https://asia.nikkei.com/business/technology/five-us-tech-gia... just for five tech giants (not to mention all the other smaller players like neocl…

By that measure it doesn’t sound like that much. You’re talking about about an amount that is a 13% of the total US government spending, of which is 20% of the entire US GDP. I’m not saying it’s insignificant but it’s only a few percent of the US GDP and it represents spending over several years.

I mean that's so far, it continues to grow exponentially larger with each quarter. The debt issuance for the first half looks to be crowding out US treasuries in the bond market - https://www.bloomberg.com/news/newsletters/2026-07-23/ai-deb... - that's an extremely large amount of debt. And it's still getting larger and larger each quarter.

Re: The AI trade now runs on borrowed money, and the lenders are repricing it

#39

Post by rapind »

klodolph wrote: post #4

A 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…

I was able to create a custom index based on the top 500 that I stripped the big AI stocks from (shovels too). Then I added decent chunks of international, small cap, and treasury ETFs to it.

I have no illusions that I can time a bubble, but I'm hopeful I'm at least partially shielded, and most importantly I feel better about ignoring wall street again.

Re: The AI trade now runs on borrowed money, and the lenders are repricing it

#40

Post by grey-area »

mrloopex wrote: post #5
klodolph wrote: post #4

A 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…

I feel obliged to step in here to say there is a grey area where these are useful tools for some applications but not on the path to AGI.

Unfortunately the hype machine has far outstripped their capabilities so far, and the amount of money spent doesn’t look like being recouped, so somebody is going to lose money, as people lost money on the overpriced spacex ipo (overpriced because of AI).

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