The AI trade now runs on borrowed money, and the lenders are repricing it • Hacker News Board

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

#41

Post by 4fggfd » Fri, Jul 31, 2026, 5:42 AM UTC

aurareturn wrote: post #24

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

It isn't a commodity product in my opinion. Far from it. I think it will ultimately be a monopoly or duopoly for SOTA. The mid to low end is commodity, yes. But SOTA models are not commodities. The number of competitors for SOTA drops by a few every year. The winners make more money, get more revenue, buy more compute, train better model with compute, buy best talent, and the cycle goes. I think it's easier to fall b…

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

#42

Post by cloudie78 » Fri, Jul 31, 2026, 5:43 AM UTC

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…

> There's no spare money to extract from the airline industry but it's still very useful. The same could be true for AI in the long term.

Of course it could, let’s start with making the models open weight and entirely open source. Fully publicly owned and not shaped to maximise profits for the shareholders.

Oh wait, Scam Altman entered the chat and turned a non-profit lab into the next biggest IPO vehicle the world has ever seen.

OpenAI launched as a nonprofit research institution. Its announcement explicitly said it wanted to pursue AI “unconstrained by a need to generate financial return,” produce value for everyone rather than shareholders, publish research and share patents broadly.

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

#43

Post by 4fggfd » Fri, Jul 31, 2026, 5:43 AM UTC

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.

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

#44

Post by reddalo » Fri, Jul 31, 2026, 5:43 AM UTC

rapind wrote: post #39

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.

>I can time a bubble

What do you mean? Selling everything before this bubble pops?

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

#45

Post by 4fggfd » Fri, Jul 31, 2026, 5:43 AM UTC

abtinf wrote: post #36

aurareturn wrote: post #29

Earlier quoted context omitted.

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.

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

#46

Post by bawolff » Fri, Jul 31, 2026, 5:45 AM UTC

reddalo wrote: post #44

rapind wrote: post #39

Earlier quoted context omitted.

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.

>I can time a bubble What do you mean? Selling everything before this bubble pops?

Talk about taking a quote out of context...

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

#47

Post by matwood » Fri, Jul 31, 2026, 5:45 AM UTC

robomartin wrote: post #8

I remember when Amazon was going to go broke every year for over a decade. Until they didn't.

Amazon had a close call around the .com crash as capital markets froze, but they were not going broke every year. They were purposely (and rather famously in business circles) investing every dollar made in order to grow the business. It was clear early on the original business worked.

Amazon also added/pivoted to AWS, which is where a huge part of its value comes from today.

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

#48

Post by sssilver » Fri, Jul 31, 2026, 5:45 AM UTC

ragebol wrote: post #16

fsckboy wrote: post #7

you 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…

Yes, they have assets: GPUs sitting in datacenters, and data. Question is: is that worth enough to cover the debt after the market crashed?

Don’t they all have mostly the same data, with a small / negligible delta between each other?

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

#49

Post by eru » Fri, Jul 31, 2026, 5:46 AM UTC

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…

As a retail investor, you should buy an index fund and then forget about it.

By the time you have read this article, the professionals and their computers will have digested that material a thousand times over and have priced it in.

To be more precise: buy the lowest cost most diversified index fund you can buy and then hold it. If you want to spend some smarts to get a better return: look at how to minimise taxes and fees.

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

#50

Post by byzantinegene » Fri, Jul 31, 2026, 5:49 AM UTC

danans wrote: post #35

mapping365 wrote: post #9

Earlier quoted context omitted.

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 se…

such a business plan has not yet created economic value, being able to roll out features at rocket speed is not a huge determinant of a startup's success.