AI's debt binge can't last, hidden borrowing reaches $1.65T • Hacker News Board

Re: AI's debt binge can't last, hidden borrowing reaches $1.65T

#81

Post by qaq » Mon, Aug 03, 2026, 10:06 PM UTC

nemothekid wrote: post #71

cmiles8 wrote: post #61

It completely unclear where this 1.65T is going to come from to pay the bill. Revenue from people buying AI doesn’t even come close to covering it, even with crazy aggressive assumptions about the cashflow that could be generated from that. The Wall St vs Silicon Valley showdown that’s setting up here looks like it will be quite epic. If last week was any preview, get your popcorn ready.

The number is large - but I'm not quite sure it's existential. The hyperscalers have been making a ton of money and I'm not quite convinced that 200B of debt for Amazon is "world ending".

AWS made 46B profit last year and will make prob close to 70B this yea so even 400B is very far from "world ending"

Re: AI's debt binge can't last, hidden borrowing reaches $1.65T

#82

Post by cmiles8 » Mon, Aug 03, 2026, 10:07 PM UTC

nemothekid wrote: post #71

cmiles8 wrote: post #61

It completely unclear where this 1.65T is going to come from to pay the bill. Revenue from people buying AI doesn’t even come close to covering it, even with crazy aggressive assumptions about the cashflow that could be generated from that. The Wall St vs Silicon Valley showdown that’s setting up here looks like it will be quite epic. If last week was any preview, get your popcorn ready.

The number is large - but I'm not quite sure it's existential. The hyperscalers have been making a ton of money and I'm not quite convinced that 200B of debt for Amazon is "world ending".

Amazon is setting itself up to get bruised a bit, but it has a sufficiently diverse business and cash flow from non AI things that it will be fine.

Pure play companies, startups, and investors are looking a lot less safe. For example there are other pure plays where debt service alone is like 25-30% of revenue, which is just insane numbers. There are also many investors and funds with extremely precarious positions in AI that are at risk of unraveling with a bang like we saw last week.

Re: AI's debt binge can't last, hidden borrowing reaches $1.65T

#83

Post by [deleted] » Mon, Aug 03, 2026, 10:07 PM UTC

msandford wrote: post #77

bdangubic wrote: post #69

Earlier quoted context omitted.

you can 100% and totally be immune to it

How do I get zero direct and indirect stock market exposure, no electricity price impact, no RAM or GPU price impact, etc? I'd love to live in a world where AI firms bidding these things up doesn't affect me but I'm really struggling to understand how they aren't impacting the market.

[deleted]

Re: AI's debt binge can't last, hidden borrowing reaches $1.65T

#84

Post by nancyminusone » Mon, Aug 03, 2026, 10:08 PM UTC

msandford wrote: post #77

bdangubic wrote: post #69

Earlier quoted context omitted.

you can 100% and totally be immune to it

How do I get zero direct and indirect stock market exposure, no electricity price impact, no RAM or GPU price impact, etc? I'd love to live in a world where AI firms bidding these things up doesn't affect me but I'm really struggling to understand how they aren't impacting the market.

be poor (minus electricity, I guess)

Re: AI's debt binge can't last, hidden borrowing reaches $1.65T

#85

Post by dom96 » Mon, Aug 03, 2026, 10:09 PM UTC

echelon wrote: post #38

scarlehoff wrote: post #22

Earlier quoted context omitted.

Internet didn't disappear after the dotcom crash, but a lot of money did. This is what could happen here I think.

The internet remains the biggest singular development of my entire life. The most valuable companies in the world are internet companies. Journalists have been eager to call AI "over" since 2022, and yet: - Models just got good at writing code this year - Models just got good at editing images last year - Models just got good at cinematic video this year This hasn't even played out. It hasn't even started. Why on ear…

> Models just got good at writing code this year

That's not correct, is it? Opus 4.5 came out in Nov 2025. Some might say models were good at coding even before that.

Re: AI's debt binge can't last, hidden borrowing reaches $1.65T

#86

Post by [deleted] » Mon, Aug 03, 2026, 10:10 PM UTC

scarlehoff wrote: post #22

XenophileJKO wrote: post #17

Earlier quoted context omitted.

It is like being in a city where Edison wired up lights.. and people are like..well I guess electricity has played out! We have only begun to extract the value of commoditized intelligence. Sure there are arguments on local models and pricing power.. but I think we will be compute constrained for the near future.

Internet didn't disappear after the dotcom crash, but a lot of money did. This is what could happen here I think.

[deleted]

Re: AI's debt binge can't last, hidden borrowing reaches $1.65T

#87

Post by msandford » Mon, Aug 03, 2026, 10:11 PM UTC

nancyminusone wrote: post #84

msandford wrote: post #77

Earlier quoted context omitted.

How do I get zero direct and indirect stock market exposure, no electricity price impact, no RAM or GPU price impact, etc? I'd love to live in a world where AI firms bidding these things up doesn't affect me but I'm really struggling to understand how they aren't impacting the market.

be poor (minus electricity, I guess)

If I'm poor I'm still indirectly exposed through the stock market. Employers stock goes down I get fired. Employer has better robotics because of AI? I get fired. Datacenter wants to get built where land is cheap? I get evicted.

Just because I'm too poor to own stocks doesn't mean stock prices don't affect me. That's indirect exposure not direct exposure.

Re: AI's debt binge can't last, hidden borrowing reaches $1.65T

#88

Post by defgeneric » Mon, Aug 03, 2026, 10:13 PM UTC

afry1 wrote: post #73

mapping365 wrote: post #70

The people who made money on fiber and railroads were the inheritors after the timeline mismatch bankrupted the original players who did the investment. Even if AI turns out to be everything it promises, you can mistime the investment and lose everything.

Fiber and railroads don't depreciate after 3 years of use like AI chips. Fiber and railroads don't need tens of billions of dollars in continuing yearly maintenance expenses to keep them from going stale.

The "3 years" figure has been repeated endlessly and yet the same H100s are making today roughly what they did in Jan 2024...

Re: AI's debt binge can't last, hidden borrowing reaches $1.65T

#89

Post by SpicyLemonZest » Mon, Aug 03, 2026, 10:13 PM UTC

echelon wrote: post #38

scarlehoff wrote: post #22

Earlier quoted context omitted.

Internet didn't disappear after the dotcom crash, but a lot of money did. This is what could happen here I think.

The internet remains the biggest singular development of my entire life. The most valuable companies in the world are internet companies. Journalists have been eager to call AI "over" since 2022, and yet: - Models just got good at writing code this year - Models just got good at editing images last year - Models just got good at cinematic video this year This hasn't even played out. It hasn't even started. Why on ear…

The robotics story is a good example of where overexuberance may be entering the market. What is the connection between LLMs or image generation and robotics, beyond the vague intuition that they're both futuristic AI tech? (Perhaps AI maximalism is true and the entire economy will be eaten soon, but then none of this sector-specific analysis matters.)

Re: AI's debt binge can't last, hidden borrowing reaches $1.65T

#90

Post by mrec » Mon, Aug 03, 2026, 10:15 PM UTC

sroussey wrote: post #65

infecto wrote: post #41

Earlier quoted context omitted.

People enjoy the narrative that AI is doomed. I am in the same mindset as you. I cannot see compute demand changing anytime soon.

But the incentive to produce that intelligence is so high, that many opportunities become practical to explore. And many of them show doing AI inference workloads at 1000x cheaper and with 1000x less power, and sometimes 1000x faster. If any one of these happens, or two, or all three, then the loans for trillions will become worthless while the use of AI can explode. The relationship between cost and ai intelligence…

This is an interesting angle, and one I hadn't considered before. Would it be overly cynically to draw a line between it and the recent willingness [1] of many on the frontier to support some sort of coordinated pause or slowdown? I think that proposal has genuine value on its own merits, but it might also give a lot of overly-optimistic financing a chance to pay off before cheaper inference crashes the market.

[1] https://www.pacingthefrontier.com/