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Financing the AI boom: from cash flows to debt [pdf]

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Re: Financing the AI boom: from cash flows to debt [pdf]

#101

Post by rogerrogerr »

lelanthran wrote: post #90
rogerrogerr wrote: post #21

Earlier quoted context omitted.

No, we won't - there's significant capex on all that infra that will have to be paid down, and we won't have datacenters to help pay for it.

> No, we won't - there's significant capex on all that infra that will have to be paid down, and we won't have datacenters to help pay for it. AIUI, OP is saying that, with all these DCs with no load, we'll have excess electricity generation capacity that was built to support these DCs. That's the "cheap power" he is talking about, not necessarily "cheap computational power".

And I’m saying the electricity companies will have excess power, but will also have excess debt to service on infrastructure they now don’t need. They’ll get rate hikes approved to force the remaining ratepayers to pay down the capex.

Also, a bunch of that money they spent will be on transmission infrastructure that is 100% useless if you aren’t moving that amount of power along exactly that route.

Re: Financing the AI boom: from cash flows to debt [pdf]

#102

Post by bigstrat2003 »

redbluered wrote: post #83
edoceo wrote: post #43

Earlier quoted context omitted.

In the dot-com situation earnings "didn't matter" as long as there was growth. We[1] all believed profit would come eventually. The lesson learned from that experience was that earning do sort of matter. It turns out there is a limit to selling dollars for dimes. Since then revenue, profit and unit-economics ("fundamentals") have gotten almost as much attention as they deserve. [1] a broad and poorly defined group of…

That's not quite the lesson. Earnings did come, and the outcome of the internet include Google, Amazon, and others -- several of the ten biggest companies in the world. In 2000, there was no sane way to predict who the success stories versus failures would be, timeliness, or otherwise. AI will be a big change. We don't know how big, when, or who the losers and winners will be yet. Everything could be grossly overvalu…

There is no shot that current AI tech comes even close to being as influential as the Internet. What we have right now is useless for getting anything productive done because it's so unreliable.

Re: Financing the AI boom: from cash flows to debt [pdf]

#103

Post by oh_my_goodness »

edoceo wrote: post #43
oh_my_goodness wrote: post #22

Earlier quoted context omitted.

How are the earnings different this time? Can you add any color to that?

In the dot-com situation earnings "didn't matter" as long as there was growth. We[1] all believed profit would come eventually. The lesson learned from that experience was that earning do sort of matter. It turns out there is a limit to selling dollars for dimes. Since then revenue, profit and unit-economics ("fundamentals") have gotten almost as much attention as they deserve. [1] a broad and poorly defined group of…

Does anybody know how much AI is earning?

Re: Financing the AI boom: from cash flows to debt [pdf]

#104

Post by andsoitis »

dataflow wrote: post #79
andsoitis wrote: post #67

Earlier quoted context omitted.

> Both industries heavy use legal bribes, donations. Politicians will gladly bail them out to take ℅ of the cut in bribes. Are you saying that it is likely that at some point in the not too distant future, OpenAI and Anthropic will need bailout-size cash infusions from the US Government to continue existence and that the US government will do it and not face severe political consequences? I just don't think that chai…

> Are you saying that it is likely that at some point in the not too distant future, OpenAI and Anthropic will need bailout-size cash infusions from the US Government to continue existence and that the US government will do it and not face severe political consequences? Didn't they say this themselves? https://edition.cnn.com/2025/11/06/tech/openai-backtracks-go... > The current administration pays very close attenti…

> Didn't they say this themselves

OpenAI backtracked, according to the article you linked to.

> Is that how the Anti-Weaponization Fund came about?

It hasn’t come about has it? It was blocked. Besides, I don’t see the connection with the topic at hand.

Re: Financing the AI boom: from cash flows to debt [pdf]

#105

Post by andsoitis »

drdexebtjl wrote: post #71
andsoitis wrote: post #67

Earlier quoted context omitted.

> Both industries heavy use legal bribes, donations. Politicians will gladly bail them out to take ℅ of the cut in bribes. Are you saying that it is likely that at some point in the not too distant future, OpenAI and Anthropic will need bailout-size cash infusions from the US Government to continue existence and that the US government will do it and not face severe political consequences? I just don't think that chai…

It wouldn’t be the first time the US government made expensive and unpopular moves in the name of national security and walked away largely unscathed.

That’s not a convincing argument that it is likely to happen in this case. For me to be more convinced, it would be helpful understand what similar specific example you have in mind that points to such likelihood in this case.

Re: Financing the AI boom: from cash flows to debt [pdf]

#106

Post by ironSkillet »

amazingamazing wrote: post #100
ironSkillet wrote: post #98

Earlier quoted context omitted.

I understand that. The AI software is meant to be a productivity enhancer for the employees using it. Other than the licenses, some training etc, there are no operating costs associated with it. Just by using the software, I don't suddenly have to pay more for salaries, retirement plans, etc, which are things that in aggregate produce the 3% margin. Maybe I have to pay more in logistics because I'm moving more produc…

The point is if you are paying for software but not increasing your revenue by your margin you are lowering it even if you are increasing profit in absolute terms. What you are mentioning with salaries is not relevant.

I think we can agree to disagree here. I don't see how a company needs to have an $8000 increase in revenue to justify a $240 software purchase. You are assuming that the current operating cost for every dollar of revenue is also applied to every incremental dollar in revenue gained from software efficiency, and that is just not true.

Re: Financing the AI boom: from cash flows to debt [pdf]

#107

Post by mizzao »

MichaelMoser123 wrote: post #75
MichaelMoser123 wrote: post #59

Speaking of financing: how is the Anthropic IPO going, what is the timeline? They filed over a month ago, no news since. (I would have expected some spectacular news headlines that would be designed to fuel public interest in the impending IPO, but can't detect anything of substance)

just recalled: some significant open source projects are being rewritten in Rust, with the help of Claude. I don't know if these efforts will be successful in the long run, but in some way these news headlines may be creating a media dynamic as part of the IPO preparations? [1] https://news.ycombinator.com/item?id=48870966 pgrust passes 100% of the Postgres regression tests [2] https://news.ycombinator.com/item?id=48…

I doubt anyone in the media is paying attention to projects being rewritten in Rust...

Re: Financing the AI boom: from cash flows to debt [pdf]

#108

Post by iambenm »

andsoitis wrote: post #69
iambenm wrote: post #42

Earlier quoted context omitted.

Modeled on Chrysler, perhaps?

> Modeled on Chrysler, perhaps? The government intervened to prevent massive job losses, protect the domestic auto industry, and, in the 1979 case, preserve critical national security manufacturing, as Chrysler produced the M-1 Abrams tank. Now, I suppose it is possible to imagine that the US government might bail out either or both of OpenAI or Anthropic (whether or not there's an ROI like there was with the Bank Ba…

What came to mind to me was a bailout shaped to benefit the public even if the company failed post-bailout, specifically the Chrysler Tech Center and how it was designed as a building that could be repurposed as a shopping mall if it fell through. Odd, interesting place.

Re: Financing the AI boom: from cash flows to debt [pdf]

#109

Post by amazingamazing »

ironSkillet wrote: post #106
amazingamazing wrote: post #100

Earlier quoted context omitted.

The point is if you are paying for software but not increasing your revenue by your margin you are lowering it even if you are increasing profit in absolute terms. What you are mentioning with salaries is not relevant.

I think we can agree to disagree here. I don't see how a company needs to have an $8000 increase in revenue to justify a $240 software purchase. You are assuming that the current operating cost for every dollar of revenue is also applied to every incremental dollar in revenue gained from software efficiency, and that is just not true.

There is nothing to disagree on, i am talking about net operating profit margins. It is math.

What you are saying is again irrelevant. It is not about justification. Is about net margins…

Re: Financing the AI boom: from cash flows to debt [pdf]

#110

Post by oh_my_goodness »

redbluered wrote: post #83
edoceo wrote: post #43

Earlier quoted context omitted.

In the dot-com situation earnings "didn't matter" as long as there was growth. We[1] all believed profit would come eventually. The lesson learned from that experience was that earning do sort of matter. It turns out there is a limit to selling dollars for dimes. Since then revenue, profit and unit-economics ("fundamentals") have gotten almost as much attention as they deserve. [1] a broad and poorly defined group of…

That's not quite the lesson. Earnings did come, and the outcome of the internet include Google, Amazon, and others -- several of the ten biggest companies in the world. In 2000, there was no sane way to predict who the success stories versus failures would be, timeliness, or otherwise. AI will be a big change. We don't know how big, when, or who the losers and winners will be yet. Everything could be grossly overvalu…

Has anybody worked out quantitatively whether the total dot-com boom was a decent investment in hindsight?
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