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CEOs to Keep Spending on AI, Despite Spotty Returns

wsj.com

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Re: CEOs to Keep Spending on AI, Despite Spotty Returns

#21

Post by turnsout »

bArray wrote: post #13

> After a year in which trillions of dollars worth of AI investments buoyed global markets and the economy, 68% of CEOs plan to spend even more on AI in 2026 They are too far in to turn back. They got into AI via fear of missing out (FOMO) and now they are too heavily invested to write it off on their balance sheet. To revert now would cause nothing but trouble. > Less than half of current AI projects had generated m…

Having seen a lot of AI-generated ads, I'm so skeptical that AI is actually improving marketing metrics. Every time I see one of these abominations on YouTube I think "is this working for you?"

With that said, I'm long-term bullish on AI. A lot of companies will over invest, just as they did during the dot-com bubble. But some of those investments will actually pay off, because this technology is not going anywhere.

Re: CEOs to Keep Spending on AI, Despite Spotty Returns

#22

Post by turnsout »

steve1977 wrote: post #10
alecco wrote: post #5

Earlier quoted context omitted.

Most CEOs do what the board wants. And the board usually reflects shareholder primacy.

I'm pretty sure shareholders are not too keen on spotty returns...

Only institutional shareholders matter, and they're on the same page as the CEOs.

Re: CEOs to Keep Spending on AI, Despite Spotty Returns

#23

Post by htrp »

jordanb wrote: post #7
thijson wrote: post #6

Earlier quoted context omitted.

Jim Chanos legendary short seller talks about AI bubble. https://www.youtube.com/watch?v=R1HrPsfUkbk

Ironically I think Chanos got murdered by the data center boom. Back before his fund folded he was talking constantly about how data center REITs were an awful business by the numbers and they were an artifact of ZIRP because they were making small amounts of revenue on large amounts of capital. Longer term they were slowly losing to market consolidation by the "hyperscalers" (AWS, Azure etc). His thesis was sound in…

>His thesis was sound in a rational world but our world isn't rational anymore and his data center REIT short got obliterated by the AI bubble.

I suspect he might be a bit bitter about that one. He has also shorted tesla (rightly or wrongly) as well as Carvana

Re: CEOs to Keep Spending on AI, Despite Spotty Returns

#24

Post by goryDeets »

stocksinsmocks wrote: post #16
steve1977 wrote: post #10

Earlier quoted context omitted.

I'm pretty sure shareholders are not too keen on spotty returns...

You might be surprised. Disney is a pretty good example of activist shareholders undermining the value of their brand for purely ideological reasons. This is a little easier to wrap your head around when you recognize Black Rock-type situation where the custodians of the funds are able to take extraordinary personal liberty with other people’s money.

Yeh, cause they (the truly wise and savvy ones) realize it's not about fiat money (that's just political propaganda). It's about attention control.

Government will always financially bail out they who control the most eyeballs as it keeps politicians from dangling from capital buildings and bridges.

Re: CEOs to Keep Spending on AI, Despite Spotty Returns

#25

Post by matusp »

bArray wrote: post #13

> After a year in which trillions of dollars worth of AI investments buoyed global markets and the economy, 68% of CEOs plan to spend even more on AI in 2026 They are too far in to turn back. They got into AI via fear of missing out (FOMO) and now they are too heavily invested to write it off on their balance sheet. To revert now would cause nothing but trouble. > Less than half of current AI projects had generated m…

> Less than half of current AI projects had generated more in returns than they had cost, respondents said.

Compares to non-AI software, is this a bad number?

Re: CEOs to Keep Spending on AI, Despite Spotty Returns

#26

Post by JohnMakin »

Der_Einzige wrote: post #11

The “AI is in a bubble crowd” still has no answer to “why didn’t the tech bubble pop in 2022?” Snowflake bought streanlit (a bad python UI/UX) for 800 million in 2022. I still have not seen a single deal even close to that bad post 2023, and especially post interest rate hikes. https://datafortune.com/snowflake-acquires-streamlit-for-usd... Actually investing in AI is smart and will deliver unfathomable ROI. AI bears…

unfathomable. The imagination has no limits. It could be billions, trillions even! The fact we do not know only means we don't know how high the ceiling can be. It could even be gazillions!

Re: CEOs to Keep Spending on AI, Despite Spotty Returns

#27

Post by benterix »

ruralfam wrote: post #8

M$FT increased 365 student monthly charges from $7 to nearly $20 per month automatically to cover CoPilot for 2026. Evidently did not inform the college about this. Just sent yearly charges for nearly $200 to gob-smacked parents. We canceled the next day. WTF M$FT. They say you will get refunded in you cancel within 30 days of the yearly charge. We did so, but I am wondering if M$FT simply and reliably does the refun…

My kid needed Windows and Office for school. I went through the pain of installing the system for her while avoiding creating a Microsoft account. As for Office, I bought a perpetual license. I believe these are the last months while these two options are still available.

Re: CEOs to Keep Spending on AI, Despite Spotty Returns

#29

Post by jordanb »

htrp wrote: post #23
jordanb wrote: post #7

Earlier quoted context omitted.

Ironically I think Chanos got murdered by the data center boom. Back before his fund folded he was talking constantly about how data center REITs were an awful business by the numbers and they were an artifact of ZIRP because they were making small amounts of revenue on large amounts of capital. Longer term they were slowly losing to market consolidation by the "hyperscalers" (AWS, Azure etc). His thesis was sound in…

>His thesis was sound in a rational world but our world isn't rational anymore and his data center REIT short got obliterated by the AI bubble. I suspect he might be a bit bitter about that one. He has also shorted tesla (rightly or wrongly) as well as Carvana

His Tesla short was off many years before his fund closed and he pretty much said he wasn't going to bet in meme stocks since their value is so detached from any kind of objective analysis.

The problem for him (and muddy waters and other shorts) was the memification of the entire economy. If you listen to his data center REIT short thesis it was very sound. Data center REITs were not meme stocks and there was every reason for them to respond to economic gravity. There was a lot of inflow of capital during ZIRP leading to a lot of buildout, but with the end of ZIRP the low return on capital in their business was going to kill them. But then the AI bubble came along and everything within three degrees of bacon went to the moon.

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