Bubbles burst when the media and public are finally bought in that they burst. This article is a good sign we aren’t there yet.
The warning signs the AI bubble is about to burst
31–40 of 86 posts
Re: The warning signs the AI bubble is about to burst
#32Given how much capital has already been committed to infrastructure development I find it very unlikely that even a Black Monday style market correction will do much to alter the medium and long term outlook for ai development and investment. Too many people talk about a bubble almost wish-casting that such a thing will make this all go away. It’s probably safest to assume your political enemies won’t be hoisted on t…
> Given how much capital has already been committed to infrastructure development Here’s the stupid thing about that infrastructure: This isn’t railroads. This isn’t skyscrapers. This isn’t underseas fiber optic. These are, at the end of the day, data center GPUs that can and will start failing en-masse on normal hardware timelines. When that happens, they will all need to be replaced, at whatever rate NVIDIAs sellin…
All the things you mentioned require a lot of maintenance as well.
Re: The warning signs the AI bubble is about to burst
#33Earlier quoted context omitted.
> Given how much capital has already been committed to infrastructure development I find it very unlikely that even a Black Monday style market correction will do much to alter the medium and long term outlook for ai development and investment. So let's bet on sunken cost fallacy? That didn't work out during the dotcom era. When people talk about the bubble is mostly about ending the LLM hype, not making everything a…
It kind of did, Facebook, YouTube, Google, were all enabled by the massive internet cable infrastructure investment laid in the 90s.
Yep, but the dotcom burst was still was a burst. Ex post success does not matter in that analysis, and in fact, I'm arguing that the dotcom burst was instrumental for companies like Facebook, Youtube and Google to develop as they did.
Re: The warning signs the AI bubble is about to burst
#34It'll burst in the same way crypto burst. The NFTs and the shitcoins and the grifters and the bandwagon hoppers all got washed out, but Bitcoin is still hitting record highs today.
All the smaller AI companies will have to quickly figure out a way to make a profit, or die.
The behemoths and the ones backed by behemoths (Google, Microsoft/OpenAI, Meta, Amazon/Anthropic) will take a good hit but will power through.
Re: The warning signs the AI bubble is about to burst
#35We’re on our way down to the through of disillusionment. See you on the other side.
Re: The warning signs the AI bubble is about to burst
#36Given how much capital has already been committed to infrastructure development I find it very unlikely that even a Black Monday style market correction will do much to alter the medium and long term outlook for ai development and investment. Too many people talk about a bubble almost wish-casting that such a thing will make this all go away. It’s probably safest to assume your political enemies won’t be hoisted on t…
The problem is it will create a broader economic problem in the markets.
The top 10 holdings for VTI, the "easy button" investment option. Are: NVIDIA, Microsoft, Apple, Amazon, Facebook, Broadcom, Google, Tesla, Berkshire Hathaway. They represent a third of US market value, and 60% of them are heavily hooked into AI. A panic will be a decimation for NVIDIA, and that splash zone will be broad.
Re: The warning signs the AI bubble is about to burst
#37Given how much capital has already been committed to infrastructure development I find it very unlikely that even a Black Monday style market correction will do much to alter the medium and long term outlook for ai development and investment. Too many people talk about a bubble almost wish-casting that such a thing will make this all go away. It’s probably safest to assume your political enemies won’t be hoisted on t…
I mean, every year or so there's a new NVIDIA GPU, making last years models obsolete and GPUs from 2 generations back essentially landfill. I don't think there's another large-scale investment that decays at this rate.
The infrastructure being there might also be a problem.
- If there's no breakthrough, and we're only going to make incremental gains, then its wasteful
- If there's a breakthrough, it might turn out a new AI architecture needs either lot less compute, or a different kind of it
Re: The warning signs the AI bubble is about to burst
#38What portion of AI spend is from non-hyperscalers? That feels like the most irrational part of this hype.
Re: The warning signs the AI bubble is about to burst
#39Earlier quoted context omitted.
> Given how much capital has already been committed to infrastructure development Here’s the stupid thing about that infrastructure: This isn’t railroads. This isn’t skyscrapers. This isn’t underseas fiber optic. These are, at the end of the day, data center GPUs that can and will start failing en-masse on normal hardware timelines. When that happens, they will all need to be replaced, at whatever rate NVIDIAs sellin…
All the things you mentioned require a lot of maintenance as well.
There are no 100 year graphics cards as there are tunnels and bridges is the point. The maintenance bill comes due a lot sooner then.
Re: The warning signs the AI bubble is about to burst
#40NVidia’s PE is below 60 and they have 100% year over year revenue growth. A bubble is typically based on future earnings potential Nvidia is a money printing growth creating machine.