Paradoxically I’m increasingly believing in two things at the same time:
@manton both are indeed true - WITH the significant exception that this is certainly overhyped and a bubble. importantly: so much is leaning on this bubble, that it's even more "too big to fail" than those responsible for the financial crisis from 2008 - so we the taxpayer will be called to bail out, again. better we learn from our mistakes, and hold people accountable
@manton I fully agree. I also think there is a likelihood that Nvidia will be declared "too big to fail" by the administration, which would make it a lot worse for all of us.
@manton What is the mechanism for (2) to happen if (1) is true? NVIDIA is primarily levered to the large-cap hyperscalers, and if (1) is true then they will be fine and may even capture some of the rents from NVIDIA. NVIDIA is only 8% of the S&P 500. Unless you’re saying the AI capex boom is a bubble.
@kylehugh.es I don’t know. Just a feeling that too much is pinned to Nvidia’s continued success. I think the capex is largely justified, though.
@manton I agree on the capex as well. It is a funny feeling, but ultimately the numbers say we can publicly survive an NVIDIA collapse. Many private AI companies would go kaput, though.
@kylehugh.es I hope that’s true about a collapse! And yeah, there are a lot of VC-funded AI companies that will fail. That is actually fine. Companies in every industry fail all the time.
@manton Much as AI and LLM’s have been conflated so too is the world of LLMS.
AI has been around for dozens donkey’s years .. LLMS are the new breakthroughs that make up the bubble.
We have been sold the line that big is beautiful … enter all associated with hyperscalers … we all know that there is another way (a better way for a lot of use cases of normal people) .. and they see a thousand blooming fields .. not an ultimate ‘winning engine’.
It’s as if instead of the pc we were all given time share on a great IBM mainframe in the sky.
Apple will start to expose that to the world in a couple of weeks … and china will do what china does … the world is bigger than America.
So yes .. there is a bubble .. there is debt exposure .. that is big enough to worry everyone .. including oracle shareholders .. AI is fine.
It’s like climate change .. ultimately the planet will be fine .. it’s the people that won’t.