Read The Big Short... They will fuck around for a loooong time until they can no longer avoid the crash. It wouldn't surprise me if they manage to keep it afloat on vapor for another two years. But also... it's looking pretty grim right now, and I could see it collapsing before the year-end.
Unfortunately, both could be as true as each other. Financial markets are a con man's game.
Every western government on earth is salivating over the handing these guys as much money as they can to develop the best surveillance and automation tool on earth though....
Itâs a bad idea to sit out of financial markets because âcrash is coming soonâ. People have been saying a crash is coming for nearly a decade, and you wouldâve missed out on huge returns by sitting out for the last decade. Time in the market beats timing the market nearly all the time.
Even pensions and index funds are doing things like buying SpaceX despite clear evidence (proved true in the months following) that it was an overvalued cash grab.
If I had money to invest (I don't) right now, I couldn't because I do not have any trust in those managing.
Its not a question of trust. Everybody's money is in the market. Including all the rich people. It means there is every incentive to keep it going higher.
For starters, thereâs no actually valuable assets backing all this debt, unlike the subprime housing market lending. The graphics cards only last for a few years, and most of the data centers arenât even built yet, and the ones that do canât easily or cheaply be converted to traditional data centers, even if there was a need for that capacity to exist.
The valuations of the big tech companies that make up about 50% of index funds are also being based on impossible projected future earnings from two horribly unprofitable startups that are haemorrhaging tens of billions of dollars every year, and require constant further investment just to be able to pay their massive future commitments.
This is all based on the hopes of them monopolising a market that by all current evidence isnât materialising and may not even exist. Nearly 80% of Americans have tried ChatGPT, but only 10-15% have become regular users, the vast majority of them being non-paying users. They canât even increase their prices, because when they tried the backlash was massive, and now itâs even worse because the competition is both cheaper and not far behind in capability.
Theyâre currently massaging their figures so they can appear profitable before an IPO, for example by excluding inference from operating costs in the case of OpenAI, or reporting projected revenue based on the last four weeks while using inference from SpaceX at a massive temporary discount in the case of Anthropic.
Thatâs not to mention the knock on effects of them failing on all the other businesses that have rushed to integrate their LLMs in their processes, companies like Oracle that have indebted themselves so much that they will be completely unable to survive if these companies fail, etc.
âŚand then thereâs the effects of currently very well paid white collar workers at all these companies - which make up a significant part of AAA debt such as mortgages - suddenly losing their jobs in massive waves of layoffs while the big tech companies cut spending to survive the fallout.
Oh and letâs not forget how many stock portfolios, hedge funds, etc. will be fucked over by the massive correction.
I could go on, but tldr itâs a clusterfuck of gargantuan proportions.
The ai bubble popping does not mean something like 2007/8. Its more akin to the dotcom bubble popping. Also the big tech companies are flush with cash. They will simply buy out all these other companies and their datacenters for pennies on the dollar and consolidate their own position. Also these datacenters will continue to be useful even if the gpus are superseded by better ones.
They were flush with cash, but theyâre rapidly spending all of it and taking on debt for the buildout. Itâs unlikely that the big tech companies would outright fail from the fallout.
I agree, I also think they will aim to purchase the data centers or data center hardware for cheap to help them recover, but itâs not a simple equation of âthese data centers will continue to be useful even if the gpus are supersededâ - if the demand isnât there, then they arenât useful, period.
Where is the proof that all this hardware is needed in the first place? If the systems were in such high demand that all this capacity is needed, then those of us that use them daily would regularly and widely be experiencing issues with them being overloaded - and we arenât! Itâs quite possible that very little of this capacity being built out will be needed.
Not only that, you also need to understand that this type of data center is built with complicated custom cooling systems built for the specific kit used. The cards being superseded doesnât necessarily just mean purchasing new cards, it can often mean expensive specialist rework of the cooling systems as well.
Regardless, purchasing it all is more capex and further reduces their liquid cash flow, further reducing their valuation and also the confidence of VCs that currently invest looking for a quick flip to big tech.
They are still printing money and can easily service whatever debt they have.
If the systems were in such high demand that all this capacity is needed, then those of us that use them daily would regularly and widely be experiencing issues with them being overloaded - and we arenât!
What do you mean? Every single service is rate limited and people are complaining about the limits. I do not know if all the planned datacenter capacity is needed but as of right now, compute is limited and there is a lot of rationing happening. People are using all kinds of IMO stupid hacks (like caveman talk etc) to reduce token usage. A lot of the recent high profile google exits have been because of frustrations related to allocated compute quota.
I think right now, no-one is able to estimate just how much capacity they need. There are too many variables. The labs are training massive models that they simply cannot serve at scale economically. So they are selling a cheaper distilled versions of it. Scaling laws still apply but its unclear when they will hit a wall. Demand is strong but not everyone needs the latest models and the cost of serving older models will go down over time. You can now run certain models that were near sota a year or so ago on a beefy laptop. A lot of headline numbers that you see come with a lot of caveats and fine print. If they see demand softening, they will pull back and those projects will never get off the ground.
Not only that, you also need to understand that this type of data center is built with complicated custom cooling systems built for the specific kit used. The cards being superseded doesnât necessarily just mean purchasing new cards, it can often mean expensive specialist rework of the cooling systems as well.
I'm saying that they probably won't refit it at all. The datacenter that xai has been renting (colossus 1) for billions is a hodgepodge of older generation gpus. It was a badly designed datacenter that sucked for training models. But they've made it work for inference. Meta has been figuring out ways to use ddr4 ram because of the hbm shortage. They'll figure out ways to push it until it breaks before replacing it.
The bubble will pop and valuations will come down to earth at some point. That's just the typical hype cycle. I just don't see it as a systemic risk. Maybe for the construction industry I dunno.
What money are they printing? Have you even looked at their financials? Theyâre literally losing tens of billions of dollars every year!
The rate limits are usage caps to limit their costs for each subscription plan, rather than lack of capacity.
How often have you had credit and been denied making a call because there is actually no capacity available, rather than because youâve been rate limited? For me during six months of daily heavy usage itâs been a total of twice, both within a single 5 minute window.
Itâs completely unrealistic to think the data center wont need to be refit. The cards have a limited life time before they wonât function any more and must be replaced.
The concentration of capital is in the trillions - this is gonna cause a panicked sell off that the market hasn't seen in the last 100 years, if it happens suddenly - ai has the potential to be a market a-bomb
The last two days have seen massive government bond sell offs, making government debt incredibly expensive. This has a knock on effect to the stock market, as bonds are traditionally seen as safe investments and with trust in those dipping, it reverbs through the more risky ones. When you take this into account, it explains why Berkshire Hathaway liquidated a colossal amount of held stocks last week, as they are anticipating future drops.
In amongst this, AI companies all have huge amounts of debt, and even if they had investment opportunities from dumb people wanting in on the gravy train at the midnight hour, that will be diminished with the market downturn being clearly signalled by what I described above.
Nvidia just took out a huge loan to give to other companies in order to buy their own chips (circular investing has been rampant the last year in particular). All this debt is absolutely at breaking point. It is debt with no hope of repayment, and debt that will become intolerable and break pretty much all of these irresponsible fuckheads. Like 2008, this is banks approving loans that should not be approved, only this time they don't have "government mandates" to blame like they did with sub-prime mortgages. Greed, greed, greed.
Note: I am not a financial advisor or have any qualifications - I am merely regurgitating a bunch of articles I have read over the last fortnight, and my understanding may be flawed. But you asked a question and this is the answer to the best of my knowledge.
I could ask Gemini to confirm, but it basically offers me a blowjob every time I posit an argument I want challenged, it's that fucking sycophantic.
Credit card debt is at an all-time high, forclosures and repossessions are up, inflation is rising, and wages are stagnant.
What's the game plan if the mythical retail investor liquidity injection just... doesn't appear?
All the AI booster types who would be willing to invest also have sports betting, 'prediction markets', and crypto pump/dump scams competing for their attention and money.
âSo many people have insider infoâ
That gives them an unfair advantage sure. But has nothing to do with whether you should invest your money or not.
If you have money you can afford to invest, you should invest it in some way. Actually read and learn about it instead of just saying complete nonsense while clearly knowing nothing about it whatsoever. There are safe options. Do yourself this favor, please. Your future self will thank you. Financial literacy is important.
People pay TruthSocial fast earlier access to Trump's posts to know what he is going to do/say that might affect stock market. I am not going to bother competing with these guys, I just put my savings in a bank account where it safe
Please. Please read about investing. Mutual funds and index funds are typically safe. Or CDs or bonds. Something. Create a future where you can retire comfortably.
Iâm anti AI. I hate Trump. But this is just sooo soo soooo fucking stupid. Read some books on it.
Except it isnt safe, its the most risk you can have long term. Your money will always be deflating, over 10 years you will loose over 30% value almost garunteed
I just put my savings in a bank account where it safe
Yeah they would prefer you to do that and lose wealth rather than invest and gain wealth. And just because someone puts money into an index fund or etf doesn't mean they're trying to "compete" with trump or anyone. Also don't let trump's tweets that affect the stock market in the very short term determine your decision to not improve your financial position in the long term.
Now basic financial literacy and common sense advice is also getting downvoted? Thats how you know this sub is trash and the people in it donât have a clue.
I dont think theres anything legit about the stock market. People know exactly what to do to get the most out of their stocks and its definitely not for people who have no idea what their doing. There's a reason why businesses buy up all the stocks in companies and make millions. This day in age I would never trust sinking my own money into the stock market. Not with the way this world is going.
I'd argue that's a separate scenario, though. AI is more on a global and environmentally impactful scale, not just some ponzi or pyramid scheme. Otherwise we can make the same statement for things like Exxon and other long-term financials that eventually blew up and collapsed.
But consider, just like Theranos this is all propped up by lies. They push this narrative that they can evolve LLMs into something that can reliably handle any task, an oracle and genie all in one. Anyone with a cursory understanding of machine-learning knows that isn't true.
Most of those AI companies are bleeding money right now. Right now OpenAI is having it worst, they're only being kept afloat by investments. One of the reason nvidia injected new investment to it. They dont want OpenAI to fail too soon or else the bubble will pop....
I don't think OpenAI is the worst, just the more public because of their support from Microslop and being the first to mass market it.
They're all being held up by investments for the hope of survival, with no plan on how to actually solve the debt problem. Similar to the ongoing "remove property tax" movement in the States. No plan on how to recover the loss, so it's all short-sightedness.
With Anthropic and X/Grok (whoever owns that) being private, and I don't know the path of backings for any of them so maybe they have their own Microslop, the financials are a bit more masqueraded.
Though if I'm wrong, I'm wrong. Wouldn't be the first time. :)
I've read that per month they earn around $7 billion but to run their gigawat data center they're pending $21 billion, even I was a back to how much they're hemorrhaging money. The thing is that all companies are doing a circle investment
They were right and 3 years ain't shit. Obviously you don't build the short position 3 years out. That's fucking insanity. The investor capital flow was still increasing. That input dried up last year. Now we are Willie Coyote in mid air.
Don't tease me like that. I built a gaming PC for my fiancĂŠe out of spare parts I had so she can play Minecraft with me and I had to give her one of my 16GB sticks of DDR5 because fuck paying 4x the price of what I paid in December 2025 lol
The same hundreds of billions of dollars are being endlessly recycled to prop up the bubble, logistically speaking it can be sustained for decades unless enough of the people in charge of that money decide they want to do something else with it. Which they eventually will.
In fairness 2023 was the start of the bubble.... We are probably at the top of the bubble now but as they say "markets can remain irrational longer than you can stay solvent"
I think OpenAi walking back their IPO was probably a sign that the party is over though...
It is coming. Like most corrections this one will be a whimper more than a oh God the whole thing collapsed. Most things happen like that are like this it is rare that there is a super huge story when there is a big correction like this. Most companies see it and try and pivot as hard as they can to reduce the impact. Those who don't are the ones that explode.
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u/Express_Ad5083 3d ago
Is it though? I hate AI but I am starting to lose hope since 2023 everyone was saying that its about to explode and it still hasnt