Feel like I’ve been hearing this for months with nothing happening in the end. Is it just hype dying down? When will it actually all crash and burn
If anybody here knew the answer to that they could make millions if not billions of dollars. It’s going to crash and burn, it’s just a matter of timing. Nobody knows. Could be next month, could be in four years.
If you consult my handy diagram, you can see that the AI bubble is currently being bodyblocked by the end of US dollar hegemony, the hollowing out of US manufacturing, the collapsing consumer economy, a lost trade war, ICE pogroms, and probably a dozen other minor and interlinked crises:
(not pictured, JDPON Don doing his darnedest to shove everything through the doorway)But seriously, I am starting to wonder if they’ll just be able to drag out the AI bullshit until the dollar’s reserve status hits some critical mass where the floor of the US consumer economy just completely collapses because who would want to export manufactured goods to the US in exchange for monopoly money? I can see a (very near) future where the slop machines are still going strong, but food riots start breaking out nationwide.
The AI boom might be keeping the US dollar hegemony afloat rather than the other way around.
I think dollar finance basically works by creating money pits where the wealthy can pour their money in a way that is largely disconnected from the productive economy, therefore avoiding uncontrolled inflation. Then those people are rewarded with new money for which new pits need to be created.
The stock market sort of works like that too. After the IPO you generally are buying stocks from other investors, the money doesn’t go to the company who’s stocks you are buying, it doesn’t go towards buying new machines or building more factories.
it’s too big to bail out the AI industry because the entire economy is now tied into the AI boom, so they’re not going to let it burst ever. u.s. hegemony is a hell of a stabilizer. they will drag out the AI bubble until it gets exploded by something entirely separate from u.s. political and military reach.
I think at a certain point their hands will be tied economically, if not from within the US then from their “trade partners” (read ‘vassals’)
When there is a more promising place for rich people to put a trillion dollars.
Maybe better phrased, when there is a better place to simulate trillions in economic activity.
Not sure spit balling here.
It’s being used right now to create slop videos for social media to manufacture consent for war. It’s not a business, it’s a service.
I’m starting to wonder at this point if it will be a loud bang, or a quiet whimper. The statesian economy is currently dogshit, such that it’s a silent recession (depression?), but the federal government won’t release the numbers because, as previously stated, the economy’s dogshit. So maybe the crash already started?
Taken from NATO magazine
Emphasis mine
CoreWeave’s business model consists of buying up lots of high-end computer chips, and building or leasing data centers to house those chips. It then rents out those assets to AI companies that need computing power but prefer not to take on the huge up-front costs themselves. If this is straightforward enough, CoreWeave’s financial situation is anything but. The company expects to bring in $5 billion in revenue this year while spending roughly $20 billion. To cover that gap, the company has taken on $14 billion in debt, nearly a third of which comes due in the next year. Many of these loans were issued by private-equity firms at high interest rates, and several use complex forms of financial engineering, such as giving the money to newly formed legal entities created for the explicit purpose of borrowing on CoreWeave’s behalf (more on that later). CoreWeave also faces $34 billion in scheduled lease payments that will start kicking in between now and 2028.
So the various sectors of the ai market (chip maker, data centers, ai software companies) are all extremely overleveraged and have taken on immense amounts of debt to build their businesses on the hope that people will become dependent on their product by the time lenders start calling in their debts.
It’s also approaching “too big to fail” status like the auto industry and home loan/banking industry, so when it fails, the American taxpayer will be footing the bill.
I think nvidia (or maybe openai) will have to start paying back something like $100 billion starting this September(?) source? I think I heard it on a podcast
The market no longer reflects reality. As long as investors continue to believe in AI it won’t matter if these companies burn 500 Billion dollars without making a cent in profit.
I feel like it’s going to start with GPUs
