Is this similar to the Dot.Com bubble burst?
Well now, that looks familiar. Rats leaving a sinking ship.
Banks are in the business of underwriting debt and reselling it to private investors.
We’ve been reading this “End is Near” shit since COVID. Put something more on the table.
Owning a debt from the AI industry is a fairly insane amount of risk
Is it? They’ve been outperforming every other debt class for five years running.
Do you think they can maintain that for another 5 years? Another 20? Is the product AI companies providing worth the valuations?
Are 5 AI companies providing more value than every other tech company in the last 50 years? Thats what the valuations are trying to say. Im still waiting on ChatGPT to cure cancer.
Do you think they can maintain that for another 5 years? Another 20?
I think expecting NVIDIA to fail inside the next five years is a wild reach. You might expect Oracle to take haircut in the next five years, based on their atrocious debt load. But even then, the idea that they’ll miss a credit payment?
Twenty years out, these firms are an even safer bet. Long term demand for compute and hosting services is only going up. And they’re so heavily consolidated. Too Big To Fail in every sense of the word. Are you going to bet against JP Morgan and Goldman Sachs on the eve of the financial crisis, even? Twenty years later, how are they doing?
Are 5 AI companies providing more value than every other tech company in the last 50 years?
It’s not a question of value, it’s a question of earnings growth. Will these top 5 AI companies be seeing stratospheric earnings growth in the next ten years? All signs point to “Yes”. The race to cement these data center footprints is a scramble for limited resources. The Capex budgets won’t be inflated to this degree forever.
Dismissing them for their rapid expansion would be like betting against New York and Chicago real estate markets because you didn’t trust skyscrapers to be profitable in another 20 years. Or betting against U.S. Steel and Standard Oil at the apex of WW2, because the resource demand from the conflict can’t go on forever.
I’m not saying they will fail I’m saying they will not maintain their rate of growth. Very, very different things but i guess you can pretend i said something else and argue against that or whatever idk dude lol
I’m not saying they will fail I’m saying they will not maintain their rate of growth.
They’ll hit a saturation point eventually, sure. But demand for capacity continues to outstrip supply.
Their yields going higher and higher is not “outperforming”, it’s the opposite. Higher yield = higher risk.
Do you have any statistics?
Bad tech rapidly became a central pillar to that buying/selling and everyone is realizing it may be worthless.
everyone is realizing it may be worthless
Idk who you think “everyone” is
I’ve been reading, “the end is near,” since HIV/Aids, y2k, 9/11, the SARS outbreak, the anthrax scare, the swine flu/h1n1 and the several ebola outbreaks. Oh yeah all those wmd scares and the potential for a world War after 9/11.
The end is always fuckin’ near. If it’s all gonna end fuckin’ do it already!!! That’s what I think and it’s the waiting and the probabilities of the what-ifs that I can’t fucking take.
Seriously, if they wanted to end it all they could, they just make threats to control everything with fear because all governments are terrorist fucking babys that ironically, need to maintain a society.
Sounds like movable mortgage debt from 2008
I’d love it if it was packaged up into securities and credit rating agencies gave those securities an A+++ would buy again rating so my wallstreet-managed 401k knows where to steal my money.
So how would a (by now inevitable) government bailout not trigger an untenable treasury yield?
Like when they underwrote the twitter purchase debt…
Ooo I know this one! I won’t give out any spoilers.
Apparently they’ve spent 10 trillion in commitments that soan to 2032… And have to get AI earning to 3 trillion a year to avoid a crash.
…and there’s 8 billion people on earth. So I assume they’re hoping for some lucrative corporate/government contracts and bailouts.
If theres one thing the US stock market has, its plenty of clueless bagholders with more money than common sense.
Wait until they bundle the debt.
This is what they usually do. I don’t think there’s much to see here.
I don’t think the article is saying the business tactic is novel. It’s pointing out that they are having trouble executing it. Being stuck for 6 months trying to distribute $38B worth of debt is not a good indicator, especially as the AI world is still full steam ahead on generating more of this type of debt.
that’s kinda illegal, isn’t it?
Buckle up kids. It’s gonna be a fun ride.
Another once in a lifetime event.
GenZ Literally never having seen a functioning economy (at least while being old enough to meaningfully comprehend its existence) I imagine Generation Alpha is gonna have it even more fucked.
2008 calling? 📞 ✨
Don’t worry, the people responsible in 2008 were held accountable. They also didn’t profit massively off the economic collapse. Frodo also got the ring to Mordor. He had some help, but the ring was ultimately destroyed.
One brown man faced legal consequences for the 2008 crash. One brown man.
Who was held responsible? That was a big joke.
Sauron
That is on top of the $18 billion in bonds it sold in a single day last September
That’s $6.57 trillion in annualized debt using AI bubble math.
I dont know that we can collectively understand a number that big and what it means to us. People barely comprehend what a billion is.
The year my paycheck lands on Jan 1, my personal financial projections are gonna look SO AMAZING
Clearly you aren’t a megacorp. Just set your fiscal year to begin on the day of your paycheck. Checkmate, YNAB.
Sub prime mortgages on crack with this BS.
