AI is obviously a bubble.
That said, Burry has also predicted 6 of the last 2 crashes.
The AI bubble will “burst” as soon as they figure out how to inflict all the damage onto regular working people. The housing bubble bursting is what enabled the ownership class to kick a bunch of working people out of their homes and then buy up all the recently vacated real estate for cheap. Nothing about the damage that the rich did to our economy caused any of them to face any actual consequences.
The promise of AI was that it would replace all the workers, but it’s not doing that fast enough and it’s beginning to look like it never will. We’ve been hearing that the AI bubble will “burst any day now” for years at this point, but if it happened right now, the ownership class are the ones who would be left holding the bag, and that can’t be allowed to happen. When they find a way to take it out of our hides, we’ll see that suddenly the “invisible hand of the free market” will present a scenario such that the floodgates open and the bloodbath is finally allowed to proceed. I imagine that’s why they started wrapping up so many pension funds and the like in AI investments.
They already have. Public Banks are huge investors in the private credit companies that underpin a good amount of the AI bubble.
The Magnificent 7 have been driving the stock markets gains for the last few years. They have also created independent companies to build out the data centers. The debt for these companies is off their books and funded primarily by private credit markets and is underpinned by contracts with the big 7 for data processing once the data center is built.
Projections by the Mag 7 have driven their share increase. So what happens if one or two of the magnificent 7 miss their projections? Well look at Oracle, its stock is tanking because it missed projections.
If the Mag. 7 stock tanks so will your 401ks. When their stock is worth less they will stop plowing money into AI. Suddenly all of the companies with contracts to build the data centers will loose their source of revenue. No revenue and they can’t pay off the loans to private credit. Private credit companies will start to go under and begin to take down the public banking companies that invested in them…
Its a house of cards ready to fall if any of the Mag 7 start to flounder.
ownership class
pension funds
Same thing. Pension funds ARE the ownership class.
I’ve been commenting that people over 55 own 52% of the US and baby boomers as a generation own ~8x more than billionaires as a class, but I re-checked and I’d quoted the wrong number in a bunch of my comments. 52% is for baby boomers only. All over 55s added together are actually over 70%. Let that sink in.
The entire goal of the economy is to let old people enjoy the spoils of the young’s work. Even billionaires are just a symptom of a larger, systemic issue (which is not to say they shouldn’t be hunted for sport, that should still happen).
I noticed the pension fund thing and I’m scared.
The “invisible hand of the market” is such a fascinating myth, because it frames the results of capitalist endeavors as inevitable and almost holy - but as soon as the sufficiently wealthy and well-connected suffer a setback, then “government bailouts” are granted.
The invisible hand is actually very visible of you dare to look close enough.
The basic supply & demand, “invisible hand of the market” stuff applies at like. A farmer’s market. This is the context Adam Smith was talking about when he made up the invisible hand phrase. If one farmer has cheaper produce than another, he’ll probably get more customers. Anything more complicated than a local farmer’s market is… more complicated.
So I saw a few relevant newspieces:
~ Companies are now ceasing their mandate to workers to use AI to do things that used to be done without AI. They’re now saying don’t use AI just to use AI. They’re trying to reduce their token purchases.
~ The estimation now for AI use cases is to reconsider if tokens cost ten times their current price. If the use case is still worth it, then that use case will likely survive the bubble. If it’s not worth it, it’s time to hire back employees.
~ The hyperscale AI industry will have to make $6 trillion annually to break even. Amazon makes $2 trillion by selling people material stuff. Walmart is similar. There may not be a market for $6 trillion in tokens every year, even from government projects. Also, it’s a bad sign if government projects are propping up the whole stock market.
~ China is mostly turning to a software AI model which does home and small business AI tasks fairly well without buying compute from a hyperscaler. You get a gaming machine, get open source AI software and a dozen terabytes of training data, and you should be able to create slop, vibe code or fix the grammar and style of your report. Also, hyperscale models are opinionated and don’t like certain topics. Home-grown AI doesn’t have those objections.
Also, hyperscale models are opinionated and don’t like certain topics. Home-grown AI doesn’t have those objections.
Unless you create or review the training data and train your model yourself, home grown AI models do have those objections.
Yeah but how do we PROFIT off of it?! Fuck capitalism because this is a valid question
An investment that would pay off if the tech industry went to hell would be Put options on QQQ (an ETF that tracks the NASDAQ-100). You have to get both the timing and the drop correct, and better funded groups with much faster computers AND the ability to make trades to prop up the market while they unload their shit will be competing against you (every options trade has an opposite side and most of them expire worthless). Watch the movies Margin Call and The Big Short for research as much as playing the lottery can be researched (they’re good movies so it’s time well spent anyway). Make a movie night out of it and watch The Other Guys which was directed by the same guy who directed The Big Short. Watch through the end credits.
I didn’t read the article because gizmodo, but as other people here have said, Dr. Burry (he’s played by Christian Bale in The Big Short) often thinks things are going to go south, and there’s usually reason to think so, but in general as Warren Buffett could easily have said, “stonks only go up.” NVDA, AAPL, and MSFT make around 15% or so of the entire world stock market and around 20% of the US market. Nobody’s going to let them collapse and even without the AI craze they still have all the other stuff to fall back on. Thumbs will go on the scale to an extent even greater than the 2008 collapse.
This is posted once every few months for the past few years btw
And not just about AI. Ever since the movie, I keep seeing posts about what this guy is betting on. I think some of it is news companies preying on poor people for clicks.
I own a beer bar, and we work with some friends who have a catering business that does pop ups on our patio. They’ve been using AI to generate flyers and then tag us to have us share them to our larger audience. I stopped doing it because they look like trash, get low engagement, and are off brand for our art-inspired space. They got upset with me that we weren’t helping promote, and I explained my position on their AI flyers, and they sent a very lengthy email back about how AI is being utilized by small businesses in ways that we’re still scratching the surface to understand its value. I popped the email into chatgpt and asked if it wrote that email and it said it did, lol. Now I have more work on my hands to design their flyers for them, but it’s worth it.
I recently read a decent article (in Danish mind you), focused on the positions some volunteers had from getting more fans to their local football club… Because they now posted stuff on Facebook.
Then followed up by an expert on engagement, and statistics on about half the population felt AI image generations to be off putting - And a fair chunk of the remainder not really caring, and a small minority finding it cool/useful.
That experts main position, was the human touch was lost and the volunteer of the local football club would most likely get more people to stadium if they asked a bunch of 2nd graders to draw match day posts.
Because it would genuinely connect to people. So yeah, a lot of smaller businesses and volunteers are currently having a feeling all of this AI gen is giving them more traffic and attention, but in reality they’re getting more attention because they went from doing nothing to doing something
The amount of food menus with it on is ridiculous. If you sell food you want it to look good, appetizing etc, so making it look like plastic tat is counter effective.
Second I immediately think they either don’t care or are uninterested in their product. That makes me question how much they care about their food, safety quality taste etc. It’s an immediate no for me.
Isn’t a beer bar just a bar?
Typically, one expects a “bar” to have beer and liquor and the ability to make at least basic mixed drinks (rum and Coke, gin and tonic, etc.).
A “beer bar” usually has a wider variety of beers on draft and no liquor or mixed drinks.
I popped the email into chatgpt and asked if it wrote that email and it said it did, lol
It doesn’t work that way tho
I mean, it literally does though. The email sounded phony AF, especially knowing that the person’s first language isn’t English and it was overly proper sounding. I copy and pasted it into chatgpt and said “did you write this email?“ and it’s response was” yes, based on the writing style and phrasing, I wrote this content."
It does not remember things it made, so no. It doesn’t work that way.
Doesn’t work that way. Only if they programmed LLMs to sign the work like using a hash you would be able to confirm or deny with 100% accuracy
Someone put in the intro to the book Frankenstein into an ai checker and it confirmed it to be 100 percent written by an LLM. It’s not deterministic.
It’s not deterministic.
This is the first thing about LLMs always, and what most people can’t seem to understand.
LLMs are a thing where you give an input and get an output, and it happens to correspond to reality much of the time. But there’s no actual understanding there.
I’ve been using ChatGPT a bit at work lately, since they’ve already paid for the subscription for everyone. I’ve learned that it is a bad idea to ask it any leading question, because it is likely to just give you the answer you want to hear.
A usual ramen spot I’ve been going to for the past few years for some reason replaced the old images of the food on their menu with AI-gen ones and it looked so weird. I saw it last time I went for my usual, but I kept looking at the art and like a Lovecraftian horror the longer I looked at it the worse the details appeared. It literally affected my appetite because psychologically I couldn’t help but think I was ordering some freak-ass food as depicted in the new ai-gen pictures, and the ramen just didn’t taste as good to me that day. And I don’t think I’ll go back anymore :(
You should tell them
It’s always an “it’s inevitable” argument.
It’s also inevitable their pop-up gets replaced by humanoid robots next year, using the same logic.
it’s so bizarre to me that people who work with food don’t realize that the ai trash is producing images that are REVOLTING, do not look like food, and actively deter people from their products.
you’d be better off with a half lit shitty polaroid of actual food than putting that trash on your branding, so much of it is nightmare fuel
I used to work in a wine store. Customers would always joke “hahaha i just pick them by the label 😂” and I would always say. That’s not stupid, wine is about aesthetics. Someone who makes good wine will appreciate the value of a good label. And the inverse is true, people with poor taste won’t care about their label, but they won’t be able to make good wine, either.
I’m saying judge a book by its cover. How else are you gonna know what’s in the book without looking at its cover??
You’re definitely right, the food looks so phony. The thing that’s wild is half the time they make a flyer, there’s only bricks of yellow text on a black background that’s too much info to read. I’m visiting San Francisco right now and saw a pizza shop last night that their entire menu was AI garbage and was so shocked how prevalent it’s become.
So do I. We had our financial person take steps to limit our exposure. Still, I expect we’ll take a major hit regardless. Hopefully, we can ride it out with no major financial emergency forcing us to sell while the market is down.
I had a boomer normie ask me how to use AI to develop his new “business” website telling me that he didn’t want to hire a developer if the developer would just use AI anyway.
This guy doesn’t know what a router is, and was asking me for help trying to understand what the AI was telling him, and it was the most basic shit.
When the normies are trying to invest in AI, they’re the last to invest and know to throw money at it. That was a big signal to me that the bubble is about to pop. Money is running out and the boomers are trying to get in on it.
Why would someone ask a person to explain an AI response they didn’t understand? Like, you’ve already offloaded the most important part from a human brain (getting a fucking answer)… Why wouldn’t you at least then ASK THE AI TO REPHRASE AND SUMMARIZE the response you didn’t understand? That’s the thing it’s actually good at doing ffs.
Exactly this. If you hear people talking about investments around the Thanksgiving table, its time to bail. All the smart people got in months ago and have left, they are just looking for bag holders now.
Lmao, I think all the smart people avoided investing in AI in the first place 😂
When the normies are trying to invest in AI, they’re the last to invest and know to throw money at it
They are also the largest group by far. Doesn’t really mean much aside from the fact that adoption is now widespread.
I don’t think it’s going to add up to a trillion dollars a year though, lol.
AI and the Enshittification Era w/ Cory Doctorow https://www.youtube.com/watch?v=-dAIJRjb-Bw
The CEO of SoftBank says they need five trillion a year.
https://finance.yahoo.com/technology/ai/articles/softbank-groups-ceo-says-5-112543307.html
…to “meet demand.” …
He’s saying “there is no bubble.”
You’d think he would know better…
Well it is SoftBank.
Full disclosure, I did not read that. But I did see the headline.
Now that I have read that, I feel like it is a cry for help.
“Those who refuse to evolve are closing down their world. Those who condemn AI are themselves spitting upward,” Son added.
“If you owe the bank $100 that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.”
J. Paul Getty
how much skin does Softbank have in this game.
Didn’t they just start a partnership with one of the big US tech companies like 6 months ago or something?
Sam Altman or someone like that has probably got their tendrils in this guy’s head…
They are the ones, Oracle will soon not be paying anymore, because of Force Majeure (techcrunch.com) …
I don’t think it’s going to add up to a trillion dollars a year though, lol.
It will. The real question is - what will be the price of a loaf of bread in the multi-trillion dollar economy?
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nope. their capex alone is going to destroy them, then their investors will realize they’re all fucked and the real fun will begin
That’s the real truth. Run like hell when luckless chumps show up looking all enthusiastic
If AI is so good they should try asking it that. See where that ends up.
That’s the right strategy. They want to use ai, so let them. No need to speak to professionals who will use ai anyway.
I can tell you how to use AI… for money.
Oh, great, thanks! You’re a real lifesaver. [Proceeds to pay more than he would have paid for the real developer, to spend more time to create vibe-coded tech-illiterate trash.]
OpenAI had their little failure of a presentation recently, and they’re introducing a “fast response” tier for 6x the current subscription cost. This is their attempt to get people used to higher pricing. They are bleeding money, and they will need to raise prices sooner than later to start attempting to make it back.
Once they do, a good chunk of their customers will simply stop paying, forcing the AI companies to further raise prices, causing more customers to leave, etc.
AI companies are trying (and failing) to be indispensable, and they need that to have any hope of survival. It’s only a matter of time before they collapse, and only then might we see what’s actually beneficial about machine learning.
I saw a meme recently- WinRAR is more profitable than OpenAI. Kind of funny to think about
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I’d probably have better luck shorting stocks if I could trigger a (rightful) panic like this guy can.
I’ve come to realize that I was assuming that there was a limit somewhere to “the market staying irrational”. I’m not so sure anymore
the market is irrational
🧑🚀🔫🧑🚀
You could argue that a heavily debt-based business that requires years and years of more debt before becoming profitable would respond to rising interest rates quite negatively, but, yeah, the whole thing is already enitrely irrational.
I’m keeping some popcorn in reserve for OpenAI’s IPO.
But the question is whether or not they’re actively holding debt or just letting themselves get diluted through investments.
There’s more supply than demand for compute at the moment, so Microsoft is more than happy to buy ownership through Azure credits - Likewise Amazon is with AWS credits
Oh, they’re definitely holding debt in addition to whatever else the hell is going on with their shell games.
I don’t get why they haven’t gone already.
If they don’t get their IPO off before the bubble pops, they might be losing out on a trillion with a capital T
Because there is no way he gets 1 Trillion in an IPO the moment their finances become public, and that is the bare minimum he needs so he doesn’t get ripped to shreds.
And we already know they’re due to run completely out of money sometime in 2027. And getting more users only increases their expenses, with no real path to profitability in sight
- They are true believers
- They know they’ll get a bail out because they are too big to fail
- When everyone sees their S-1, it’s gonna make WeWork look like fucking Amazon
It’s less about fundamentals and more about what investors believe about the market. That’s why Musk is so good at manipulating the market, he’s convincing enough for many investors.
The market has never been rational.
I certainly hope so as I may have sold all of my (meagre) investments in anticipation.
He may not be far off.
These bubbles usually last approximately five years. (Or at least that’s been the case historically.) We’re in year four. I’m actually keeping a portion of my portfolio in cash so when the crash comes I can take advantage, though I may move my whole retirement account into bonds and money market funds after the new year.
Trump just said in a response to a question about our $40 trillion debt (jesus, that’s a lot of zeroes), “You know, inflation, certain levels of inflation, will also pay off that debt very rapidly. Very rapidly.” https://www.msn.com/en-us/news/other/trump-just-soft-launched-higher-inflation-as-the-new-solution-for-rebalancing-the-40-trillion-us-national-debt/ar-AA2dpocG
So I hope that cash isn’t USD. Honestly, all currencies look pretty bad right now. And if Trump triggers Iran into destroying the Middle East (and maybe triggering Israel to nuke, if Trump hasn’t already), the only thing that’s going to be worth a damn is cigarettes and penicillin.
Astonishing really.
This is the guy running the US like a business.
Don’t worry about debt, just stoke up inflation so it does t seem like so much money.
Nothing could possibly go wrong with this plan.
Apparently this was covered in an article in Fortune magazine. in it they state trump called it a ‘soft default’ on usa debt.
This is basically not paying debts. it’s consistent with trump practices. Afterall, didnt he bankrupt 40 companies including 6 casinos? he’s just moving on to bigger fish by bankrupting the usa now.
Who could have possibly seen this coming??
Tech billionaires were late to the party showering trump with money to get him elected.
Cryptobros were there first. They want the dollar at zero.
The AI bubble is propping up the American bond market too (countering all of the other crap Trump had been doing to undermine the economy). When the bubble pops, the bond market is going to suffer massively as well.
You’re not wrong. I’m thinking of buying in post-bubble potentially, but I’m not 100% sure what I’ll do yet. I do know that, by the day, it feels more and more like a good time to take the profit that’s there and wait.
Do you mean long term bonds or do you think short term will be affected as well? If it is a riding rate environment then t-bills or MMFs probably have more to gain from the rising rates than risks from a drop in value of held bonds
I guess that depends how much real damage Trump has done to the underlying economic come B-day.
T-bills and MMFs sound like something from different communities…
Is there something I can do with my work 401k?
You could reallocate into bonds if you believe that it will tank the equity market as a whole. Most available options to allocate into a pretty broad so it’s not totally exposed, just expect lower returns in the mean time and be prepared to reallocate into more growth exposure if/when the broader crash happens. Difficult to time so beware.
Bonds are a bad call as well, as the US government is screwed on interest and will be inflating.
Gold is a better call, this looks like stagflation coming.
God I hope so.
It’ll only hurt us. The rich will profit heavily.
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Yeah, but if the bubble lasts longer it’ll hurt us more when it does collapse.
Plus we’ll have to deal with more clanker bullshit in more of our daily lives for longer if it takes a long time for it to collapse.
Are you talking about the collapse of the AI bubble hurting us? I mean, sure, but what’s the alternative? There isn’t one. The sooner it pops, the more money that will be available to develop businesses that can grow the economy. Right AI is gobbling up investment capital and driving up the interest rates and inflation of the price of tech hw is stunting consumer and business tech, contributing to overall inflation, and making actual products people want to buy more expensive, ie less sold…
I’d like to say that this economic collapse could not have come at a worse time, but I think bubbles like this are only possible when markets are no longer competitive, everyone is broke as shit, and people have to invent fantasies to make investors think line will go up.
Edit: Oh, and I just thought of a REALLY big benefit of an early pop: people’s retirements will be less exposed to AI-first and AI-only companies which are almost guaranteed to fail. If OpenAI raises 2 trillion, it’s going to be getting a lot of that from institutional investors investing other people’s money.
If it does, it needs to pop so hard that EVERYONE involved with it can’t even afford to be heard of anymore.
