Comment on The air begins to leak out of the overinflated AI bubble
sugar_in_your_tea@sh.itjust.works 1 week agoYou do realize an economic bubble is a metaphor, right? My point is that a bubble can either deflate rapidly (severe market correction, or a “burst”), or it can deflate slowly (a bear market in a certain sector). I’m guessing the industry will do what it can to have AI be the latter instead of the former.
helenslunch@feddit.nl 1 week ago
Yes, I do. It’s a metaphor that you don’t seem to understand.
No, it cannot. It is only the former. The entire point of the metaphor is that its a rapid deflation. A bubble does not slowly leak, it pops.
sugar_in_your_tea@sh.itjust.works 1 week ago
One good example of a bubble that usually deflates slowly is the housing market. The housing market goes through cycles, and those bubbles very rarely pop. It popped in 2008 because banks were simultaneously caught with their hands in the candy jar by lying about risk levels of loans, so when foreclosures started, it caused a domino effect. In most cases, the fed just raises rates and housing prices naturally fall as demand falls, but in 2008, part of the problem was that banks kept selling bad loans despite high mortgage rates and high housing prices, all because they knew they could sell those loans off to another bank and make some quick profit (like a game of hot potato).
In the case of AI, I don’t think it’ll be the fed raising rates to cool the market (that market isn’t impacted as much by rates), but the industry investing more to try to revive it. So Nvidia is unlikely to totally crash because it’ll be propped up by Microsoft, Amazon, and Google, and Microsoft, Apple, and Google will keep pitching different use cases to slow the losses as businesses pull away from AI. That’s quite similar to how the fed cuts rates to spur economic investment (i.e. borrowing) to soften the impact of a bubble bursting, just driven from mega tech companies instead of a government.
At least that’s my take.
helenslunch@feddit.nl 1 week ago
The AI bubble is never going to “pop” for Nvidia because they’re not dependent AI. Other than slightly modifying the design of their chips. When the AI bubble does pop Nvidia will just go back to selling cards to gamers and professionals. They’ll be the biggest profiteer of the bubble.
sugar_in_your_tea@sh.itjust.works 1 week ago
A lot of Nvidia’s stock price is based on AI demand. If that evaporates, Nvidia’s stock price would drop back to where it was before AI became a major profit driver. The big players will fight to keep AI business going, so I think we’d be in for a pretty soft landing there.