Comment on Everyday AI looks more like the '08 housing bubble
Buffalox@lemmy.world 5 days ago
I don’t think it’s a bubble, first there is absolutely zero comparison to the housing bubble, which was a financial problem, and this alleged bubble is mostly driven by companies that have lots of money, so it is not credit based.
The better comparison would be the dot com bubble, which was dominated by companies that didn’t even have a product and didn’t make any money. The frenzy is similar, but the fundamentals are different.
AI investments may cool down because obviously there is a frantic race in an attempt to get ahead.
But the reason I don’t think the AI bubble will burst is because it is driven by companies that actually make money.
They may lose money investing too heavily in this, but they most companies investing in this can afford it.
If it is a bubble, it is a very very long one, Nvidia value has been exploding since 2016 based on their AI products.
If this is a bubble, I think it will go down in history as the longest living bubble ever.
Is the market frantic? Yes absolutely.
Is the value of some AI companies extremely high? Yes absolutely.
Is it a bubble that will burst? No if it’s a bubble, this one will be more like deflating to a less frantic level, because ALL the main players have the money to weather losses.
Its not a bubble but most people here dont think for themselves. They dont even seem to understand the connection between what news is put out, which analysts they choose to give attention, and for what purpose.
Imagine living your life and just believing whatever someone says in the news just because he has the title of analyst. And never thinking about who profits from that specific guy being on the news at that specific time.
Its not a bubble but most people here dont think for themselves.
But the ones who believe the AI hype think for themselves. Right.
If people think it’s a bubble, then it’s a bubble! (Self-fulfilling prophecy.) Google Trends is a decent gauge of public sentiment.
Especially your first paragraph is probably spot on. Short attention span.
I don’t think the AI bubble will burst is because it is driven by companies that actually make money.
Last I looked, the big AI companies are all hemorrhaging money.
It’s perfectly normal for a growth business to invest more than they make, I didn’t say they were profitable yet, but they are making money.
It is not “normal” to run a 4 year money loser and claiming to be worth billions.
Only is made up financial land does that work, and causes cyclic depressions where the working class loses wealth, and the oligarchs further concentrate wealth in their hands.
The market can remain delusional longer then you can remain solvent.
It is not “normal” to run a 4 year money loser and claiming to be worth billions.
Maybe not, but it is absolutely normal to lose money for years to make a profit later.
Microsoft was ready to lose money on Xbox for 10 years to take a place in the console market. And it’s a very profitable market for them now.
Microsoft tried some of the same with Windows Phone, where they invested billions for years before they gave up.
One of the most hyped AI companies is probably OpenAI, and they absolutely have products that makes them money. They are not profitable yet.
But among the bigger stock holders are Nvidia and Microsoft, and if OpenAI goes under, they will absolutely survive just fine. But I don’t think they will.
OpenAI is owned by companies that know how to make money, and apparently OpenAI knows how to do it too, and has been quicker to make money on for instance ChatGPT than Google was on making money on YouTube.
Some AI companies will go down, that’s the nature of being in a cutting edge business, and it’s the nature of competition. But I think the AI business will mature and stabilize like most businesses have, not burst like a bubble.
Nobody called it a bubble when the smartphone market exploded. Because everybody could see the value of the product, although it’s not quite the same, many companies have been forced out of the smartphone market due to competition. I think the AI market will be mostly similar.
Well argues. Also even if it is a bubble it’s arguable that most technology innovations are preceded by bubbles which are important for directing investment into emerging technologies. The railroad mania in the 19the century or the fibre optic rollout in the late 90s benefited humanity long after the bubble burst
I think the biggest difference between this bubble and the ones that pop are whether the valuations were built by debt. In this case - no. So when their products turn out to be less useful than they claim, it will devaluate. But the debt issued to build the bubble wont go through a sudden correction that is amplified and causes an even bigger collapse like in 2008 or the dotcom bubble.
If it doesn’t pop, it’s not really a bubble, it just looks like it.
In bicycle repair terms it is called a slow leak.
ThirdConsul@lemmy.ml 5 days ago
Citation needed.
thespcicifcocean@lemmy.world 5 days ago
the only company making a profit is nvidia. everyone else is losing.
gnarly@lemmy.world 5 days ago
Not true, plenty of AI companies are in the green like Midjourney. Not everyone is hermorhagging money like OpenAi to curb out competition.