Comment on Peter Thiel dumps entire Nvidia stake, slashes Tesla holdings amid bubble fears

• dogs0n@sh.itjust.works ⁨1⁩ ⁨day⁩ ago

  Think this one was the one going around

  Image

  Not sure what you can lookup, probably stuff like “AI investment bubble”

  This is probably a good resource (haven’t read it) en.wikipedia.org/wiki/AI_bubble (specifically look under Speculation > Circular Financing, soz dunno how to link to a header)

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  • incompetent@programming.dev ⁨1⁩ ⁨day⁩ ago

    I really appreciate the info. Yikes! This isn’t looking good.

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    • Jhex@lemmy.world ⁨1⁩ ⁨day⁩ ago

      The worst part is not JUST the circular investment making up basically all the new investment in the last few months… but the fact they are all based in impossible-to-deliver metrics.

      So it is literally not a matter of “if” the bubble pops, it’s a matter of when the market speculators will no longer be able to hide it

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  • sugar_in_your_tea@sh.itjust.works ⁨1⁩ ⁨day⁩ ago

    All that shows is who the business partners are. Nvidia sells GPUs, AI companies buy GPUs, and companies buy products from AI companies. For example, Microsoft’s Copilot is based on OpenAI’s models. End customers buy products from companies that either do AI themselves or buy products from AI companies.

    All you’re seeing here is how markets work. If it’s a bubble, it’ll likely impact those in the picture, but it’s not a bubble because of the picture.

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    • dogs0n@sh.itjust.works ⁨13⁩ ⁨hours⁩ ago

      From the wiki article:

      Speculation about a bubble largely originates from concerns that leading AI tech firms are involved in a circular flow of investments that are artificially inflating the value of their stocks.

      Example: OpenAI buys gpus from nvidia. Nvidia invests in OpenAI with the expectation of them using the money to buy more nvidia gpus.

      The hype of any company partnering with OpenAI right now is boosting stock values crazily. Look at the AMD partnership, they basically were given one of the largest stakeholder positions in AMD and given the chips they wanted because they paid AMD by boosting their stock with the hype of the partnership.

      If it’s a bubble, it’ll likely impact those in the picture, but it’s not a bubble because of the picture.

      Yes if this bursts it’ll effect those in the picture, but we are also in the picture. If it bursts, who gets bailouts with public money? Who has to not buy things because it becomes too expensive?

      There’s more to it than a simple picture. If the stock market crashes because of AI (or for any reason), we will all be effected (even just think about peoples retirement funds).

      And final note, it’s not a bubble because someone made a graphic, they made a graphic describing how it could be a bubble.

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      • sugar_in_your_tea@sh.itjust.works ⁨3⁩ ⁨hours⁩ ago

        My point is Nvidia isn’t propping up the bubble. If you look at the OpenAI deal, it’s a bit less than their yearly revenue, and the deal is for about the number of GPUs they make in a year, so it’s basically trading GPUs for equity. If anything, Nvidia is profiting from the bubble, not propping it up.

        we will all be effected

        Oh certainly, but I don’t think it’s any different from other large corrections.

        Here’s how I see the major companies in that chart in a crash situation:

        • Nvidia - currently trading at 50+ times earnings on AI hype, but 25 is more reasonable, so potential crash of 50%, but probably much less since they’re still king in non-AI compute
        • Microsoft - AI is mostly value add, and the stock isn’t too inspired overhyped, so maybe 10% correction?
        • OpenAI - would go under and get liquidated
        • Oracle - datacenters and AI aren’t a huge part of its business, so probably minimal impact
        • the rest - haven’t looked into all of them, but most will be hit hard

        It’ll he hit hard, but not nearly as bad as 2000 or 2008. If I look at the S&P 500, only 3 of the top 10 (Nvidia, Google, Meta) would be severely impacted, the rest only seem to dabble. Those 10 make up almost 40% of the S&P 500 and like 30-35% of the total US market. There are more large companies in there as well, but I don’t think most will be screwed like OpenAI. Palantir, for example, likely retains its government contracts for their data alone.

        So in an AI bubble scenario, I’m guessing we see a correction of like 20-30%, maybe less depending on the nature of it. I think a more likely scenario is a bear market where investors slowly get tired of poor earnings as the promises of AI fail to manifest. If OpenAI dies, large companies just move to another provider.

        And final note, it’s not a bubble because someone made a graphic, they made a graphic describing how it could be a bubble.

        I think they’re missing the forest for the trees here. It’s not a bubble because these companies are investing in AI, it’s a bubble because tons of companies are buying into the hype. These companies are merely investing into solutions those companies claim to want. I work for a relatively small non-US company (a few thousand employees, revenue around $1B), and the board recently came to our tech group asking what we’re doing with AI.

        This isn’t a handful of companies propping it up, a large chunk of the market is afraid of being left behind and demanding AI tools. All the graphic shows is how large companies are investing to meet the demand. Microsoft used OpenAI products in its offerings, OpenAI is a major Nvidia customer, etc.

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