Comment on Peter Thiel dumps entire Nvidia stake, slashes Tesla holdings amid bubble fears
dogs0n@sh.itjust.works 1 day agoThink this one was the one going around
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)
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.
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.
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:
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.
I can’t say I’m an expert in the theory of this stuff, so big chance I’m very wrong.
All i know is experts have already likened the current “AI Boom” to the dot com bubble.
Nvidia might not be propping up the bubble in certain ways, but they could be deemed the center of the bubble. They went from a $370B market cap 3 yrs ago (around ChatGPT launch) to now being around $4.5T (peaking very close to $5T near the start of this month I think).
They could be the king in non-ai compute, but 99% of their revenue comes from b2b sales (and has done for a very long time I believe) so I can’t see them keeping any of those gains if we see an AI burst (this entire gain in stock seems very related to AI, not to any other advancements made for their chips to my monkey brain).
Most big (and small) tech companies are really buying into this AI hype, not sure if using AI has caused gains in stock market prices for certain companies, but I imagine we could see some drops here too (im thinking along the lines of hey your business “relies of ai tooling now” so mby u cant compete im gonna sell).
So I think all these businesses getting on the AI train could be bad too.
And final note again, if we see a burst, I think everyone panic selling could spread over to people panic selling everything and trying to get their hands on cold hard cash so their entire life savings dont vanish in an instant, so market wide we could see big drops? Certainly this could be very bad. I’m not very sure though on all the theory, I don’t think i’m smart enough to theorise this type of stuff, but I tried anyways. Maybe the govt have learned its lesson (pressing doubt rn) and will do ANYTHING to stop a crash, idk.
incompetent@programming.dev 1 day ago
I really appreciate the info. Yikes! This isn’t looking good.
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