Hacker News Reader

Comment by turnsout | Hacker News Reader

This is conjecture, but I'm fully expecting a correction, if not a recession. Fortune 500 has gone all-in on AI and set high expectations for increased efficiency. So far, that boost has not come, but Wall Street has been patient. But if you fast forward a few quarters, I wonder if investors will lose their patience and wonder why we're all still burning cash.

BTW, I'm long-term bullish on AI, I just think companies have gotten over their skis in the short-term.

View on HN

The high concentration of tech companies that are spending on AI are also the ones controlling the narrative including the funding, success criteria, and communication. We are more likely to see minor corrections that effect individual companies but don't impact the market enough overall.

Tell that to their actual customers. At some point, State Farm or Eli Lilly is going to say "hey, we spent $1B on AI and fired 10,000 people. Where's all that efficiency you promised?"

At some of those companies, many of the laid-off employees weren't adding any value. So efficiency will increase even if AI has zero effect.

Guess we'll find out!

That first sentence sounds so like 2008-land. House of cards is a house of cards. If 1 + 1 = 2, the market will discover it. The 1 + 1 = 3 narrative can only be controlled for so long.

I think that the Fortune 500 is so invested in AI that AI has potentially become "too big to fail". There are increasing political and financial connections between big tech and the executive branch as well. As long as the Trump administration is willing to backstop any backslide on AI, things will only continue to go up. And there's no guarantee that Democrats would take a significantly different stance.

What does it mean to "backstop" an AI company whose products no longer appeal to people?

It's reasonably clear what it means to backstop failing financial institutions and so on. Not clear on how the concept applies to Microsoft or Nvidia or something.

The US federal government already took an equity stake in Intel so they might do the same with other key tech companies.

Trump may be willing but is he able? The US economy isn't unsinkable, or have infinite money to borrow or even print. I am not sure Trump is that tech co. friendly either and he is definitely not consistent and can turn at any time.

For the next three years, the Trump administration can borrow or print an effectively infinite amount of money. Then cleaning up the mess through an austerity program will become someone else's problem.

They might but they are not immune from global markets that are watching their moves closely. Those markets determine bond yields and currency exchange rates.

Although the market can be irrational longer than Trump needs to stay in office.

> As long as the Trump administration is willing to backstop any backslide on AI, things will only continue to go up.

Government trying to “backstop” firms to prevent a bubble bursting may be able to delay it somewhat, but not indefinitely, and only at the cost of magnifying the impact when it does.

And the capacity to even delay it is constrained by the state of the rest of the economy, and that isn’t looking great right now in the US, which is teetering on the edge of stagflation.

+1, just like the dot-com bubble

Reply on news.ycombinator.com