they're just printing money for each other at this point
It's "seller financing" but to a degree we've never seen before in an industry (which create these "circular" effects).
There's a good HN thread from 2-days ago on this subject (200+ comments).
Maybe I can get quoted in a sidebar:
“Hey Econ students, we normal people could see that the AI market was extremely gamed. We can see the investment feedback loop. It is just that the organizations continuing it have control over so much money, they don’t have to stop and ask society in general for permission to continue. Really this is a symptom of the wealth inequality crisis that they covered chapter…”
The reasoning behind such a deal are usually not a good sign for the underlying health of the companies involved.
It certainly wouldn't be for fear of a lack of investment. AMD is up 30% from this announcement alone.
OpenAI may own 10% of AMD, and that seems like OpenAI investing in AMD in exchange for buying 6GW of GPUs and 160million in stock.
But if it results in their stock reaching 600$, then AMD will give back the money that OpenAI spent on GPUs as 10% stock options into AMD.
Which sounds like, no one is really investing in each other, they're both like exchanging money back and forth, where both hope to gain some extra money by propping up the AMD stock with the announcement, hoping it helps make AMD more competitive on the GPU landscape.
Did I get it right?
So day 1 valuation is mostly hype, but that hype may translate into real value later.
Completely agree, I’d expect all of those to take a big hit, and some more than others, but I don’t think Microsoft or Google would disappear. As for the SP issue, if this trend continues, people might start seeing the SP as the opposite of diversification (at least in the stocks market sense) and will have to start looking for something else.
BTW, I’m almost an all-in SP investor myself so I’ll have to navigate that dip too, lol
After the predicted bloodbath, do we get some infrastructure and products worth keeping at the end of it? If so, does that mean the system can limp on, after even more money has printed, or do we get to another big fork in the road where systematic change is required?