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https://ts2.tech/en/coreweave-stock-slips-as-class-action-no...
90% of their stock is being used as collateral against 33 banks for 18 billion stargate loan to OpenAI.
Given Japanese bond markets right now, 30% circular financing, if the AI narrative falls, ARM is gonna blow up.
Right we have a loop where AI is so expensive (because it's priced to feast on B2B margins) that the best consumer experiences aren't affordable, and they're not affordable so they don't go mainstream, and they're not mainstream so no one is willing to take less money and bank on the incredible volume that would emerge if it went mainstream.
If we can get model pricing cheaper AI entertainment alone will probably carry things (I'm 99% sure NovelAI is already one of their largest customers outside of major AI labs)
If anything I'm more worried about the consumers than the companies.
You should really crunch the numbers on buying and then running enough compute to run a leading edge model. The economics of buying it (never mind running it) just dont add up.
You still haven't factored in "training", the major problem right now that every one remains head in sand about.
I dont need a model to know who Tom Cruise is or how to write SQL if I am asking it "set up my amazon refund" or "cancel xyz service". The moment someone figures out how to build targeted and small it will take off.
And as for training, well having to make ongoing investment into re-training is what killed expert systems, it's what killed all past AI efforts. Just because it's much more "automated" doesn't mean it isnt the same "problem". Till a model learns (and can become a useful digital twin) the consumer market is going to remain "out of reach".
That doesn't mean we dont have an amazing tool at hand, because we do. But the way it's being sold is only going to lead to confusion and disappointment.
> I dont need a model to know who Tom Cruise is or how to write SQL if I am asking it "set up my amazon refund" or "cancel xyz service". The moment someone figures out how to build targeted and small it will take off.
I think people got a lot of ideas when dense models were in vogue that don't hold up today. Kimi K2.5 maybe be a "1T parameter model" but it only has 32B active parameters and still easily trounces any prior dense model, including Llama 405B...
Small models need to make sense in terms of actual UX since beating these higher sparsity MoEs on raw efficiency is harder than people realize.
It will be worse than the dot com bust.
But you're more likely to just cash out early, lose a bunch of gains, then buy back in later at higher prices.
If you can time the crash you can make a shitload of money. But you can't, so you'll come out better if you just keep buying in every paycheck and ride it out just like you have been.
You're right that selling everything and 'going to cash' would be a mistake, but diversifying away from US large cap growth absolutely wouldn't. I'm 60/40 stocks/bonds. My stocks and bonds are 50/50 us/intl. ~ 10% of my us portfolio is small cap value.
What's funny to me is that nobody learns from the past. This is far from the first tech bubble we've had even before the .com crash (canals, railroads, radio...). The answer, every time was diversification.
https://www.investopedia.com/your-s-and-p-500-index-fund-mig...
https://www.cnbc.com/2025/10/22/your-portfolio-may-be-more-t...
Also, during a crash there is the so called "flight for quality" where people cash out from risky assets and invest in stable ones that can weather the storm. So, try to invest in assets that are A or above (https://en.wikipedia.org/wiki/S%26P_Global_Ratings). The chart is for countries, but analysts grade companies as well in case you want to stay away from treasuries/national bonds.
Also diversify geographically. US will likely take the biggest hit if the bubble pops, so perhaps European markets that lagged behind in adopting the technology are safer (IMHO).
Personally, I am preparing by moving money from growth items to stable ones a bit at the time. To diversify even further I am using ETFs that, in addition to what mentioned above
1) pay dividends (whether these distributed or reinvested doesn't really matter) 2) are denominated in or hedged in safer currencies (CHF especially, but also Euro)
You definitely get smaller returns, but the name of the game is to maintain what you have, not to make heaps of money.
Finally, I am not a financial advisor, so do your own valuations/risk assessment analysis.
Current US debt to gdp is 124%, 38.6 trillion. Japan too at 230-240%.
Bond markets in both are looking seriously unhealthy (Japan going via a Liz Truss moment at present).
If the AI bubble falls over, the US government is going to have to print 5 trillion to cover the bubble at least. The only option there is inflate away anyone holding cash.
If hte AI succeeds and people are replaced, the US government faces a massive fiscal cliff of a loss of tax receipts. They won't be able to service the debt and again will be forced to inflate away.
To service current debt projects, AI growth needs to return some 3.2-3.5%, it is currently 0.5%.
Bonds, equities, USD, and housing are all risk assets right now.
And whose fault is that?
However, the consequences are always applied to everyone but the executives and board.
Primarily the fault of our governments not using anti-trust laws for real in, like, decades.
Governments actually do have the power to regulate the economy and to prevent catastrophic crashes from occurring. The warning signs for the AI bubble have been visible for well over a year now, when the entity relationship map between the major players began to resemble a Habsburg family tree... and yet, nothing was done.
The reality is even worse than this. It's not that the government is asleep at the wheel, it's that all financial crises were caused by government intervention to begin with (2009 subprime government backed mortgages, 2020 covid money printing, etc). The big banks, corporations and wall street were only taking advantage of the situation the government helped create in order to enrich themselves.
Average people would have also loved to have taken advantage of it to enrich themselves, if they could understand the system well enough to game it, and some do, so it's not like the blame is only on one participant, but pretty much everyone is to blame:
- the government for creating asset bubbles and closing an eye as it is inflating
- corporations and super wealthy for being greedy and exploiting the system created and run by the government
- the voters for being uneducated and stupid and not seeing the government rob the blind, or for being greedy and complicit on the asset bubble for personal gain, and not holding the government accountable
I never meant such a thing.
>assuming the people in government positions have the actual best interests of the country in mind
They don't. They care about themselves and the lobbyists paying them, and sometimes they throw you a bone to win an election.
>Deregulation specifically led to the sub-prime mortgage crisis and the current situation, not the existence of regulations itself.
Deregulation is also a form of regulation because the government is the one that removes the previous safeguards put in place via new regulations. And Clinton was the one responsible for the sub-prime mortgage deregulation.
???
Literally all the cloud providers have been reporting severe capacity crunches for the past few quarters -- to the tune of backlogs of triple-digit billions each. As a reminder, a backlog or "Remaining Performance Obligation" (RPO) is money their customers have committed to them but they could not realize because they didn't have enough capacity to serve their workloads. Which is why they are all committing to double-digit billions each in AI CapEx spend over the next few quarters.
And most of them (aside from Oracle, which is trying to borrow its way into this gold rush) are investing money from their double digit billions in profit (per quarter!) into this spend... money that they could have otherwise comfortably held on to for something more palatable to share-holders.
Revenue and return on investment is a valid concern to bring up in this whole GenAI shebang; demand is not.