Looks like there is only limited money in the market and there is a race to get it first. Wonder if the free market concept should move the prices down in such a scenario?
The only next step is the public market.
That's surprising to me; I thought (or heard) that it was low 3-digit millions.
We prefer red blooded American scam artists here, buddy. Hell, Elon probably found some bullshit way to recognize Chinese AI as Twitter revenue, used to buy cyberattacks to sell to SpaceX.
Knowledge Atlas Technology (Z.ai): 57B
MiniMax Group: 26B
Deepseek: 45B (rumored)
Can public markets go higher? Shiller P/E is closing in on the peak of the dot-com bubble:
https://www.multpl.com/shiller-pe
This is already close to being the frothiest market in US history.
Consider two competing forecasts for AI: it's a "normal technology", or it will be superintelligent.
If it's a "normal technology", where's the moat? Why won't this turn into a boring commodity business, like telecom after the bubble? Sure, railroads transformed the US, but that didn't prevent investors from losing a bunch of money first: https://news.ycombinator.com/item?id=47900502
If it's superintelligence, we're most likely either all dead (in which case you helped cause human extinction by investing, congratulations) or else we're living on generous UBI: https://www.astralcodexten.com/p/you-have-only-x-years-to-es...
Shiller PE is near 44. Japan had an equivalent price to earnings ratio of over 70 during their 1989 bubble.
If EU depositors want exposure to US AI firms, why didn't they already withdraw their money to invest in Microsoft/Google/etc.? I'm a bit doubtful that an OpenAI IPO is going to trigger major shifts in asset allocation.
If you think you can get all the _public_ to pull their short term bank deposits into stock .. well, (a) you've not met the Germans, and (b) that is how the economy of Albania collapsed in a pyramid scheme.
At the same time of these companies IPO'ing, they are also trying to bend the rules of the index funds and their markets (Nasdaq,S&P 500) so that they can get listed into these index funds asap.
And when these happens at such obscene levels, what happens is that a very sizable chunk of the S&P will get into these companies (5-10% is a very large number for a single company especially such companies within these index funds IMO)
and their whole plan is that then banks and other investments sitting on cash would then invest in it. Oh by the way, your retirement funds might also be linked to it all.
The fact is that there is a race with multiple companies (SpaceX,Anthropic,OpenAI) all trying to IPO and get listed on the stock markets as soon as possible.
BTW, in Shiller's book which was published right as the dot-com bubble popped, he has a chapter listing out similar late 90s structural factors, many of which could lead to permanently higher stock prices in theory.
Fortunately for them, the current SEC is highly in favor of short-term market manipulation.
How many public companies even get 122b? They definitely can go higher if they really are that valuable. With public companies come the other factors which might not be based on the actual value and can cause people to throw money.
Kind of a radical idea. I did read about that in economy books way back when at uni... but I don't think it's really happening actual. At least my walled doesn't seem to get it.
PS: it's a joke, free market works when there is competition. VCs are making damn sure it's just enough monopolies that they get wealthier while consumers themselves get milked. Without antitrust actually being enforced, there is no free market.
https://ourworldindata.org/grapher/price-changes-consumer-go...
Banks make money by giving out loans is a meme, but it's actually true here. You kind of need collateral to do that, but a stock of a company which has revenue is a perfectly cromulent collateral even by strict standards. It's not even some infinite money glitch - it's kinda how the whole system is supposed to work.
The stock market is largely about betting on expectations of future value while money is just a token which is used to settle things. E.g. if you think about simplified mechanics of IPO, say, investor Alice buys OpenAI shares, OpenAI gets the money and Alice has shares. If for simplicity we assume that Alice and OpenAI use same bank and there are no intermediaries, then it literally just updates two cells in a database. And Alice now has shares which is an asset of known value, thus can be borrowed against, etc. Also, say, OpenAI can use that money to repay debt, then perhaps lender would buy SpaceX stocks - it's not like money was withdrawn from the system.
Of course, there can be some interference: multiple companies do IPO around same time it would reduce FOMO, and if they did it literally in one day there might be lack of liquidity.
Splendidly interesting times.