US AI stock sell-off shakes markets from Wall Street to Asia
theguardian.com
theguardian.com
err... they already know. It's click bait stories to get readership.
Yes? We had an entire great depression that tanked the global economy for a decade, and smaller dips since.
I regret to inform that the line does not, in fact, always go up. It does go down sometimes regardless of how much money is put into it.
Price discovery is at the margins: it's determined by (active) buyers and sellers.
If you're a (passive-ish) buy-and-hold kind of person you're generally not involved in the process (except on your (bi-)monthly purchase off your paycheque in for your retirement account).
So the active folks can cause prices to go down.
In the dotcom era the demand was far lower than the projections, and orders of magnitude less than what they were building out to. The "products" like catsdotcom and dogsdotcom had massive investments with 0 real-world demand. Even hardware stuff like fiber rollouts were severely overestimated, and led to very cheap dark fiber for a while, because the demand simply wasn't there. We know now, with hindsight, that the demand eventually overtook those projections and deployments 10-15 years later.
In comparison, today we see huge demand, and all of the providers seem to be swamped. The hardware pricing has gone through the roof. Environment stuff + public "opinion" + outside influence campaigns have led to a very hostile environment for building out capacity. Real constrains for power generation. The providers are so eager to get more capacity online that even the most "religiously self proclaimed good guys" had to sign with spacemanbad to get more compute yesterday. It's that bad.
And despite all of this, all the providers are reporting increasing revenue. Even "wrappers" like cursor reported 4+B/y revenue. The top labs are remporting several B /mo in revenue, and growing. Even goog's cloud stuff is starting to be a sizeable chunk of their revenue, and that's competing with the ads cash cow. Hell, even meta had a record quarter, driven by increased traffic in their products, likely because they deployed chat stuff. There is real demand in the market today, and with model capabilities going up, that's bound to continue for the foreseeable future.
The dotcom bubble and this thing are nothing alike. Any of the large "products" can (and some probably will) fail, but the tech behind it is like the Internet. It will only grow, and be ubiquitous in a decade.
You dismantled your entire argument with this closing sentence. I do not doubt that gen AI is here to stay in some form, but that is not what we’re discussing here. What you’re showing as weak proof of demand is billions in revenue that pale in front of hundreds of billions, soon to be a trillion, in yearly capex spending. That is not regular spending for a tech buildout unless you are somehow certain that the tech in question can radically upend the global economy. Right now that is very much still wishful thinking. Even the dotcom Internet buildout cost a fraction of this current frenzy, and yet the demand justifying our current situation is moot at best. Or you want me to really accept that these companies will generate trillion/s in revenue within 5 years to justify the absolutely insane level of investment?
But then again they also said the same thing about Amazon. And google. And (at one point) MS. And the others.
To reiterate: some might fail, but the field as a whole won't go anywhere. To look at the past 3 years, look at the current demands, and pretend that they'll all fail is insane. The proverbial cat is out of the bag, and it's not going back in.
All the new entrants have no existing revenue base like Google and Meta do, and these new companies are heavily funded by investors.
Any self respecting current AI company appears to be worth north of $1bn from day 0... based on investment valuation.
As long as the investors get THEIR money back, they won't care about a collapse.
It has no effect on your life.
It has no effect on companies either. When your market share value is 10USD or 1000USD does not change if you are profitable or not.
Public Pensions, private company pensions and the investments of public organisations and academic institutions are all tied up in these investments.
If they get it wrong, the impact on people is enormous.
In todays financial news, the pension fund of a telecoms firm lost £300m in an investment in a utility company. https://archive.ph/CmA59
OpenAI and anthropic tokens are down 30% in the start of the month but flat on the week, possibly meaning that market front ran this sell off, possibly not.
This is huge, isn't it? The conservative investors probably put their money into hardware companies, not directly into AI ones. So any scare of bubble-bursting affects memory manufacturing stock first and foremost? Meanwhile the AI stock itself continues to be held by the believers and Musk fanboys alike?