It being that size, lasting for that long, and the total lack of viable products created by it are the problem. Financing only adds leverage, that makes every loss or profit larger.
- you fund a new company and sign long terms contracts with it - this new company uses the money you gave it and a lot of debt (backed by long term contracts) to build datacenters and buy a lot of GPU - your figures look great
If their business model thinks they can make a profit doing it this way, why stop them?
The core problem here seems to be that people think your supplier having an equity stake in your company is wrong or risky.
It's irrelevant.
> If their business model thinks they can make a profit doing it this way, why stop them?
I don't think someone needs to stop them, but there are some legit questions that need an answer:
- what happens to all these companies when growth decelerate or stop?
- what happens to nvidia stock when it has to buy back unused gpus?
- what are the risk that a sectorial financial crisis turn into a major economic crisis?
If these were all private entities, I think it'd be okay.
But they're public entities and they're using the pittance of investment as a force multiplier on their stock price, which they're then regularly using to raise capital.
A lot of dumb money in retail investors (as well as corporate) are a big reason this valuations bubble is occuring - which is really the elephant in the room. It's not that the tech isn't real. It's that the valuations behind it have already priced in maybe a decade of profit that hasn't come close to materializing for the LLM vendors; although, the shovel sellers and makers are doing phenomenal - and they have a vested interest to keep the party going with many sweetheart financing/equity deals.
And before someone tells me AI demand is fake and circular, my company is spending thousands on Anthropic a month, up from $0 in 2025. And no, we're not getting scammed by Anthropic or tokenmaxxing for no reason. We are getting value. At minimum, my company is not part of this circular thing.
The problem is that this is simply not enough. They need you to spend tens of thousands, probably closer to hundreds of thousands, before the numbers start making sense.
> At minimum, my company is not part of this circular thing.
You're in the blast radius. And if you don't have a plan for "what if Anthropic hikes the API rates by 10x or worse", you're in the kill zone.
So.. great news for Anthropic, I’ll go ahead and let the elephant in the room go unaddressed
That's not how that works. Their stock price is not directly correlated with them raising capital since Nvidia has not issued new shares (or sold shares on the open market) since their IPO. Their corporate bond is also not based on, or relies on, the stock price since they must be paid back in cash.
But "invest in companies that may grow your own TAM" is an ancient strategy. Sometimes it works, sometimes it doesn't (like any strategy).
I'm not disagreeing with you, just saying it's business as usual.
People have always had difficulty understanding large scales.
I don't feel that I have the expertise to analyse business structures like these accurately and impartially, yet I am under the impression that I have a better understanding than many who confidently talk about it and preach the end is nigh.
Even if the end is,in fact, nigh. It will not render their reasoning sound. They will have been right more by coincidence than judgement.
Webvan, Pets.com, eToys.com, Kozmo.com…all these dot com busts maxed out at less than 0.3 billion dollars in investment/IPO scale before they went under. A good amount of these share similarities with the AI bubble with a lot of them promising to be the e-commerce infrastructure of the future with “unlimited potential” as brick and mortar purchases were all predicted to move online. Webvan was going to be the automated warehouse of the future, for example.
Even the successful giant unicorns look minuscule in comparison. YouTube’s total investment was under $12 million before Google bought it for $1.65 billion, which looks like peanuts compared to these Hertz rent-a-server companies.
SoftBank dumping $8 billion into Uber looks positively quaint by comparison.
Who gives a ** if you've seen it before, it's now a large scale issue. Stop trying to downplay it like it's a book you've read the second time.
What is the end of this sentence?
And if it is, it's not a problem!
And if it's a problem, it doesn't affect me!
As a rule of thumb in life, if someone is managing your money then you should by and large agree with their judgement of the markets.
Interestingly, the Hunterbrook Wikipedia article says that Hunterbrook is unique, and the Muddy Waters Research Wikipedia article lists loads of other organisations. Perhaps someone should investigate…?
(Stock) market is, by definition, irrational. If you are scared of solvency, sell and hold money and/or gold.
The fundamentals are unpredictable, so even a perfectly rational planning (suppose such thing could exist) would lose money sometimes. Not in the long run, but long run doesn't matter if a single wrecked ship can wreck you.
I assume this is just your definition?
Is weather irrational, because you cannot calculate it?
Markets and weather are just too complex with too many unknowns to calculate it.
Besides, I don't think serfom has to do anything with it, as you have to keep people in, while the current agenda is all about keeping people out.
A crash is just another chance of buying more.