valuation gains on investments are one-offs, not signs of sustained improvements in profitability that would warrant higher market caps
replywhen those valuation gains are in turn the result of circular financing schemes (a bakery giving out money so that people buy bread from it), we're getting to a dangerous situation
Circular financing is an issue if the wealth accumulation stays in the chip -> model provider ecosystem. However it seems like the labs are making quite a lot of revenue from the chips (customers).
replyDemand for compute is far outstripping what was projected in the initial rounds in which we pearl clutched over 'circular financing' - which is hardly distinguishable even from the classical bill of exchange, the core phenomenon of the money market in Bagehot's day, in which I provide you inputs and you give me a share. I keep reading people saying what amounts to: the primitive bill of exchange was circular!!; if the seller of inputs has reason to lend, so does everyone else etc etc. In fact if the projections about final sales are correct, it is plain all these deals will be fine.
replyThe issue is simply that the posted article begins with a review of recent earnings/ revenues, but fails to discuss that a substantial part of those revenues are investment markups.
replyWhether it matters we don’t know yet, but it’s a fact worth noting. A better article might have tried to argue why it doesn’t matter