Now that AI got involved it’s on topic for TechTakes I guess. Making a containment thread because there might be a lot to sneer about this.
Boring version of of the main story: https://text.npr.org/nx-s1-5345802
Skynet declares trade war on penguins: https://archive.is/Nn5MC
Reactionary news outlet celebrates 77% drop in stock price by taking everyone else down with them: https://bsky.app/profile/brianmfloyd.bsky.social/post/3lluybov3i22o
so I previously predicted the AI bubble would pop on Trump’s watch and crash the stock market. Never did I envision Trump doing it to himself, in a manner so stupid I’m not sure anyone anticipated it.
I’m wondering what this does to the AI bubble. I think the bubble is led by trillions of dollars desperate for lottery-sized returns. There’s so much family, pension and sovereign wealth money that can’t get returns on sane investments that they’re left only with insane ones.
This is not about tech at all. If they thought they could do a tech bubble with ELIZA chatbots, we’d have number power plants being restarted to power hyperscale data centres running billions of copies of ELIZA.
What would it take for this crash to affect the AI bubble materially?
As the classic film Network points out, the Saudi money is the end of the road; there aren’t any richer or more gullible large wealth funds who will provide further cash. So OpenAI could be genuinely out of greater
foolsfinancing after another year of wasting Somebody Else’s Money. This crash has removed “large” from the front of any other wealth fund that might have considered bailing them out. The Stargate gamble could still work out, but so far I think ti’s only transferred bag-holding responsibilities from Microsoft to Oracle.Another path is to deflate nVidia’s cap. At first blush, this seems impossible to me; nVidia’s business behavior is so much worse than that of competitors Intel or Imagination yet they have generally never lost faith from their core gaming laity, and as long as nVidia holds 20-30% of the gaming GPU market they will always have a boutique niche with cap at least comparable to e.g. their competitor AMD. But GPUs have been treated as currency among datacenter owners, and a market crash could devalue the piles of nVidia GPUs which some datacenter owners have been using as collateral for purchasing land, warehouses, machines, more GPUs, etc. nVidia isn’t the only bag-holder here, though, and since they don’t really want to play loan-shark and repossess a datacenter for dereliction, odds are good that they’ll survive even if they’re no longer king of the hill. The gold rush didn’t work out? Too bad, no returns allowed on shovels or snow gear.
Side note: If folks just wanted to know whether tech in general is hurt by this, then yes, look at Tesla’s valuation. Tesla is such a cross-cutting big-ticket component of so many ETFs that basically every retirement scheme took a hit from Tesla taking a hit. The same thing will happen with nVidia and frankly retirement-fund managers should feel bad for purchasing so much of what any long-term investor would consider to be meme stocks. (I don’t hold either TSLA or NVDA stocks.)
I hope this makes sense. I don’t post with this candor when I’m well-rested and sober.
yeah, Nvidia is gonna be fine. They make a useful thing that people want and is the best in its field. I’ve spoken to Nvidia people, they know damn well this is a bubble and they’re making hay while the sun shines, but also NVDA has always been volatile as hell and they tend to assume Mr. Market is just on crack again.
The AI bubble takes out tech and thus the S&P 500. US stocks are fucked. Buuuut, I expect to see in about six hours that they’re fucked already. Edit: it’s coming up 08:00 UTC. Asia and Europe markets open, down about 10%. Yyyyeeeahhhh boyeeeeeeeeee
this might be fallout from tariffs, some went in on saturday iirc