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AI Is the Bubble to Burst Them All
- spking 10mo agohttps://archive.ph/DbFXY https://archive.ph/DbFXY
- bofadeez 10mo agoDuring most of the dot-com boom, there was not a broad consensus that a bubble existed, whereas today’s AI boom is widely accompanied by media warnings about an AI bubble, making public awareness much higher than it was in the late 1990s. I don't think a single person hasn't heard the "circular financing" talking points from multiple people who think they're being insightful. Or Burry who thinks a GPU should be trashed after 2 years. Doesn't sound like irrational euphoria.
- techblueberry 10mo agoDoesn’t that make it more irrational?
- jbs789 10mo agoThe general term bubble doesn’t help. It’s reasonably obvious that there are some very high expectations baked in to certain equity valuations. Leave it to the reader to take a view on whether it makes sense.
- bgwalter 10mo agoGreenspan warned about irrational exuberance, the newspapers were full of articles like the Guardian one: https://www.stlouisfed.org/publications/regional-economist/april-1999/bubble-bubble-toil-and-trouble-asset-prices-and-market-speculation https://www.stlouisfed.org/publications/regional-economist/a... https://www.theguardian.com/business/1999/dec/20/nasdaq.efinance https://www.theguardian.com/business/1999/dec/20/nasdaq.efin... This time, "AI" has been hyped up more than tech in 1999 by the media. The media has just reversed course in 2025 because they found out that most people hate "AI". in 2023-2024 it was mainly hype.
- toss1 10mo agoThe thing that got me most about Federal Reserve Chairman Greenspan's warning about "irrational exuberance" of the markets was that the warning was in 1996, and it seemed to me and many others already obvious by then, and that Greenspan was cautious and late in his warning. Yet, the markets continued rapidly upward for another FOUR years. Shorting the high-flying stocks with negligible income in 1997 or 1998 would have been completely sensible. And it would have wiped you out, as you would have been years too early. It just proves the adage: "The markets can remain irrational longer than you can remain solvent." Today, the levels of (over-)investment compared to investment are even more extreme. But when is the time to call it?
- fy20 10mo agoThis line from The Guardian article: "The notion that Amazon.com will be allowed to corner the market in on-line book sales is wholly implausible."
- diamond559 10mo agoThere is better awareness of everything bc of the internet, you are just in the disbelief phase even though markets have already peaked and insiders are heading for the exits.
- bofadeez 10mo agoEugene Fama believes it's impossible to detect a bubble. Why do you think he's wrong?
- diamond559 10mo agoWhy do you think Jeffery Gundlach is wrong when he just said literally everything is overvalued? Everyone knew it was a bubble in 2001 and in 1929, that's part of being a bubble, it doesn't make sense but it just keeps going up ignoring all risks. Is there liquidity for a little more yeah maybe, but when everyone is long and highly leveraged there is only one way for things eventually to go.
- bofadeez 10mo agoThat person is not even an academic. At least google Eugene Fama so you don't embarrass yourself like this. What does Ja Rule think about bubbles? Ask him why markets can remain irrational longer than you can remain solvent.
- diamond559 10mo agoI do know who he is, why do you assume I don't, just so you think you can appear smart on the internet? Pretty pathetic. Gundalach has better investing success than you and Fama, you should listen to what he says instead of just assume he's wrong, that's called being intellectually dishonest.
- bofadeez 10mo agoYeah I guess you fundamentally misunderstand the difference/significance between someone who is seeking objective peer-reviewed truth and someone who tries to seduce investors to put money into their fund for fees on the internet with wild theories and anecdotal gambling success. It's not your fault, you must be a teenager or something.
- TheAlchemist 10mo agoThere was, at least towards the end. FED chair at the time described it as 'irrational exuberance'. Warren Buffett made an excellent speech in front of most Silicon Valley titans at the time - telling them that their wealth is about to be blown up. This isn't rocket science - do anybody sane believe that OpenAI will spend what, 1.5 Trillion $ they project ? Quite a big chunck of Oracle, Nvidia and others projections are based on this 1.5 Trillion $. They are loosing money and their revenue is 1% of this figure.
- bofadeez 10mo agoWarnings today are mainstream and widely understood, unlike late‑90s dot-coms where Buffett was largely ignored. Buffett explicitly says he doesn't invest in complicated businesses, finances aside. Plus, core AI players are profitable and funding capex from real earnings, valuations are concentrated in a few mega-caps, revenues are real, and financing is healthier. So while parts of AI may be overvalued, it’s structurally very different from the 1999 bubble. And is it really overvalued if AGI is achieved? Sounds like risk:reward profile is already priced in the gamble, and the valuation is appropriate....But I guess if you take it to the logical conclusion... if AGI is achieved, everyone will be out of a job, so scarcity-based economics, based on scarce labor input, itself will have to be redone. Wild speculation there.
- TheAlchemist 10mo ago"core AI players are profitable and funding capex from real earnings" What ? Who's profitable except NVidia who is selling shovels (increasingly to itself) ? Edit. Profitable on AI, if by profitable you mean from other sources then yes.
- NedF 10mo ago[dead]
- johntennessee93 10mo agoPeter Thiel dumped his shares, now the billionaires are pumping out the FUD.
- bentt 10mo agoThere's a lot of manipulation going on. Attempts to pop the bubble artificially, prematurely. There's a lot of impatience and illusion of control out there. You can bet that when a real bubble bursts, we won't be seeing articles about it on Wired in the run up.
- jrflowers 10mo agohttps://www.theguardian.com/business/2007/sep/30/5 https://www.theguardian.com/business/2007/sep/30/5
- NoGravitas 10mo agoUnderrated comment.
- diamond559 10mo agoYou're in the disbelief phase, it sounds like you are overinvested and defensive about your position. The Nasdaq and crypto already peaked, housing is peaking as well, we're in the middle of the crash.
- bentt 10mo agoNope. Is this the same crash that happened when tariffs were announced? What about the 2022 crash? What sort of crash are we talking about? IMO the AI incumbents want to provoke smaller pullbacks on the way up to A) kill competitors who can't handle it and B) prevent a catastrophic crash that would actually hurt them. That's why we see stuff like Thiel selling his NVDA holdings. He's just going to buy back in later.
- diamond559 10mo agoTarget is already 44% down on the year, Meta/Oracle/Tesla/Palantir and many others are 20% off peak, layoffs are at 2008 levels, look at peak to trough 2001 down, that's how bad it can get. Yeah, he'll buy back later, when Nvidia is beaten into the ground and you've all given up hope it will ever go back up again.
- whydoineedthis 10mo agoIts silly to talk about a bubble when all of the major AI companies just recieved 3-5yrs runway in VC. I normally hate the term FUD, bit in this case it's proveably true. Even if these companies collapse in 5 years, thats a lifetime away in tech years, not an immediate bubble.
- fzeroracer 10mo agoI don't think it's particularly silly when the rest of the economy is by all indications in a deep recession. If the tech market is literally the only thing holding up the market then you have to ask how and why.
- wilg 10mo agoI suspect that isn't true
- fhsm 10mo agoS&P500 isn’t “the economy” but in the context of talk of a bubble it seems like we’re talking about equities not the whole economy. So let’s just keep taking the short cut … The top is over performing so concentration is real but it’s not the only growth driver: https://www.fool.com/research/magnificent-seven-sp-500/ https://www.fool.com/research/magnificent-seven-sp-500/ The return / valuation concentration prob not as titillating as the PE run up: https://finance.yahoo.com/news/surprisingly-excellent-run-stocks-exactly-090000014.html https://finance.yahoo.com/news/surprisingly-excellent-run-st... True or not true hard to say without better definitions of terms but seems like current profile is not ultra common in history but it’s not a bunch of losers getting diluted out.
- fzeroracer 10mo agoWe're at a record number of subprime borrowers falling behind on car loans, which historically is a really bad economical sign, consumer sentiment is at an all time low and the labor market isn't looking great either. Anecdotally, prices have risen sharply and people are getting sharply priced out of basic necessities due to rising costs.
- jbritton 10mo agoSome have realized that LLMs don’t really reason and that LLMs may not be as amazing as the claims. However, I think LLMs plus agents, plus advances that are likely to come may very well prove to be more valuable than anyone can foresee. It’s very difficult to predict the future profitability of tech.
- fl7305 10mo ago> LLMs don’t really reason Do you have a test for this? Or is it based on the presumption that reasoning skills cannot evolve, it can only be the result of "intelligent design"?
- jbritton 10mo agoI have been spent many hours with them on coding tasks. As things currently stand once context or complexity reaches a certain point they become completely incapable of solving problems and that point occurs on very simple things. They appear completely brain dead at times although they are magnificent liars at making you think they understand the problem. Although, I recently got chatGPT 5 to solve a problem in a couple hours that Claude Sonnet 4 was simply never going to solve. So they are improving. I don’t know the limits. I’m more hopeful that a feedback loop with specialized agents will take things much further. I’m extremely skeptical that getting bigger context windows and larger models is going to get us reasoning. The skepticism comes from observations. Clearly no one knows how thinking actually works. I don’t know how to address the evolve part. LLMs don’t directly mutate and have selective pressure like living organisms. Maybe a simulation could be made to do that.
- handoflixue 10mo agoWould you agree that many humans, especially younger ones, are also incapable of reasoning?
- addaon 10mo agoI think it’s completely uncontroversial that younger humans are incapable of reasoning, no? The only area for discussion is at which age (if any) this changes for an individual.
- yalogin 10mo agoI am split on this, this is definitely a bubble but I don’t know if it’s going to crash or wipe out countries. The problem here is the tech is real and has great promise. This is not AGI but llms can make the promise of robots real, by it may take a long time for it to materialize just like with self driving cars. So the hype can subside but it needs an impetus to slide. It may or may not happen and even if it does, not sure when
- ericb 10mo ago> the tech is real and has great promise. This was very true of the dotcom bubble. The entire "web" was new, and the promise was everything you use it for today. Pets.com was a laughing stock for years as an example of dotcom excess, and now we have chewy.com, successfully running the same model. Webvan.com, was a similar example of "excess" and now we have Instacart and others. I looked up webvan just now--the postmortem seems relevant: "Webvan failed due to a combination of overspending on infrastructure, rapid and unproven expansion, and an unsustainable business model that prioritized growth over profitability."
- saxenaabhi 10mo agoIsn't openAI already profitable on inference? I understand training is still costly, but it's not unimaginable for it to turn profitable as well if you think believe they'll generate trillions in value by eliminating millions of jobs.
- zerosizedweasle 10mo agoNo, inference is actually pointing to them being economically unviable. https://www.ft.com/content/fce77ba4-6231-4920-9e99-693a6c38e7d5 https://www.ft.com/content/fce77ba4-6231-4920-9e99-693a6c38e...
- hnfong 10mo agoIf you eliminate ONE job and let's say the job pays $100K, in theory at most $100K goes instead to AI revenue. In practice it's a lot less, nobody is going to move everything to AI if it's just a 10% saving. So, to get a trillion in value, you'd have to eliminate many tens or even hundreds of millions of jobs.
- iJohnDoe 10mo agoIf it’s a bubble because some large and small companies will collapse, then yes, there is a bubble waiting to burst. OpenAI, NVIDIA, Microsoft, Apple, Amazon, etc. obviously won’t collapse. The money being thrown around is mind boggling. However, we’ve been throwing this type of money around for a handful of years now. Tons of layoffs, homelessness, corruption, unemployment, difficulties for everyone to find a job, the incoming SNAP meltdown, government shutdown and the mess it’s going to cause for a while. None of it makes sense. It’s pure crazy because everything should have imploded by now. The tech layoffs and government layoffs alone should be causing a shitstorm of misery out there, but it’s hidden somehow. AI isn’t going away. It’s here to stay. It has already become embedded into so many core things we do everyday. So many jobs are affected by it. Like, marketing, graphic design, writing, so many jobs in hollywood, like storyboarding and voiceover work, and the creative process of so many things. So many scenes today in movies are CGI and it’s hard to tell, like 3-second scenes, or CGI overlays. All of that will be created with a prompt in the next couple of years. Sure, some editing will be needed for the generated scenes, but with far less staff. The key takeaway here is that this equates to millions of jobs vanishing rather quickly. Core jobs that people of all ages based their careers on. Don’t get lost in the details of AI generating garbage or not. The remaining companies that survive will continue to make it better. Don’t think for a second there will be a resurgence in these jobs coming back because everyone thinks a human can do it better. All those data center GPU buildouts will not go waste. We’re headed for a dystopia that’s even worse than the one we’re living in right now. Wait until a few people are killed by police for stealing food from a grocery story because they are starving and need to feed their families. It will be the first time we get close to a civil war becoming a reality.
- throw234234234 10mo agoIts amazing what the invention of the transformer architecture has achieved; even if the above doesn't come to the past it has sparked discussion of the above possibilities. For a simple idea/algorithm to have changed the world or at least people's future outlook to bleak dystopia; to create mass stock valuations, to justify the business layoffs that have happened and more is definitely significant and much more than I would of imagined just a few years ago. I'm amazed at the sheer volume of resources allocated to the above so quickly for example; more than any other boom I've seen. Society can raise trillions quickly if it means not employing people I guess? Knowing basic economics I don't buy the utopia case with AI for the majority of people, particularly the middle class. To be clear most people I meet anecdotally (especially outside the tech space) are net negative on the changes AI is doing to their lives, even if they are in jobs like trades. It has had a profound impact; probably much more (no matter which camp wins the argument, bulls or bears on AI) than its inventors ever thought it would. It makes me think of whether the people who invented this, once they see the end result, will be happy with their invention and the changes it will create in the world. If they aren't happy in hindsight it says something about the unfortunately all too common naivete of the techie in general and the impact of their work on society/economics/etc until it does eventually occur.
- bicepjai 10mo agoRecently, I came across a short video on YouTube where Jeff Bezos referred to AI as an industrial bubble rather than a typical financial bubble that we often associate with bubbles.