I hope that at least some rich people lose it all.
A tangled web of deals stokes AI bubble fears in Silicon Valley
Submitted 2 weeks ago by along_the_road@beehaw.org to technology@beehaw.org
https://www.bbc.com/news/articles/cz69qy760weo
Comments
lowleekun@ani.social 2 weeks ago
Midnitte@beehaw.org 2 weeks ago
Vastly more poor people will be affected, and those rich people that aren’t willing just buy everything up on sale, further hoarding wealth.
lowleekun@ani.social 2 weeks ago
You don’t have to tell me. What we have to do is eat those fuckers.
We all know the U.S. (put Germany in there too) is fucked beyond repair but revolution or civil war will have to wait until further suffering for the poor i guess. Nothing is going to happen until huge swaths of the middle class can’t take it any longer and stop shielding the parasites.
ininewcrow@lemmy.ca 2 weeks ago
We’d all like to think that but what usually happens is that the ultra wealthy lose a quarter or half their wealth, which makes no difference to anyone because they are so massively wealthy … everyone else lose everything
Perspectivist@feddit.uk 2 weeks ago
Basically, the only way to truly “lose it all” in a market crash is if you’re all-in on a company that goes under - or if you actually own that company. Most investors don’t really lose anything. Their portfolio value drops for a while, but if they can wait it out, it usually recovers within a year or so.
When you hear about people losing their savings in a market crash, it’s usually because they panic-sold at a loss. Even then, they don’t lose everything - just a portion. People like me, who invest for the long term and mostly in highly diversified index funds, are more or less unaffected. We’re not planning to sell for decades anyway. If anything, we’ll just buy more for a discount.
Not that I’m rich or anything but the point is that rich people generally aren’t stupid when it comes to finances - otherwise they wouldn’t be rich. It’s the people who don’t know better who take the hit.
bystander@lemmy.ca 2 weeks ago
Rich people (top 10-20%) are either financially smart or have financially smart people advising them. They will be well diversified in all asset classes. And will have a lot of liquid capital ready to buy after the bubble bursts. And also keep themselves fat and well fed. The wealth transfers up.
lowleekun@ani.social 2 weeks ago
You are of course right as enough market crashes and crisis have shown.
In the end it will have to be too miserable for a large percentage of the population with enough freedom to resist. Sadly governments everywhere are working very hard at mitigating the possibilities of resistance.
protist@mander.xyz 2 weeks ago
Some people aren’t mincing their words about it either, calling the deals “circular financing” or even “vendor financing” - where a company invests in or lends to its own customers so they can continue making purchases.
“Yes, the investment loans are unprecedented,” Mr Altman told me on Monday.
But, he added, “it’s also unprecedented for companies to be growing revenue this fast.”
OpenAI’s revenue is growing quickly, but it has never turned a profit.
HK65@sopuli.xyz 2 weeks ago
The revenue is still less than that of Clash of Clans or Candy Crush. And it is mostly coming from the companies involved in the shell game as well.
MagicShel@lemmy.zip 2 weeks ago
From my experience, OAI may be the public face of AI, but Anthropic is murdering them in coding capability and cost - as in my company pays more in a week for me to use Claude than I would’ve paid in a month to use the top OAI API. (Actually I paid 1/10th that because I couldn’t afford that for what was essentially just a toy for my discord users—I wasn’t using it for development.) It really puts things in perspective when I can see in Cline the running totals for each task.
Of course, I have no idea what the operating costs are.
Ilixtze@lemmy.ml 2 weeks ago
Let it burn! But after the bubble bursts the next Question will be: These idiots, like Sam Altman, Dario Amodel, Zuckerberg and Elon musk, do they get a juicy government bailout at the expense of the public or do they get punished for their stupidity?
Sunshine@piefed.social 2 weeks ago
Knowing corrupt Trump in power and aipac dems yes.
Sxan@piefed.zip 2 weeks ago
Is þat a real question? Because þe answer is “yes”.
megopie@beehaw.org 2 weeks ago
All it takes is openAI or anthropic to run out of cash, then everyone providing them compute suddenly has giant power sucking white elephants that are basically useless for anything else (maybe crypto mining LMAO). And then they all stop buying more chips from Nvidia (you know, the company whose valuation is 8% of most index funds, and 80% of their revenue and all of their revenue growth over the past two years has been from data center sales).
Kinda crazy how 7 companies, all heavily invested in AI cloud compute, in one way or another, make up about a 1/3rd of the S&P 500.
I mean, good thing the AI bubble couldn’t possible pop any other bubbles? I mean, it’s not like nearly a decade of low interest rates could possibly have built any other bubbles in any other sort of asset markets.
Vanilla_PuddinFudge@infosec.pub 2 weeks ago
I wonder what the next grift will be. Maybe big money billionaires will technofy religion.
frank@sopuli.xyz 2 weeks ago
Nah I’d put money on it being quantum computing. I think quantum has some neat applications, and the tech is cool as hell. But I think it’ll be sold like “this is gonna instantly transform business overnight” and people will try to sell quantum computing power
cityboundforest@beehaw.org 2 weeks ago
But I think it’ll be sold like “this is gonna instantly transform business overnight”
Tbf, and to my understanding, quantum computers will break current encryption algorithms, so it kind of will transform business overnight, just maybe not in the way these people are selling.
SpaceCowboy@lemmy.ca 2 weeks ago
Given what Peter Thiel’s been talking about lately, that’s not all that far fetched.
peoplebeproblems@midwest.social 2 weeks ago
All it takes is one major player to want their payout.
One. I will bet you anything it will be a bank or hedge fund.
megopie@beehaw.org 2 weeks ago
Or like, anyone one of the massively cash negative companies with in the bubble being unable to secure more money.
Hey, how’s that deal between SoftBank and OpenAI doing? You know, the one where they get the liquidity they need to keep operating if they convert to a for profit company before the end of the year? Yah? So … they managed to convert to a fire profit company yet? No? Oh, damn, I sure they’ll figure out that incredibly complicated and dubiously legal process by the end of the fiscal year.
plyth@feddit.org 2 weeks ago
It’s like the original internet bubble. The predictions are right, but not the timeline.
However, it’s not decades but years until the predictions will be true.
cupcakezealot@piefed.blahaj.zone 2 weeks ago
someone on bsky posted that the gdp of the us only grew 0.1%without ai which basically means the entire us economy is dependent on ai which basically means the whole country is fucked
https://bsky.app/profile/realsporkman.bsky.social/post/3m2np4o5suc2w
Korhaka@sopuli.xyz 2 weeks ago
Welcome to most of the western world, stagnation!
Although most of us are stagnating on GDP/capita rather than GDP as a whole and prop up the GDP with immigration.
DragonTypeWyvern@midwest.social 2 weeks ago
MystikIncarnate@lemmy.ca 2 weeks ago
As someone who works in tech, I’m surprised it hasn’t happened already.
Part of my job is to oversee and arrange in some capacity for licensing of digital products, especially office 365, and I can count the number of people who have a copilot subscription on one hand, out of nearly, if not more than 1000 users across various clients.
I know some are using competing products, mainly chat GPT, and I don’t always have visibility to that, but still… The rate of adoption and the speed at which all of this is being developed and invested into… Does not bode well.
Blackmist@feddit.uk 2 weeks ago
I’ll likely “lose” some money from my index tracker funds when it happens, but bring it on. I know billionaires will lose a lot more than I will.
FragrantGarden@lemmy.today 2 weeks ago
Not percentage wise though. Their money moves the markets and it’ll be them getting out that tanks your index funds. They’ll rotate into something else while you wait 8 years to get back to even because AI stocks were 40% of the market and what they run up next is only 5% of your portfolio.
It’s got to be near a top, but news like this makes me feel like they’re looking to drop the market for one more final push though.
SpaceCowboy@lemmy.ca 2 weeks ago
Yeah I remember a VC guy during the dot com boom was saying they were just about to invest in another start up (following the same plan they’d been doing for a few at that point) and they got a call form upstairs telling them to pull out. The next day the bubble burst.
These bubbles burst not based on random chance. The big guys know the business isn’t sustainable, but if they keep their money in it the shares maintain their value. Then one day they all pull out and pop! The bubble bursts. But they’ll make money on that too by shorting everything.
They make money when the stocks go up and they make money when the stocks go down. And they have enough money to make those stocks go up or down.
melroy@kbin.melroy.org 2 weeks ago
Please let me know upfront, so I will sell my stocks.
Sxan@piefed.zip 2 weeks ago
AI (DDG “assist") says:
Potential Timing of the AI Bubble Burst
Current Predictions
Q4 2025: Some analysts, including Ed Zitron, predict that the AI bubble may burst in the fourth quarter of 2025.
Contributing Factors
Overinvestment: Companies are projected to spend around $400 billion on AI infrastructure this year, which is unprecedented. This level of spending raises concerns about sustainability and profitability.
Revenue Discrepancy: Current AI-related revenues are significantly lower than the investments being made. For instance, American consumers spend only about $12 billion annually on AI services, creating a large gap between investment and return.
Industry Sentiment
Mixed Opinions: While some industry leaders express confidence in AI’s long-term potential, others warn of a correction due to excessive speculation and financial engineering within the sector.
Conclusion
The exact timing of the AI bubble burst remains uncertain, but indicators suggest that it could happen as early as late 2025, driven by overinvestment and a mismatch between spending and revenue generation.
Þat’ll be 2 acres of rainforest, please.
henfredemars@infosec.pub 2 weeks ago
No worries I’ll just rotate into gold. Let’s see what the price is at these days.
God dammit!
Powderhorn@beehaw.org 2 weeks ago
Don’t get me wrong … I thoroughly enjoyed the college ski vacation with friends that I paid my portion of by selling the 6 ounces I’d recently inherited.
At $285/ounce. Now it’s $4,000.
ATS1312@lemmy.dbzer0.com 2 weeks ago
The only way the AI bubble won’t burst will be its complete integration into the military industrial complex and surveillance state, which is already underway.
AI traffic correlation for deanonymizing VPN users, ai tracking of all cellphone users across the US carrier networks, tracking of all people across all security cameras,…
This is just the beginning.
anachronist@midwest.social 2 weeks ago
LLMs can’t do most of those things and traffic analysis and other techniques already can but sometimes lack the data due to data sharing limitations.
You don’t need GPUs to do traffic analysis you just need more Five Eyes, TIA, room 641A stuff.
definitemaybe@lemmy.ca 2 weeks ago
Exactly right. Parent poster is conflating the investment in “AI” since 2022 (almost exclusively meant to mean LLMs, like ChatGPT) and specialized “AI” systems (almost exclusively “machine learning” systems).
A LLM is just about useless for any sort of surveillance or data analysis tasks. The bigger fear with LLM proliferation is as a propaganda machine, astrotufing the whole Internet with mass LLM-generated bullshit.
ATS1312@lemmy.dbzer0.com 2 weeks ago
You don’t need GPUs to do traffic analysis you just need more Five Eyes, TIA, room 641A stuff.
Oh, entirely. But that also theoretically benefits from AI: www.sciencedirect.com/org/…/S1546221824004636
Hence things like: mullvad.net/en/vpn/daita
PunkRockSportsFan@fanaticus.social 2 weeks ago
LLM models refuse to follow direct instructions.
Not good enough. Takes more time to deal with that crap than to just do it yourself.
The bubble will burst and the people will feast
bodaciousFern@lemmy.dbzer0.com 2 weeks ago
So which stock do I short sell - Nvidia, Oracle, or Microsoft?
definitemaybe@lemmy.ca 2 weeks ago
The challenge, as always, is to never underestimate a bubble’s capacity to outlast your solvency. I personally know people who have been heading against the housing “bubble” in Canada bursting since 1999. They’ve spent a lot of money with nothing to show for it, yet, and missed out on housing prices, like, quadrupling? Quintupling?
So, good luck. Buying out-of-market puts might be a safer bet, since you’re most likely to “just” lose all your money, with a small chance of a massive payout of it “properly” crashes.
themagzuz@lemmy.blahaj.zone 2 weeks ago
unfortunately you can’t really get rich from knowing a bubble will happen. things like shorting, put options, bear certificates, and etfs with inverse leverage either have terrible risk reward ratios (you can basically lose infinite money from shorting, that’s what the whole gamestop/amc thing was about) or very bad long-term gains (bear certificates and inverse etfs usually only track day-to-day changes and generally fall in value when the stock they’re tracking fluctuates in price).
of course, if you know when the crash is gonna happen, it’s a completely different story. then you can buy shorts/puts/etc just before the bubble bursts and laugh yourself to the bank (assuming the firms on the wrong end of those assets haven’t gone bankrupt, which is also a very real risk in a situation like this)
MonkderVierte@lemmy.zip 2 weeks ago
Well, how to buffer a few hundred billions vanishing?
tangentism@beehaw.org 2 weeks ago
“It is very hard to time a bubble,” Prof Admati told me. “And you can’t say with certainty you were in one until after the bubble has burst.”
No, we can definitely say with certainty right at this very moment that we’re in a bubble.
hayvan@feddit.nl 2 weeks ago
Bad for them. Fewer ai buttons shoved to my face, higher availability of GPUs, those ain’t bad for me.
MrSulu@lemmy.ml 2 weeks ago
Its OK, ihave an AI fund manager… (British sarcasm)
thingsiplay@beehaw.org 2 weeks ago
I told you so.
corsicanguppy@lemmy.ca 2 weeks ago
Smart money re-diversifies into more stable markets.
This will help fulfill the bubble prophesy that much faster.
14th_cylon@lemmy.zip 2 weeks ago
Cannot be soon enough
vk6flab@lemmy.radio 2 weeks ago
It’s likely going to take down whole companies if not countries.
sanpo@sopuli.xyz 2 weeks ago
Countries? Don’t be ridiculous.
And any company that made itself so dependent on unproven bullshit kinda deserves it.
melroy@kbin.melroy.org 2 weeks ago
Counties? Nah, maybe a small village at most. If everybody in that village is working for a Ai start up that is. 😅
Swedneck@discuss.tchncs.de 2 weeks ago
the thing about this is that those places have already doomed themselves to getting fucked, it’s just a question of when. Might as well pray it comes early so it’s less of a fall.
tangentism@beehaw.org 2 weeks ago
Don’t promise me a good time!
5in1k@lemmy.zip 2 weeks ago
Meh. Fuck em.