r/valueinvesting
Peak Cheap: The AI Boom Isn't 2000, It's 2008
Argues the current AI boom resembles the 2008 financial crisis rather than the 2000 dot-com bubble, implying systemic risks and overvaluation.
- The comparison to 2008 suggests hidden leverage and systemic fragility in AI infrastructure spending.
- Implies that current valuations are disconnected from fundamental reality, posing a crash risk similar to the housing market collapse.
- Challenges the narrative of sustainable growth by highlighting potential credit or liquidity crises underlying the tech rally.
Taxpayers are going to bail out OpenAI and others to the tune of trillions of dollars
To the tune of starving millions to make a better kind of gun
No we're not lol
AI usage is going to shrink due to cost per token transition and the market will shrink like a ballsack in cold water. Then the government will step in and say AI development is strategically important and provide some kind of tax subsidisation for its usage by corps to resume the ball roll.
This article is wrong about the depreciation aspect (or purposely misleading)
Nebius raised their 4 year old H100s from $2.95 to $3.85 just this month.
Pricing power has been incredibly bullish without any apparent demand destruction.
I think the fundamental issue also articulated in the article is that whether the end-AI demand / revenue will eventually catch up with the enormous capes for scaling AI. The pricing power has been bullish but is the end AI revenue sustainable before the financing model is strained.
This is a really good write-up. You did a great job putting everything together.
Thank you! Appreciate the kind words
So why is this article removed and the account banned? I find that rather disturbing...
I think I just swallowed the red pill.... This should be on the front page just about everywhere btw
I skimmed the article, but I disagree with the author in one sense. I would argue we’re in BOTH a numerator (2000) and denominator (2008) bubble. We have companies like Palantir and SpaceX (soon) trading at like 75-100 times sales, companies like Tesla trading at 350+ times earnings, MAG7 trading at 30x earnings with denominator style suspect earnings with meta spending like 80% of its revenue on capex with nothing to show for it.
So we have both the 2000 style extreme valuations on companies with little to no earnings and 2008 style companies earning a lot on paper but cyclical (memory, chips). I don’t know how anyone doesn’t get concerned with the 10x Micron move in the last 12 months. It’s just a classic signal that something is wrong with that level of enthusiasm.
Who knows what happens though, it seems like a fools errand to be short this market.
Great article and very accurate
Anyone who is able to keep investing through a downturn will be handsomely rewarded yes.
so what's a retail investor to do?
How long before it goes tits up?
I'm holding a lot of these companies, plus more in my etf's