r/investing
Is the pullback in the room with us?
Author questions the AI rally's sustainability, citing overvaluation, poor monetization, chip demand risks, and high interest rates.
- AI-related stocks are severely overvalued and lack clear monetization strategies.
- Chip providers face risks as their customers struggle to profit, while Chinese open-source AI reduces demand for expensive US tech.
- The Fed is likely to keep interest rates high to battle the market, limiting liquidity.
Finding it hard to understand how markets are still propped up so high…
Every investing subreddit i come across has members flaunting their 100-1000% gains on AI-related stocks.
We see a pullback of 5% and everyone is piling in to the dip (at least on reddit).
At what point do we admit everything is overvalued? They dont even know how to monetize AI!
Backlogs at every chip & compute provider, promised to be fulfilled by companies that can hardly turn a profit.
Then you look at chinese opensource and realize everyone is fighting for lower costs, reducing the willingness to spend on expensive fancy american AI.
When does the market take a breather?
I think the fed will battle the market with higher rates, unless stocks start to fall and they’ll hold steady until later this year.
What are your thoughts?