Will AI hardware players be forced to back down on prices to save the rest of stock market?
Author doubts sustainability of tech giants' AI capex, warning it could crash the market if ROI fails and hardware prices aren't cut.
- AI hardware prices charged by providers are completely unsustainable for buyers.
- Massive capex spending lacks clear ROI, putting the whole market at risk of collapse.
- Tech companies' dropping share prices will eventually force them to cut AI spending, hurting hardware providers.
I have very little knowledge about markets and the technical details of AI hardware, however, I can't help but think that the prices being charged by AI hardware providers such as Nvidia and Micron to companies to build out AI facilities appears to be completely unsustainable. Capex spending is now putting the whole market at risk of collapse as there is no clear sign of how ROI will work out for those companies spending funds to build out the AI revolution.
How long can companies like Microsoft and Meta continue to pay to build AI facilities when their share price is dropping to multi year lows? Surely this will eventually become too difficult for these companies/shareholders to deal with and there will be pressure to just drop AI spending? Then AI hardware providers will just lose the only customers they have that can afford the AI build out?
Can someone please explain to me how the market can survive in the short term with only semi players continuing to go up if it completely devalues all the companies investing in those products and then consumers cannot afford to buy anything that includes computer hardware, as is being seen for companies like Apple with price hikes and Valve with the Steam Machine?

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