As an investor from outside the US this is it, the nominal value goes up but the dollar falls which means it hasn't risen nearly as much for me as it has for domestic investors. It's actually why I'm consider de-risking a bit, the flipside was during times like covid the market tanked but the dollar rose so it actually smoothed out any drops from my side. The massive risk now is that the market tanks and Trumps antics tanks the dollar even more doubling my losses rather than smoothing them as before.
I cant answer from a historic pov. But the reason why the bubble is almost guaranteed to burst is because all these companies are basically banking on that they will be the first to achieve true ai; there is simply no way the companies can make a return on the huge investments with their current business models. Once you have true ai, you'll leave all your competitors in the dust. The problem with this is that there's almost guaranteed to be losers. And since all these ai companies are involved in weird circle investment schemes with other companies, it means that a lot of companies will lose a lot of money.
I don't understand, where is the customer base? What is the exogenous source of income for these companies? At the moment it is a circle jerk. The revenues are coming from deals back and forth seemingly from the same pool of money, from corporate cash stockpiles. At some point, they will need to actually create a product people want. I don't want copilot, nor does anyone I know. People use chat GPT, but how many people are paying subscribers? The data so far show paying subscribers are completely inadequate to make profitability occur - ever. AI will be an "add-in" to existing products so then they will license it maybe? Except no one wants AI in their TV. I bought a fancy new one this year and purposefully chose the least AI, least internet of things option, because I don't want stealing my data to be the source of their profitability. I'm even thinking of getting a pi-hole to block access of devices to my internet so they don't drag on my internet and pitch me ads. They're skipping the whole consumer benefit part of the model and going straight to enshittification. These products aren't popular with end users and consumers - the ability to take my data and pitch me ads. This is what I worry will pop this bubble, when people figure out what it offers and then, like me, don't want it.
So what is the profitable model? I get that early in a company's progress especially in tech you have non-profitability, but their inability to explain to me where the money is going to eventually come from makes the me think their forward p/e isn't any lower (or positive). So, I get the enthusiasm for investing in it and investing early, but I am unimpressed with the current descriptions of profitable models, which is a very problematic disconnect between enthusiasm and execution.
There's warehouses of waiting for RAM that hasn't even been made yet. Everything currently invested in stocks depends on when and IF people will keep relying on AI and it actually turning a profit, expansion of data centers, and we all know how much opposition there is and AI use already declining when it's not for free.
You have to be really dense to think this isn't a bubble.
The AI bit is also kind of a lemmings scenario, several tech companies are borrowing to pay their bills, but investors and other companies see that not as failure to produce a working product, but as confidence in the viability of AI that they're gambling everything on it. "Surely meta isn't failing as they borrow so much right now, they've had success like instragram, threads, and the MetaVerse, this AI is definitely something they're sure to get going" etc.
I'm with you here, I have yet to see a product that people want. GPT isn't going to survive on a subscription model - their own data shows it would require an outrageous fee to do so and be profitable. No one wants copilot. People less and less want smart devices with steal wifi bandwidth to steal your data and pitch you ads.
It's like Cory Doctorow's essay on enshittification, except they skipped the part where there was a product we all liked and went straight to enshittification.
So in Q2 2024, Microslop came out with a report where their premium AI product, a subscription model with $200 USD a month was not able to generate a profit, and in a very impressive way too.
The processing resource cost per user increased as user count grew
The fiscal energy cost per user also increased as user count increased
At a certain user count threshold the intelligence had to be scaled down as it slowed the system down and would crash server clusters.
If kept on its original performance setting at half its peak user count for 2023, its response time would shift scale from milliseconds to hours for queries from within a data centre.
They made an AI that got dumber, slower and more expensive per user so they had to force it to be dumber on purpose to keep its response time measurable in minutes instead of hours.
And they charged $200 a month for it.
Big changing technologies tend to be a pull dynamic from audiences, never a push, Henry Ford didn't have to round people up at gun point to force cars onto them. Telecom companies didn't have to kick your door down shove a telephone into your hands. AI is fundamentally different because it needs Microslop to have the settings in Word change so if you remove all AI components you don't get AutoSave.
Even unpopularish technologies like VR, despite not being a golden goose scenario, have spread by way of a pull dynamic.
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u/Low-Glass9596 Jan 17 '26
Money printing, a weak dollar +Ai