The difference to the dot com bubble is that the unprofitable companies are privately held and the public companies are extremely profitable and have finally found something to soak up their ridiculous profits other than stock buybacks. How a crash affects anyone other than high-net-worth individuals with money tied up in VC funds is not explained.
The real question would be the debt on the GPUs. If a hyper scalar puts 100B from profits into data centers, and borrows 400B against the datacenters (or their suppliers do!). Then the buildout could be quite problematic.
If it’s just profits getting invested + some VC exuberance… I don’t actually know if it matters. If zuck simply shut off the money spigot and never spoke on ai again… would anything actually happen?
CoreWeave has taken on $11.2B in debt with interest rates ranging from 7% to 15%, paying $250M in interest on that debt last quarter on just $19 million in operating income. Half of their assets are GPUs, depreciating over six years.
> How a crash affects anyone other than high-net-worth individuals with money tied up in VC funds is not explained.
That is even worse. There are many so-called "AI companies" drowning in spending lots of tokens and the majority of them have lots of assumptions when going to raise more money to VCs.
What if the VCs say no?
What if 90% of all these startups get competition from a frontier AI lab and undercuts them? We are seeing this with Cursor and Anthropic already.
What if early-stage startups cannot afford the 100K per H-1B hire anymore AND cannot hire remote overseas due to the HIRE act?
Additionally, we are going to find out what does not mix well together with AI and will inevitably cause a crash that could come unexpectedly.
> Real estate and crypto on the other hand...
At least we do *know* that both of them do not mix well together.
Real estate and crypto on the other hand...