What is this a bubble on? What does said bubble collapsing look like?

bitmasher9 4 days ago | parent | next [-]

Nvidia is giving OpenAi money (through investment) to buy Nvidia chips. The bubble is that Nvidia got that money from its crazy high stock price, the extra investment raises OpenAi’s evaluation and the increased sells raises Nvidia’s evaluation. If the valuations see a correction then spending like this will decrease, further decreasing valuations.

Bubble collapsing looks like enshittification of OpenAI tools as they try to raise revenues. It’ll ripple all throughout tech as everyone is tied into LLMs, and capital will be harder to come by.

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drexlspivey 4 days ago | parent | next [-]

> The bubble is that Nvidia got that money from its crazy high stock price,

This is totally False, NVDA has not done any stock offerings. The money is coming from the ungodly amount of GPUs they are selling. In fact they are doing the opposite, they are buying back their stock because they have more money that they know what to do with.

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JCM9 4 days ago | parent [-]

A company buys back its stock if it thinks the stock is underpriced. Otherwise when “you have more money than you know what to with” you give it to your shareholders via a dividend. A concept mostly forgotten by tech companies.

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rhetocj23 3 days ago | parent | next [-]

Ermm this is nothing but a wealth transfer from the shareholders who sell at too low a price, to those who dont.

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drexlspivey 4 days ago | parent | prev [-]

A company buys back stock because distributing dividends incurs a 30% withholding tax.

	▲	rhetocj23 3 days ago \| parent [-]
		Sorry guys but this is why I dont want to see many finance related posts here, because very few know what they are talking about. Buybacks are the preferred method of RETURNING CASH to shareholders, because dividends historically have been sticky. Buybacks are flexible. Buybacks are also done to optimise the debt ratio, to minimise the firms cost of capital and thereby maximizing firm value.

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vessenes 4 days ago | parent | prev | next [-]

NVDA outstanding shares are down ~1.2% year over year; the company has been buying back its own shares with —>> profits <<— to the tune of tens of billions.

Meanwhile NVDA stock is mildly up on this news, so the current owners of NVDA seem to like this investment. Or at least not hate it.

Agreed that we’ll see ad-enabled ChatGPT in about five minutes. What’s not clear is how easily we’ll be able to identify the ads.

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mountainriver 4 days ago | parent | prev | next [-]

Valuations won’t see a correction for the core players, I have no idea why people think that. Both of these companies are already money factories.

Then consider we are about to lower interest rates and kick off the growth cycle again. The only way these valuations are going is way up for the foreseeable future

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4 days ago | parent | prev | next [-]

[deleted]

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babelfish 4 days ago | parent | prev [-]

> Bubble collapsing looks like enshittification of OpenAI tools as they try to raise revenues

Why does monetizing OpenAI tools lead to bubble collapse? People are clearly willing to pay for LLMs

	▲	bitmasher9 4 days ago \| parent [-]
		You read this backwards. If the bubble collapses we will see OpenAI raise capital by increasing revenue instead of investment.

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shawabawa3 4 days ago | parent | prev | next [-]

AI and tech companies

Collapse might look a little like the dot com bubble (stock crashes, bankruptcies, layoffs, etc)

	▲	wongarsu 4 days ago \| parent \| next [-]
		And it's worth reiterating that a bubble does not mean the technology is worthless. The dot com bubble collapsed despite the internet being a revolutionary technology that has shaped every decade since. Similarly LLMs are a great and revolutionary technology, but expectations, perception and valuations have grown much faster than what the technology can justify These hype cycles aren't even bad per se. There is lots of capital to test out lots of useful ideas. But only a fraction of those will turn out to be both useful and currently viable, and the readjustment will be painful
	▲	HarHarVeryFunny 4 days ago \| parent \| prev [-]
		Plus unused dark fiber = unused AI data centers and power generation capacity.

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jenkinomics 4 days ago | parent | prev | next [-]

I think ultimately the conclusion that we're in a bubble is bad analysis. It jumps over a chasm and assumes that analogy to past historical situations allows us to draw conclusions.

This isn't a bubble. This is the collapse of 300 years of modern capitalism into corporate techno feudalism.

This won't crash and lead to a recession or depression. We are at the end game. Look around you. Capital is going scorched earth on labor. They are winning. Cost of living in metropolitan areas is exploding, and most of us will end up begging for scraps in peripheral areas.

This is the result of everything the elites have been working towards for the past few decades. Climate catastrophe is the cherry on the cake: they will shock therapy us into the last few bits. There will be corporate citizenship that enables one to live as a demi-god at the behest of the owners, and survival in the wastelands for the rest of us.

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Drunkfoowl 4 days ago | parent | prev [-]

High end server gpus and AI roi expectations.

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reactordev 4 days ago | parent [-]

I think everyone is underestimating the advancements in wafer tech and server compute over the last decade. Easy to miss when it’s out of sight out of mind but this isn’t going anywhere but up.

The current SOTA is going to pale in comparison to what we have 10 years from now.

	▲	zer00eyz 4 days ago \| parent [-]
		> I think everyone is underestimating the advancements in wafer tech and server compute over the last decade. What advancements? We have done a fabulous job at lowering power consumption while exponentially increasing density of cores and to a lesser extent transistors. Delivering power to data centers was becoming a problem 20 ish years ago. Today Power density and heat generation are off the charts. Most data center owners are lowering per rack system density to deal with the "problem". There are literal projects pushing not only water cooling but refrigerant in the rack systems, in an attempt to get cooling to keep up with everything else. The dot com boom and then Web 2.0 were fueled by Mores law, by Clock doubling and then the initial wave of core density. We have run out of all of those tricks. The new steps that were putting out have increased core densities but not lowered costs (because yields have been abysmal). Look at Nvidia's latests cores, They simply are not that much better in terms of real performance when compared to previous generations. If the 60 series shows the same slack gains then hardware isnt going to come along to bail out AI --- that continues to demand MORE compute cycles (tokens on thinking anyone) rather than less with each generation.