I mean the issue is scaling, the worlds for cloud never kept getting bigger and bigger and compute scaling had stopped a while ago in the CPU space.

With AI every new generation with both massive hardware and software stack changes from Nvidia makes prior chips extremely inefficient to run, basically we are comparing an ASIC industry to a general purpose compute industry where all work loads are the same shape and size and so on.

Margins for ASIC based mining companies or ASIC solutions providers were never high, Optane and other weird solutions are niche and great for a specific category or moment in time, but they become obsolete pretty quickly.

The fear is we don't know if this Capex can stop. The worst type of fear is if this Capex will stop then what? Someone is very overpriced in this market, the cloud companies, the hardware providers or both.

I don't see how we reconcile this without a massive wave of repricing, ofc markets can stay irrational and we don't see the actual books but AI doesn't have so much revenue. Suddenly the AI token/cloud revenue won't 100x in a year or two...

Especially when intelligence will continue to get cheaper, the margin compression is a massive risk.

All the data centers for hyper scalers were a miniscule part of their story the real moat was the software layer on top otherwise Hetzner would be priced like an Amazon as well.

Something is shaky with this market I don't know what it's very opaque even as an insider working on for big tech and startups. I have no clue who falls first and which bottleneck cracks but there is not enough revenue for tokens, we will see a strong 2-3x growth in the next few years, from here which is absurd, but it's not enough, not nearly enough. If the capex keeps high and increasing.

Ofc they can stop the capex and the otherside gets repriced it's not like nvidia, micron and co aren't worth trillions.