As a retail investor, you should buy an index fund and then forget about it.

By the time you have read this article, the professionals and their computers will have digested that material a thousand times over and have priced it in.

To be more precise: buy the lowest cost most diversified index fund you can buy and then hold it. If you want to spend some smarts to get a better return: look at how to minimise taxes and fees.

Don’t forget there is a constant pressure for everyone to have an opinion on how this is going to end while hoping it ends tomorrow so they can be vindicated. The dotcom bust took a decade to grow and collapse. I think it is too early to make predictions with AI. I mean the sentiment here is either it will dry up the world and kill us all or transcend humanity, there’s no gray area. I don’t want to fall into the emotional sieve that seems to drive everything.

I was able to create a custom index based on the top 500 that I stripped the big AI stocks from (shovels too). Then I added decent chunks of international, small cap, and treasury ETFs to it.

I have no illusions that I can time a bubble, but I'm hopeful I'm at least partially shielded, and most importantly I feel better about ignoring wall street again.

How can people in Hacker News still doubt AI's benefit when they are seeing in front of their eyes every technical profession getting disrupted to oblivion in the last year. Just ask basically any software engineer how much their profession has changed over the last 12 months

Obviously there is risk, but can't we really extrapolate the AI gains forward and just see how big it's ahead to become?

The airline industry since its birth has had a collective net loss, in aggregate, despite moving hundreds of millions of people.

The industrialisation essentially socializes the cost across a lot more people though, so even though it doesn't make a profit it does mean people can have air travel without it costing millions per flight for the few people who can afford it. Essentially the economies of scale from having lots of flights isn't enough to make it profitable but they are enough to make it affordable.

There's no spare money to extract from the airline industry but it's still very useful. The same could be true for AI in the long term.

Sometimes the goal of an industry is to exist rather than to make a profit, because the benefit to society is more important than profit. People don't like that though so they do a bit of creative accounting or head-in-the-sand denial around it.

It isn't a commodity product in my opinion. Far from it. I think it will ultimately be a monopoly or duopoly for SOTA. The mid to low end is commodity, yes. But SOTA models are not commodities.

The number of competitors for SOTA drops by a few every year. The winners make more money, get more revenue, buy more compute, train better model with compute, buy best talent, and the cycle goes.

I think it's easier to fall behind and never catch back up than people think. One disastrous training run can leave a lab months to a year behind. For example, Meta's disastrous LLAMA 4 models. Meta is lucky to have their ads business as a funding source. However, Anthropic's revenue is growing so fast, that ability to use ads as a funding source to stay in the race may not last much longer for Meta.

To me, SOTA LLM training is very much like new chip fab nodes. One disastrous node can put you behind for many years or forever. The cost to build the next chip node doubles every every 4 years (Rock's law). The cost to train the next SOTA model likely has some similar power law which means over time, it's too costly for losers to keep up. The only reason TSMC isn't a defacto monopoly for advanced chip nodes is strictly due to geopolitics.

That wasn't what it seemed like at the time. Amazon didn't post profits, sure, but they sure as hell weren't a giant money suck either, they didn't need billions in financing to run their business. There were a lot of Amazon bears, but they were concerned about the high valuation, not about them going broke (since even the most pessimistic bear can read a cashflow statement).

That’s because they were reinvesting the profits. I think they had given a profitable quarter just to show that they could do it.

Amazon had a close call around the .com crash as capital markets froze, but they were not going broke every year. They were purposely (and rather famously in business circles) investing every dollar made in order to grow the business. It was clear early on the original business worked.

Amazon also added/pivoted to AWS, which is where a huge part of its value comes from today.

I remember when hundreds of dotcom companies were going to go broke, and they all did.

Not sure what your point is.

First, and obviously, the article is talking about capital when they say 'money'. Not all capital is borrowed.

Second, not all money is created via borrowing (but the vast majority is!)

And the YouTube video you linked to is very confused even about the money that is created via borrowing.

Government debt is not required to create money. The Bank of Japan bought stock ETFs to get 'freshly printed' money into circulation. ('Freshly printed' in scare quotes, because these days it's just entries in a database.) Another example: Singapore's central bank (MAS) does not use Singapore government debt to create Singapore dollars; I'm not even quite sure they would even be allowed to.

You can say that money itself is a debt of the central bank; and that's sort-of true, but it's not what David Graeber talks about.

A bit of a pedantic last point: silver coins or bitcoin also require no borrowing to create. Silver coins have been used as money, bitcoin could conceivably be used as money. (There are other problems with these options, but that's besides the narrow point.)

I agree with the general sentiment, but I feel like it is also a bit reductive. Assets in this space are near impossible to evaluate and can fluctuate in value greatly based on other actors. In a hypothetical scenario where, say, google releases a new frontier model that somehow leapfrogs the competition by 5 months all of a sudden the value of the Asset of Fable 5 and GPT 5.6 might completely crater.

Yes, they have assets: GPUs sitting in datacenters, and data.

Question is: is that worth enough to cover the debt after the market crashed?

I would imagine Anthropic et al. are largely leasing land/buildings, so as the other commenter said… must be the server racks that are acting as collateral (if anything). Generally enterprise hardware depreciates very harshly. I’m used to paying $10 for Intel Xeons that once retailed for over $5,000. I expect to pick up some NVIDIA Blackwell 6000s for $100 each someday.

GPUs have a five year lifespan before they become obsolete and start experiencing reliability issues. We're already 1-2 years into that five year lifespan.