Has anyone seen a definitive mathematical proof of this? I have seen countless articles and exposes about the hidden debt. These are incredibly sophisticated companies so presumably they wouldn’t let themselves get into a company ending bind. But what are the chances this is actually an MBS type situation where the system is truly overloaded and a few sacrificial lambs are needed?

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WarmWash 21 hours ago | parent | next [-]

A lot of people want to see AI fail/collapse.

A lot of publications pay attention to that.

A lot of people love reading things (often only reading things) that make then feel right/correct/justified.

A lot of publications live or die on ad views.

And just like that we have a viable media business model!

	▲	functionmouse 21 hours ago \| parent [-]
		Also, the most popular bear case being invalid helps the bulls, who largely control the discourse.

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billywhizz 21 hours ago | parent | prev | next [-]

the fact fortune magazine is the one ringing the alarm bell here is arguably more useful information than any attempt at a "mathematical proof".

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chasd00 21 hours ago | parent | prev | next [-]

> I have seen countless articles and exposes about the hidden debt.

eh trolling for clicks. It's just not on the balance sheet (if i have my terms correct) so you have to look in a different report to find the numbers. If it was truly hidden then discovery of the debt would trigger lawsuits from investors. Major investors know about it already that's why no one is getting upset over it except for laymen. btw, laymen in the stock market (retail investors) just serve as red meat or cannon fodder for actual traders with real money and real information.

edit: there will def. be significant winners and losers, the stakes are very high and the dollar amounts are very large.

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dgellow a day ago | parent | prev | next [-]

I mean, it is. Coreweave for example is very clearly a sacrificial lamb.

FWIW Enron was also a „sophisticated company“ at the time

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bastawhiz 20 hours ago | parent [-]

Enron committed serious fraud, and not because what they did was made illegal after the fact. Unless I'm missing something, none of the big AI companies have committed serious fraud (or at least, not any that's been revealed).

	▲	dgellow 13 hours ago \| parent \| next [-]
		Im pushing back on the „sophisticated companies“, I don’t mean to say they are committing actual fraud. My point was that Enron finances were extremely complicated, on purpose, to hide the fact it was a massive fraud. Before collapse Enron was talked about as one of the most innovative and successful company ever. People who should have known better assumed the company would of course not put itself in a bad situation by committing the most flagrant fraud ever. For the AI bubble too many people assume that large companies having a stake in it will of course know what they are doing, be careful and not expose themselves too much or do wild bets that don’t pay off. But looking at the level of capex from hyperscalers, the amount of circular financing by NVIDIA/google/microsoft, the level of debt raised for datacenters (and its associated raising interest rates), the lack of moat for AI labs, the absurd AI labs valuations, OpenAI ever increasing infra expenditure commitments (we are at more than $750B for 2030), Oracle dire situation (to say the least), the mounting pressure from China/open models, and the fact that 2 companies represent the vast, vast majority of the compute demand. None of that looks like a healthy, sustainable industry. In fact it looks like the most obvious financial engineering ever, where the only ones benefitting are NVIDIA, memory manufacturers, and hyperscalers. And they are doing what is necessary to keep the game going. If the demand for AI vendors isn’t increasing massively in the coming years the whole thing will go down. And the level of demand required need to be pretty much the AI booster dreams where everything becomes agentic everywhere. Short of that we are very likely to see things go downhill
	▲	sublinear 17 hours ago \| parent \| prev [-]
		All usage of AI is fraud

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runarberg a day ago | parent | prev | next [-]

People were saying this about the Lehman Brothers and the entire financial sector at the time, right up until their bankruptcy and the great recession. Some predictions turn out to be correct. And with the benefit of hindsight, obviously so, though how much of a hindsight is needed to make it obvious is up for debate. I would argue for the AI bubble, very little indeed.

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mschuster91 a day ago | parent | prev [-]

> Has anyone seen a definitive mathematical proof of this? I have seen countless articles and exposes about the hidden debt.

There's an old WSB saying: the market can remain irrational longer than you can remain solvent. The AI craze is that but on 'roids.

> These are incredibly sophisticated companies so presumably they wouldn’t let themselves get into a company ending bind.

The problem is, company C-levels don't care about the long term health of the company. They only think about next quarter (in a misguided interpretation of "shareholder duty/fiduciary duty") and their bonuses tied to their KPIs.

> But what are the chances this is actually an MBS type situation where the system is truly overloaded and a few sacrificial lambs are needed?

The system definitely is overloaded to hell and beyond after well over a decade of ZIRP. That money never got deflated out of the system in a healthy way and now everything is looking to fall apart.

Unfortunately, such events are already "priced in". VC essentially is built on 1 of 100 investments striking it big and 99 going bust. A market correction won't hurt the big guys, but it will definitely hurt all the small guys.

	▲	gradus_ad 21 hours ago \| parent \| next [-]
		That saying goes back long before WSB
	▲	kzzzznot 21 hours ago \| parent \| prev \| next [-]
		WSB? Keynes said that…
	▲	coliveira 21 hours ago \| parent \| prev \| next [-]
		> incredibly sophisticated companies We need to stop thinking that just because they have money they're incredibly sophisticated. We have a few examples like Mark Zuckerberg, who had early success with FB, but he seems to be incapable of investing in profitable products. E. Musk: great at selling his companies, but laughably bad at making profits at the same level of expenses. Sam Altman: never had a real job he did well other than raising money. This is the kind of people that control these companies.
	▲	cavemandaveman 21 hours ago \| parent \| prev [-]
		That's cynical nonsense that executives don't look past the next quarter. There would be none of this AI investment if that were true. It's all a long-term play with huge investments and minimal revenue by comparison in the short run. NVDA had the foresight two decades ago to invest in CUDA. That's not next quarter thinking.