The sharp drop is the latest sign of anxiety creeping through Wall Street over how long it will take AI companies to see returns on massive investments.
The AI bubble is bigger than the dotcom bubble. It’s bigger than the subprime bubble. We are still living in the wreckage of that bubble, 18 years later.
It’s even more “funny” that just that: there are several bubbles going on right now, not just the AI, most notably a massive realestate bubble and also bubbles in things like car loans in the US.
Further, consumer indebness is again at record levels, worse even than 2007.
In other words, it’s like a mix of the dotcom bubble (this time around with a tech stack that delivers at best a lower return on investment than the Internet) AND the 2007 bubble of overvalued realestate and people deep in debt (with the personal finances of most people worst on this side of 2007 than they were on the other side so there’s a higher probability of defaults) AND a bunch of smaller unpopped bubbles all over the place.
I expect that when one of the big ones goes the resulting consumer retrenchment and pullback from both lenders and investors is going to cause the other bubbles to blow up (as loans are recalled, not rolled over or defaulted on, consumption falls and investors desperatelly try to exit their riskier positions) and the full result will be at least as bad as 2000 and 2008 combined, possibly worse.
The AI bubble is bigger than the dotcom bubble. It’s bigger than the subprime bubble. We are still living in the wreckage of that bubble, 18 years later.
It’s even more “funny” that just that: there are several bubbles going on right now, not just the AI, most notably a massive realestate bubble and also bubbles in things like car loans in the US.
Further, consumer indebness is again at record levels, worse even than 2007.
In other words, it’s like a mix of the dotcom bubble (this time around with a tech stack that delivers at best a lower return on investment than the Internet) AND the 2007 bubble of overvalued realestate and people deep in debt (with the personal finances of most people worst on this side of 2007 than they were on the other side so there’s a higher probability of defaults) AND a bunch of smaller unpopped bubbles all over the place.
I expect that when one of the big ones goes the resulting consumer retrenchment and pullback from both lenders and investors is going to cause the other bubbles to blow up (as loans are recalled, not rolled over or defaulted on, consumption falls and investors desperatelly try to exit their riskier positions) and the full result will be at least as bad as 2000 and 2008 combined, possibly worse.
This is one of the AI apocalypses I do worry about. That and the Idiocracy/slopocalypse one.