"Now, I know what you’re thinking. Ed, isn’t that exactly what’s happening here? We’ve got overvalued startups, we’ve got multiple unprofitable, unsustainable AI companies promising to IPO, we’ve got overvalued tech stocks, and we’ve got one of the largest infrastructural buildouts of all time. Tech companies are trading at ridiculous multiples of their earnings-per-share, but the multiples aren’t as high. That’s good, right?
No. No it isn’t. AI boosters and well-wishers are obsessed with making this comparison because saying “things worked out after the dot com bubble” allows them to rationalize doing stupid, destructive and reckless things.
Even if this was just like the dot com bubble, things would be absolutely fucking catastrophic — the NASDAQ dropped 78% from its peak in March 2000 — but due to the incredible ignorance of both the private and public power brokers of the tech industry, I expect consequences that range from calamitous to catastrophic, dependent almost entirely on how long the bubble takes to burst, and how willing the SEC is to greenlight an IPO.
The AI bubble bursting will be worse, because the investments are larger, the contagion is wider, and the underlying asset — GPUs — are entirely different in their costs, utility and basic value than dark fiber. Furthermore, the basic unit economics of AI — both in its infrastructure and the AI companies themselves — are magnitudes more horrifying than anything we saw in the dot com bubble.
In simpler terms, I’m really fucking worried, and I’m sick and tired of hearing people making this comparison."
https://www.wheresyoured.at/dot-com-bubble/
#AI #GenerativeAI #LLMs #DotComBubble #AIBubble #VC #VentureCapital #BigTech
