This is going to be super duper awesome when the AI bubble bursts.
Source:
https://talkingpointsmemo.com/edblog/the-ai-economy-not-an-exaggeration
1 Boost
0 Likes
@MichaelTBacon
Is this because datacenters can get debt financing and nothing else can?
I am really not sure but the thing that made the most sense to me in explaining all of this was a thing recently about all of the cash that the giant tech firms had accumulated over the last 25 years that they didn't know what to do with (that their shareholders and board would agree to, i.e., *not* paying contractors' workers more).
AI became the shiny bauble that finally hypnotized all of them to dump their gigantic cash reserves into something, which has meant that they've had about 2-3 years of free spending with no noticeable impact on the money supply or borrowing rates, because it was all money they'd already made and were sitting on. It's also why the economy has had weird staying power the last 18 months despite Trump doing everything he could to break it.
But that money's gone now and the tech firms are having to actually raise funding the normal way, and so interest rates are finally starting to respond.
@MichaelTBacon
That would make sense.
Now I want to see MS, Oracle, Facebook, Apple, and Google's cash balances year to year. I remember reading, as you said, that they were sitting on sovereign fund-scale cash piles. Have those been spent down?
@ohmu To my knowledge, yes.
In the past couple of years as Anthropic and OpenAI raised moderate-sized-country-GDP levels of funding despite never coming close to a profit, and all of us were saying, "who TF is giving them all this money?" apparently a lot of it was coming from those cash piles. And yes, AFAIK, they've reached the end of those.
Let me see if I can find that article from a while back, I stuck it on here, I think . . .
@MichaelTBacon
Graphs like this make Soviet era five year plans seem suddenly attractive.
@MichaelTBacon still better to have a correction though