Wall Street Sees an AI Bubble Forming and Is Gaming What Pops It
View original at finance.yahoo.comWall Street Sees an AI Bubble Forming and Is Gaming What Pops It Photographer: Chesnot/Getty Images (Bloomberg) -- It’s been three years since OpenAI set off euphoria over artificial intelligence with the release of ChatGPT…
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If you think about how much money — it's in the trillions now — is crowded into a small group of themes and names, when there's the first hint of that theme even having short-term issues or just valuations get so stretched they can't possibly continue to grow like that, they're all leaving at once
80% confidenceOpenAI expects to burn $115 billion through 2029 before generating cash in 2030
80% confidenceOracle remained confident in its ability to meet its obligations and future expansion plans
80% confidenceThese aren't dot-com multiples. This isn't to say there aren't pockets of speculation or irrational exuberance, because there are, but I don't think that exuberance is in the AI-related names of the Mag 7.
80% confidenceThe credit people are smarter than the equity people, or at least they're worried about the right thing — getting their money back
80% confidenceOpenAI plans to spend $1.4 trillion in the coming years
80% confidenceThis kind of group thinking is going to crack. It probably won't crash like it did in 2000. But we'll see a rotation.
80% confidenceWe're in the phase of the cycle where the rubber meets the road. It's been a good story, but we're sort of anteing up at this point to see whether the returns on investment are going to be good.
80% confidenceAny plateauing of growth projections or decelerations, we're going to wind up in a situation where the market says, 'Ok, there's an issue here'
80% confidenceIf we continue down the track of lever up our company to build out for the hopes that we can monetize this, multiples are going to contract. If things don't come together for you, this whole pivot would have been a drastic mistake.
80% confidenceThese stocks don't correct because the growth rate goes down. These stocks correct when the growth rate doesn't accelerate any further.
80% confidence