Better Offline The Hater's Guide To The AI Bubble, Pt. 1
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Jul 23, 2025 Dive into the vulnerabilities of the generative AI market amidst a looming collapse. The hype surrounding AI is scrutinized, drawing parallels to historical bubbles. NVIDIA's heavy reliance on a few tech giants raises eyebrows about profitability. Major companies like Microsoft and Amazon face questions about their AI investments' actual returns and sustainability. Skepticism reigns as the discussion critiques inflated growth claims, echoing past doubts about Amazon. The complexities of the AI bubble and its societal impacts are also explored.
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GPU Sales Drive Market Stability
- The US stock market heavily depends on GPU sales, particularly from NVIDIA, which represents about 8-9% of the entire market.
- Five major tech companies drive over 42% of NVIDIA's revenue, making the market unstable if their spending on GPUs changes.
AI Investments: High Cost, Low Return
- The big tech companies spend hundreds of billions in capital expenditures on AI infrastructure but generate only billions in AI revenue.
- Much of this AI revenue is at cost or just above it, underscoring poor profitability in generative AI investments.
Fragile Five Dictate AI Bubble
- The 'Fragile Five' tech companies' investments in NVIDIA GPUs largely dictate US stock market stability.
- Their AI-related spending causes massive losses with little real revenue growth, making the AI trade unsustainable.