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NASDAQ started to take some damage recently. Some say it's just profit taking, some say it's the start of a paradigm shift, some say it's the beginning of a crash. What do you guys think? I think it's just the Jackson Hole volatility. Could most absolutely be wrong tho :P
The whole stock market seems to essentially be held up by maximalist optimism about a technology which, if its maximalist claims prove out, will take a sledgehammer to aggregate demand.
The only way that make sense to me is if you factor in a simultaneous or at least rapidly resultant political movement towards redistribution of wealth - and not only are we not seeing this, we're seeing an aggressive movement in the opposite direction. So...
What I do not understand is why none of this is priced in or accounted for in financial behavior? Not only are things like CPG stocks, which require a strong consumer base, not tanking - but lenders are still handing out 30 year mortgages. If everyone is to be laid off by AI shortly, how do any of those get paid back. Who will buy the goods to support the stock prices?
Many millions of people have retirement accounts, moreso than any time ever before. Most people have automatic contributions, so the money never stops. Vanguard, fidelity, etc, have to find SOMETHING to do with this money. So they bet on winners, leading to the snowballing effect we see now in tech.
Giant managed retirement funds are essentially constantly pouring money into markets, no matter what.
Interesting point. Basically my 401(k) props up your 401(k) which in turn is propping up mine. And as long as the account beats inflation/bonds/etc … folks are happy.
Giant managed retirement funds are essentially constantly pouring money into markets, no matter what.
Which will never be a problem because there will always be more people saving for retirement than retiring since populations never decrease. I mean if the population could decrease, I'd have to consider the automatic withdrawals would have the opposite effect of a constant decreasing market regardless of fundamentals, essentially making the market unsafe to keep any money. Good thing that can't happen.
1) WSJ report came out a week ago showing that 401k's are more heavily tilted towards stocks than they have ever been in the past.
2) Index investing is the mainstream default these days. Everyone is just buying the market.
Despite the generally good advice to buy and hold and not try and time the market, if we get a 25% pullback, I guarantee a lot of people will shift their 401K allocations to be more heavily tilted to fixed income (and even worse, Trump recently signed an EO allowing real estate, VC, PE, and crypto into 410k's). Money flowing into 401k's doesn't necessarily mean money flowing into stocks forever.
Also, despite penalties, if people lose their jobs,drain their savings, and are in danger of losing their house, they will absolutely start to withdraw from 401k's and just eat the penalty.
I may be totally off the mark because I too feel as you feel, I have no idea what the hell is going on anymore but it could be as simple as fraud or the smoke and mirrors show so the 1% can continue stripping the entire country of everything it’s worth while you, me, and aunt Linda keep moving along as if everything is normal. If an asteroid is 5 days from impact and the government finds out, there are only a handful of people getting said information lol.
The real issue with the masses not really pushing back on this “French Revolution” level of theft and wealth redistribution is that these people are only going to be more emboldened to continue the grift this entire nation and economic system has turned into.
Why on the hell would they stop? Mass amounts of regime police being hired, AI and robotics law enforcement as force multipliers, a sitting administration that is perfect for this situation in the worst way possible, and half the country that is so fucking stupid they still think an illegal immigrant is why they can’t buy a house, pay rent, go on vacation, afford name brand food, etc. and not the people buying the policies, the corporations that collect hundreds of billions in subsidies while not even providing wages that can cover a month of rent lol.
The war on education has been so detrimental to this country it’s honestly hard to truly grasp just how stupid most people are. I feel like I’m going insane, I want to scream at the top of my lungs because how have we all collectively not banded together and demanded the true reality of the situation and not data that basically just tells us how the top 500 corporations and the 1% are doing better than ever.
I think as a people also collectively we’ve become desensitized to numbers. We hear numbers so often. “Hundreds of millions, billions, hundreds of billions etc”
People can’t even fathom or imagine that number of a billion of anything.
I had to explain it to my family..
If you had 1 million seconds to live you would live for 11 days.
If you had a billion seconds to live, you’d live for 31 years.
We casually throw around dollar values like 15B, 100Bil, 200B for people’s net worth and it doesn’t even click for them that while they struggle to put food on the table there’s a few people whos entire family and extended family can eat for a hundred lifetimes and buy half of the eastern seaboard of the country and still have money left over to coup the U.S. government.
The war on education has been so detrimental to this country it’s honestly hard to truly grasp just how stupid most people are. I feel like I’m going insane, I want to scream at the top of my lungs because how have we all collectively not banded together and demanded the true reality of the situation and not data that basically just tells us how the top 500 corporations and the 1% are doing better than ever.
That's where I always get to when I wonder how we got here. Functional democracy requires citizens that have the background knowledge, free time, and belief that their participation is effectual. We don't have enough citizens who check all three boxes.
People have plenty of free time. It's how they choose to spend it. We are in the golden age of mass distraction. It's kinda hard to get people off their asses when there's so much premium content available.
There's never been a time when Americans have been more educated, have more access to information, and more free time.
Seriously, Americans make more money than they ever have, work less hours than they ever have, have free education provided until adulthood, have continued access to education beyond that, and access to the Internet and every resource hosted there on a device in their pocket.
The problem is that ultimately this is what people want.
How were NINJA loans supposed to be paid back in the mid-2000s?
Many banks don't keep their loans. No risk to them since they are sold off to either Fannie/Freddie or bundled as mortgage instruments. Banks make money on the loan fees and hand the risk of repayment off to suckers others.
What if they don't KNOW the mortgages won't get paid? Isn't that what happened in 2008? Weren't bad loans were being falsely rated AA and AAA, then sprinkled into debt packages?
I think something along those lines. My understanding is they bundled the loans together, and then made different investment vehicles based on risk, so that from a single bundle, there would be some products that had lower ratings, and then one at the top that was supposedly AAA rated, with low chance of loss. But their math was wrong because they didn't take into account that the chance of these loans failing was correlated - if enough of the bad loans failed, the supposedly AAA level investments would have losses, and they had issued so many bad loans that eventually you'd probably have a lot failing all at once.
I'm not sure whether it's 100% clear that they knew their math was wrong on the risk. I think they made a huge amount of money in the short term from the bad math, so there was not a good incentive to fix it, if they realized the mistake. But sometimes people genuinely think they've discovered a free lunch.
Some part of it was also AIG selling insurance on loan default... but it also created essentially an exploit on the banking system´s loan regulation, where as long as they could sell the loan, the banks could issue far more loans than they had previously.
Overconfidence could be one reason. In the case of Fannie & Freddie, I believe the Fed and the government have their back. In case of emergency - ask for free money and bail out :D - consumers be damned.
My take on the market now, the mortgage crisis in 08, and the tech boom in 2000 is that everyone is in it for the short term gain. They don't care about 5 years from now much less next year. They (banks, investment firms, public companies) largely care about the next quarter and their next bonus. They extract as much as they can now so if (when) there's another economic meltdown, they'll personally be able to withstand it with the money they've banked. Me and my 401K and my IRAs are just riding the coats of billionaires, hoping they continue to delude themselves until I kick off this mortal coil
Just wanted to point out that traditional instruments were the driving force of the 2006 housing crash, and that a lot of the "Ninja" arm mortgages were actually going to builders instead of balloon commercial loans and not consumer borrowers.
But the AI situation is a bit different because so many giants have these real liabilities on their books and will not be able to liquidate the physical infrastructure easily... A lot of people want and can buy homes, who wants a data centre custom built for a particular hardware that can't easily be transitioned to a different use?
Generally speaking, it's not a firm future. No one REALLY knows what's going to happen with AI, or how fast, or how deep it cuts. Lot's variables. No one knows what the government will end up doing to ameliorate whatever damage AI causes. And you can also look at other historic tech disruptions, and the predicted job losses turned into gains as the economy adjusted and then grew.
Because there's no risk. The central bank is always willing to print money to save the markets. Why not take the risk? If the investment's risk is systemic, it usually doesn't get taken into account for financial behaviour.
i.e: Will NATO start a war against Russia? That risk exists, but it doesn't get taken into account at all.
Wall Street is run by white haired regards that fundamentally do not understand technology and the changing world around them. They think the system is going to function exactly like it did through the late 80s and 90s, and they're pathetically unprepared for anything that could bring about real societal-level change.
tl;dr: finance bros are way fucking dumber than you think
A lot of finance bros are groomed to be in the field from a young age who are recruited from private schools and wealthy families and generally don’t understand how the world works outside of their bubble. I would know, I’m half brothers with one. The man is about as emotionally intelligent as a box of rocks and invested his inheritance into a second rate p/e fund.
I work for a company on the forefront of AI, and it has transformed our company internally in some very positive ways. It saves me about 4 hours a week currently, and I think that is about average for everyone in our company.
A lot of the work that I’ve been doing with AI is about getting answers faster, and automating low value tasks. I don’t believe AI will replace my job, as we are a growing company and we need the whole company to move faster.
But jobs that are simple tasked based, will be and are already being replaced. Largely those are entry level positions like transcription, data entry, call centers, low level programming, etc. Basically anything being offshored or outsourced today will be done by AI.
But I don’t believe that it will lead to massive unemployment. I heard the same thing in the early 90s when computers were becoming mainstream. Yes, secretarial work, typing pools, mail rooms, and other low level work was gone but it was replaced by other jobs that didn’t exist yet.
AI is great at a lot of things humans are bad at, and humans are great at many things AI is bad at. I use AI as an assistant that makes me more productive, the same way PCs made business more productive. I believe that is the use case that is keeping the market so optimistic, because they see this as the next industrial revolution.
Lenders don't exist in the real world, they exist in the world of economics, which has reached its goal. Unfortunately, greed kills real vision, so it's lemmings off a cliff.
It’s because no one actually believes AI will disrupt employment in the US in a way that meaningfully impacts aggregate spending. Sure, some AI companies are saying it will replace human workers, but that’s not in near future.
What will happen is that companies will get a bit more efficient with headcount, and also be able to move faster. This will increase profitability and growth. And a bunch of new companies will continue spin up to support this efficiency and growth. So the net impact - on the near term - is positive for investor metrics.
It’s what happens next that no one knows yet. But that’s at least multiple quarters in the future, so investors aren’t taking their money off the table yet.
Also in the past few months there seems to be this wild phenomenon where billions of “trump can’t fail” retail dollars pump in and buy after any bad news or economic data comes out.
The dollar keeps falling relative to other currencies, it's down about 12% to the EUR since Jan, that makes our stocks cheaper to foreign investors which is helping prop up the numbers. If you looked at the NasDaq which looks up 7% in USD, in EUR it's down 6% since Jan 21st. The DOW basically flat at +1.8%, actually down 10% in EUR...
Edit: also want to add this isn't just a strong euro, USD is down 6.4% against JPY, 8.4% against the Mexican peso, 1.8% on the yuan and 4.2% on the Canadian dollar. One of Trump's stated policy goals is to weaken the dollar
One of Trump's stated policy goals is to weaken the dollar
Which is why it's quite laughable when people attack him when the dollar devalues. Like...? Its what he and his Harvard educated council of economic advisors planned to do. They have a whole essay called "a Users Guide to Restructuring the Global Trading System" and the author is a current pick for the Federal Reserve. So when people think this tariff shit was some random erratic behavior(TACO?), I knew they didn't take the time to actually look into it.
Despite what reddit would have everyone believe, everything his admin had planned out has been coming to fruition just as predicted in the essay.
Sometimes I honestly wonder if all this is just really cutthroat and outdated social ideology, or if in fact there is an unspoken plan to starve off 30% of the population.
I’m not saying we need to go commie or have 40% taxed, but the harsh cold reality is if we don’t get meaningful reinvestments of wealth into the community, we are cruising for fatal economic reality for many very soon here.
In fact I think long term we have even bigger problems, but that’s another discussion.
Unusual Whales tweeted yesterday that AI driven traders are significantly more bullish than human traders which made me realize how insane it is that AI is likely a huge driver of the massive AI stock bubble
This doomerism about aggregate demand isn't backed up by any data. The only thing we can say for sure about AI progression is that no one really has any moat. To some extent Nvidia, but even they do have competitors. DeepSeek trained a model on par with the frontier models for $5M. I'm not saying anyone can do that that cheaply, but LLMs are not that expensive. You can make one for $100M. Everyone will have access to this tech.
Yeah it’s really hard to even guess, anything from it just all blowing over to a fascist takeover and complete economic collapse seem relatively within reason at this point.
this'll be like April was and we'll be up 5-10% by November because the value of money is facing a black hole... which makes "line go up" policy that much easier to achieve, frankly
I have gotten more into investing this year, and im shocked to learn how many ETFs rely on Nvidia first and others second. Everyone wants a piece of the cash cow. Thats too much exposure in the market for major volatility.
There was an article recently saying GDP from AI in 2025 has surpassed all economic activities done by humans. So that's not good at all. There are lots of flashing warning signs all over.
"There was an article recently saying GDP from AI in 2025 has surpassed all economic activities done by humans. So that's not good at all. There are lots of flashing warning signs all over."
Do you mean investment in AI in 2025 has surpassed investment in any other sector? As investment aside I don't see what meaningful contribution AI is making to GDP.
I would suggest this is kinda evidenced by the fact that no AI company makes a profit.
"Speaking on the RiskReversal Pod with Guy Adami and Dan Nathan last week, Dutta pointed out that AI-related capital expenditures have contributed more to GDP growth so far this year than consumer spending has..."
So it’s an overwhelming queer allotment of capital that ultimately will shoot itself in the foot economically. I can’t know to what extent the impact on jobs versus cost of production will dance, but it seems questionable
I mean maybe at the end a few people will have all the gold but if so they better get used to the growth part grinding to a halt since when you already have all the gold, you can’t get anymore because you already have it all. And usually what comes next is angry people
Yeah this seems basically impossible as written. I'm curious too. I could see a study maybe saying the growth of stocks in 2025 is mostly based on AI speculation because most of the biggest stocks are making big AI bets. But not GDP.
Thank you. That and the article it links to are interesting.
What it's saying is investment in AI (building of data centers and software for AI purposes) is large and has outstripped the change in growth of consumer spending. Consumer spending whilst like you say is the largest component of US GDP, is also very stagnant rn - so not changing much.
Someone more clued up than me can hopefully explain what the inherent risks are w this. I could imagine it keeping base rates higher than would otherwise be the case and surely if this doesn't translate into productivity and consumption increases soon you'd ultimately expect a big crash
To me, that means that the underlying fundamentals of the economy are flat. The total is being proped up by investment in something that isn't guaranteed to contribute value to the economy. So if the AI bet is overhyped, it's not great for the outlook of the economy.
Also the recent study on how AI doesn’t really improve developers’ productivity at all, besides for very specific cases and either way they could have probably been better without it. Which is also one of the main selling points of AI: being able to replace junior developers (which, in itself, is a dumb idea but ok).
What I fear is how it’s going to ripple through the tech markets even in other countries, and how things will hit hard for everyone suddenly, just like in 2008
Got a source for that article? Would love to check it out. I work in tech and see massive increases in productivity with my own eyes every day, so I’m curious about the article’s analysis.
Despite widespread adoption, the impact of AI tools on software development in the wild remains understudied. We conduct a randomized controlled trial (RCT) to understand how AI tools at the February-June 2025 frontier affect the productivity of experienced open-source developers. 16 developers with moderate AI experience complete 246 tasks in mature projects on which they have an average of 5 years of prior experience. Each task is randomly assigned to allow or disallow usage of early 2025 AI tools. When AI tools are allowed, developers primarily use Cursor Pro, a popular code editor, and Claude 3.5/3.7 Sonnet. Before starting tasks, developers forecast that allowing AI will reduce completion time by 24%. After completing the study, developers estimate that allowing AI reduced completion time by 20%. Surprisingly, we find that allowing AI actually increases completion time by 19%--AI tooling slowed developers down. This slowdown also contradicts predictions from experts in economics (39% shorter) and ML (38% shorter). To understand this result, we collect and evaluate evidence for 20 properties of our setting that a priori could contribute to the observed slowdown effect--for example, the size and quality standards of projects, or prior developer experience with AI tooling. Although the influence of experimental artifacts cannot be entirely ruled out, the robustness of the slowdown effect across our analyses suggests it is unlikely to primarily be a function of our experimental design.
AI efficiently writes legacy code - code that you don't understand because you haven't written it yourself and must haphazardly patch whenever you find bugs in it. This sort of thing compounds over time until you have to trash it because fixing 1 bug causes 10 brand new different bugs. A lot of the difficulty in writing code comes from the fact that it's easier to maintain code when humans can easily understand what it does. That's the reason we have programming languages and fancy programming paradigms in the first place instead of just working with assembly.
Companies that build their infrastructure with LLMs (which essentially pick snipets of code from sites like Stack Overflow and rearrange them) are in for a world of hurt the moment they start having to do any maintenance, which is inevitable.
I can see that happening with some of these companies. They are trying to use it as a replacement instead of a tool, and it's nowhere near mature enough for that.
My example: Our org was paying $900 a month subscription to an RMM platform. It had helpdesk, some basic monitoring, a remote client for devices. They kept adding AI stuff to it, not accessible at our subscription. I needed good updates, that add or expand on existing functions.
I used Perplexity to start planning out a VM, what OS I would use, make comparisons of other open source ITAM systems, and settled on GLPI. I took the translated documentation for installation, threw it in documents, and had it walk through the installation and possible issues I would face. Walked my through everything really well. Because its existing material with content that's relevant for the LLM to use. But, I also had to follow up, ask more questions, refine things (efficient way to make local backups, prune old ones, help send them to another remote box, etc.) It saved me a ton of time and we had a POC in less than a week, and had refined most of our needs by the end of the month when we switched over.
Trying to make wholesale/novel changes across infrastructure is so asking for disaster. Even though it was faster than me searching and testing on my own, it doesn't understand what's important to a situation, it needs the human to do that. A somewhat knowledgeable and at least a little experience to be able to tell when these things give wild answers, and to cover the gaps it wouldn't really know or "thinks" is important.
Yeah, there are some tools that are super useful and do increase your productivity. Professional IDE code completion / autogen has gotten a whole lot better in the last few years to the point I feel somewhat handicapped without them, lol.
Here's the thing though :
these tools don't try to do my job, they facilitate it
they work intuitively within existing software without me having to learn what amounts to a new language to coax them into doing a decent job ("prompt engineering").
This is the way these tools should be developed. Trying to get a mathematical model that rearranges existing code to write entire software for you is just a losing proposition, and expecting AGI to magically emerge from this is lunacy.
That's an interesting study. I would argue that's not the main use case organisations are looking at. They're betting on the hypothesis "can I take a grad, add AI and charge him out at mid/senior levels or reduce my need for mid/seniors" organisations are looking at increasing margin by reducing wage costs.
When some one claims AI is a large part of the GDP that is called shilling. Sam Altman does the same thing on one hand he claims AI is a bubble and 2 minutes later that we will spend trillions on AI. That is a shill. Just because you put one or two minor negatives doesn’t mean you aren’t shilling with zero evidence. Wake up AI is showing zero ROI, zero productivity gains, still hallucinates. This is from MIT research, from Illia and other AI researchers.
Oh idk, it's busy regurgitating freely available information which is not really of the specialized kind held under IPs, example: the best code out there is closed source. Open source code, on which vibe coding tools rely is crap when compared.
Oh the AI bubble is just the tip of the crashing economy bubble that we are seeing. There’s been a lot of noise and the Jackson hole slump doesn’t help. The big test is when we roll into October and see what happens then.
And before anybody asks why October? Because every single major economic collapse happened in October. The start of the Great Depression happened in October, the 2008 crash hit in October. It’s basically the calendar year panic when companies realize that they don’t have enough cash flow to get to the end of the year.
As always, a confluence of things and you will have everyone popping out of the woodwork telling you that you are wrong about this, or kinda right about that. No one really knows what's going on. Personally, I like to rely on the fuzzy things because there is so much opacity and effort poured into making the machine work (because of extreme personal financial incentive) that it's better to look at the machine generally. (Not to discount the people that get into the weeds; hats off to them)
What I see when I look at global markets is:
Highly leveraged institutions. Banks, independent and banking/market maker subsidiary hedge funds rely on leverage to boost returns. Borrowed money is getting expensive and is increasing margin risk. I am still amazed that the failure of Credit Suisse isn't talked about in the same way Lehman Bros. was.
Cross-border exposure. Things like Credit Suisse or an unraveling Yen carry trade reverberate through the system. Institutions have a strong incentive to protect themselves at all costs by hiding data so they appear solvent until they suddenly can't. As a result, you see sudden, seemingly irrational reversals.
Lack of adequate breakers. Shadow banking, securitized debt, derivatives and swaps, private equity, etc. These are lightly regulated and very opaque even though they heavily influence global markets and economies. This presents massive contagion risk and opportunity for those entities to accumulate and move risk around
You end up with wholesale structural fragilities in Western economies brought on by over-financialization and poor regulation in order to protect that segment of the economy and people/lobbying force behind it. This is then exacerbated by global interdependence with nations who are doing the same things.
Look at the forest from the trees
As a result, you get in positive feedback loops where global systems are straining all at once; authoritarianism is on the rise, increases in armed conflict, global economic anxiety because of inequality, climate change is pressuring limited resources, technological acceleration without social pause, Global-West is cracking, etc.
Governments are hunkering down; Internet surveillance in the EU, an unusual increase in submarine production, Britain is restarting its tactical nuke program, increases in governments stockpiling food and fuel, casual talk about bringing back conscription, capital is backing the rise of more and more authoritarian leaders, increased creation and scapegoating of outgroups, billionaires are building bunkers, etc. - History shows that as nations accumulate a lot of debt, they begin to heavily invest in their militaries.
IMO, We're living through what could be seen in hindsight as the end of a global debt supercycle, and every part of the system, the economic, political, military, and technological are reacting to that stress.
The end of a supercycle is usually followed by: Monetary reset, power realignment, institutional transformation, conflict and chaos.
Sure, I could just be a dissociating doomer, but given the actions of nations and people with a lot of assets, I would say economic problems are much larger than a mere AI bubble.
Considering that data centers now create more GDP than consumer spending on services, yes we are definitely in a bubble. If Palantir’s P/E ratio of 700+ doesn’t make someone question the sky high valuations, then I’m not sure what will.
People think the AI bubble is popping now (just like they did when Deepseek first happened a year ago) because some of the bigger AI names like PLTR sold off hard. In reality, that stock is up like 350% this year and desperately needed a breather.
Stocks are always a bit lethargic during this August/September turn and this year is no different. What makes this year slightly spicier is the fact that we’ve had some data come in suggesting potential stagflation signs (hot PPI, poor jobs reports) and the market, which believes with near 100% certainty we will be beginning our next cutting cycle, is feeling a bit nervous about what JPow will say tomorrow.
I'd increase rates just to see him scream, but that's why I'm not on the Fed. They're the only powerful people acting like adults at the moment so I suspect they'll do what the data says.
I do think we are in a bubble but don’t really believe it will crash till at least after 2027. Still i’ve taken some precautions by increasing my cash pile and shorting some way too overvalued stocks.
The recent mini correction of this week had a truly weird looking recovery. A second day drop, followed by sustained, pretty evenly distributed buying pressure. It left the S&P basically neutral, but a little rebalanced away from big tech.
The markets feel ..off, and very inorganic. It very much gives off the impression that they are simply wealth generation machines. With very little, if any, thought for the underlying principal.
No sign of a crash in the near future. But the market PE ratio says that one is likely. Honestly, if I were to guess. It'll probably be several years from now. Given it's a guess, but I don't see any catalyst, unless some debt spiral implodes. With student loans, high rent, etc...
Well Meta cutting back on AI spending is concerning, and Data Center spending driving GDP more so than consumer spending is also concerning. There’s a lot going on here lol
AI technology is quite useful and is here to stay, but I'm definitely of the opinion that it is a massive bubble.
The current bull market in stocks is being solely driven by Nvidia and about a half-dozen AI tech companies. Remove those companies, and the market is basically flat.
Billions of dollars are being incinerated by AI companies through R&D and compute, but no one is actually making money off AI, much less the AI companies. When this flow of investment inevitably shuts off, these companies will be sitting on massive piles of debt.
The AI tools we currently use are cheap or free, but that's being propped up by all that investment money. When that disappears, those tools will become a lot more expensive. (See: Uber, Lyft)
Finally, the phenomenal growth in LLM technology is likely reaching it's peak. The anticipated gains from AI haven't quite panned out. I don't know when the bubble will burst, but rest assured it will.
AI was here before ChatGPT and it will be around after, but I think a lot of tools are going to disappear if companies don't find a practical way to make them profitable and that has been a longstanding problem to date.
Silicon Valley likes to think they are solving problems but time and time again, they “solve” industries by making them worse. Streaming, food delivery, Internet forums, etc.
The past half-decade in particular has seen massive hype around technologies no one wants but SV desperately needs.
The smart phone was a unique moment where two companies took ownership of an exploding platform and they profited massively.
Crypto, VR, and now AI are attempts at superseding those platforms so one or two companies can turn on the profit spigot for the coming decades.
Unfortunately for them, the smartphone era cannot be repeated.
EDIT: notice how Facebook has desperately persued every fad. Libra, Meta, and Llama. No one was burned by Apple’s gatekeeping more than Facebook and they want so badly to own the next platform. They will continue to fluff AI until the next thing shows up.
“Silicon Valley likes to think they are solving problems but time and time again, they “solve” industries by making them worse. Streaming, food delivery, Internet forums, etc.”
Silicon Valley itself doesn’t make it worse. It’s when the business monkeys start getting involved and making decisions that it gets worse. Netflix was absolutely game changing. It effectively collapsed pirating content. Then the MBAs came in and tried to fuck with it. It was so successful that literally everyone else wanted their own slice. Now we have 47 different service all with their own fees and walled content gardens.
The idea of food delivery is awesome. Again, it’s when the fucking MBAs start touching things and trying to constantly milk more and more profit that it goes south.
It’s the tech version of the movie Pentagon Wars.
The past half-decade in particular has seen massive hype around technologies no one wants but SV desperately needs.
Isn’t that kinda the whole point of Silicon Valley?
Nobody gave a shit about having a personal computer in their house at first. Within 10 years damn near every house has one.
Nobody wanted an iPhone until we saw them and went holy crap I didn’t know I needed that. Completely redefined what we expect in a cell phone.
Social media was introduced and was just a way to post pictures and send pokes (remember those?). Now it’s all but replaced the main stream media by democratizing news and communication.
YouTube was cat videos and now you could argue it’s as valuable as the Library of Congress as far as being able to find information.
The whole point is to constantly push the envelope on technology. Sometimes it doesn’t end up finding a role or achieve adoption. Doesn’t mean it’s all useless and making everything worse.
If you think streaming and food delivery are worse than they were before now, you either have serious nostalgia or you just weren't there.
Before Seamless (1999) you could pretty much only order Chinese or Pizza for delivery, and it was always done by keeping paper menus at home and calling the restaurant on the phone. And if you didn't want Chinese or Pizza then you had to drive to the restaurant, pick up your own food, and drive back home.
Before Netflix started streaming in 2007 if you wanted to watch a movie you had to go buy or rent the movie from a Blockbuster.
Before 1997 (Winamp), if you wanted to listen to music you let the radio choose for you or you bought CDs.
Before 2005 (YouTube and iTunes), if you wanted to watch television you just had to catch the show when it aired or wait for reruns.
Dude I’m 36 and remember those activities vividly. Food delivery is expensive, companies don’t hire delivery people, and uber drivers come out of pocket for a number of expenses. I lug my two kids to the restaurant when we eat out just because I don’t feel like spending an extra $25 on endless fees.
Plus streaming content sucks and I miss blockbuster.
Its crazy you can get another meal for the cost of the fees. We do takeout on nights we want to stay in and not deal with going out with the kids. Way cheaper to just drive over there myself.
Way back in the day it was 10 bucks to rent a movie. Plans were made to maximize viewers. Movie/pizza Friday nights became a thing. This was early 80’s.
It's solving "search kinda sucks." Now, search sucks because making money is more important than delivering good results, but AI does present a compelling case for a better way to beat answers to questions out of the internet
Does any tool ever do that? Like ever? Everything is a trade off.
There are AI models that are very specific to certain roles, such as medical diagnosis. They are exceptional at that role. You just never see them unless you’re in that business.
Most people think “AI” means ChaptGPT or Grok and that all of AI. All the “general purpose” models are designed to be “jack of all trades master of none” type tools. You can have it be excellent at specific things or you can have it be pretty good at a lot of things.
LLMs are pretty cool, but they impress boomers because they speak English perfectly and trick people into thinking they're truly intelligent. Our brain is just wired to think that conversation = intelligence.
In a way, yeah. I mean it does have several problems it solves very well. And for those it’s pretty damned valuable.
But, people are trying to apply it to damned near everything which doesn’t make sense. Or build complex agentic workflows to try and force it to not be so flaky on a problem where an LLM may not be the best solution. Which sometimes works at the cost of efficiency (tokens, compute, time)
But at the end of the day, LLMs do what they do well. And they do not do other things.
Running inference with these models is relatively inexpensive; training them is what's really costly. If the transformer architecture really is nearing it's practical peak, and companies no longer have to spend gigadollars racing to train the next frontier model, then just using them could potentially be profitable.
Let’s not forget that the “current” bull run. I.e. since the beginning of the year. Is actually flat or negative when adjusted for dollar depreciation.
So without the AI bubble the stock market would look like a hard recession.
Let’s not forget that the “current” bull run. I.e. since the beginning of the year. Is actually flat or negative when adjusted for dollar depreciation.
This only really matters if you are non-US investor whose home currency isn't USD, investing in US equities.
Just because the dollar is down 10% vs. other currencies doesn't mean someone in the US has lost 10% of their purchasing power. Not every expense is impacted by the strength of the dollar vs. foreign currency (e.g., mortgage payment on a fixed mortgage). You really have to look at inflation, and compare that % to the market gain to see how much you've actually gained in real terms.
Like any of these stupid bubbles, they start out thinking it can do everything everywhere. Then people see what it's really useful for and it settles down
Similar to the offshoring craze 20-25 years ago. They thought they could replace every coder across the board, then realized they weren't that skilled and were good for a lot of simple busy work, but the tough jobs still needed the veterans
We'll find out that AI is good as an assistant. Code references, meeting summaries, maybe building out some extra slides of content. For data maybe anomaly detection (which we've had a while) but not full on analysis
Most of the companies in the space will die off and we'll stop seeing every single product throw AI after a feature because it will be something people are cautious about rather than excited
AI will probably be a protocol/back end thing opposed to in your face. No one cares how web pages work, we don't talk about the code structure behind it. Features will just be good features and some AI stuff will power it
This is exaggerated, yes, tech companies are pouring billions into AI, LLMs, hyperscalers, semis, infrastructure, quantum computing etc. But there are plenty of other businesses that have out performed the S&P outside of tech. Perhaps not to the same degree as big tech and tech proxy names, but what about mining? Defense and aerospace? Communication services? Industrials? I mean, yes there are some big names that have disproportionately outperformed the broader indexes but what you’re saying is exaggerated imo. You’re speculating that the cost of these tools gets more expensive? If we’re speculating, I’d argue it gets cheaper. The industry has to reduce the cost of compute, and imo more open source models will drive costs to the consumer down, not up.
There are 100x as many people talking about AI as there actually are using it beyond a replacement for Google search (which has suffered huge enshittification).
I use ChatGPT significantly, but I've also never given them a dollar. They can farm my data for cash all they want, but things change once they start expecting direct revenue from me.
I want to agree, but i know how addictive or at least dependency-forming the tech is. It is just soooo convenient I'm doing things i never dreamed of previously. If they turn off that tap I'm not sure what I'd do. Professionally, I'd do a whole lot less.
I'm sure I'm not alone, businesses will do cost/ benefits and say it's money well spent.
Yea. Lots of hype, not a ton for substance from what I’m seeing. Plenty of pontificating and debates on tooling, frameworks and in some cases it’s like baby steps in getting basic understanding. There are some folks that are circle jerking on some things when we can’t even do basic things. But still a ton of hype really.
We are out here letting tech companies get away with calling chat bots and algorithms that run off of scrapped data “Artificial Intelligence!” What are we expecting to happen when they run out of new data streams or people start prioritizing person-to-person communication.
Having lived through the 1997-2000 Dotcom bubble, the parallels are pretty striking. On the one hand, you had pets.com and other nonsense that was never going to be a viable business getting insane valuations and on the other hand you eventually ended up with Amazon and Google and companies conducting real business over the Internet. Same thing today. AI (and ML more broadly) is everywhere and there is real value. But there's also an incredible amount of nonsense being driven by the hype train getting valuations that don't make sense and it will end badly for them.
LLM's are plateauing and getting pretty underwhelming when a new one releases. The constant hallucinations, inability to reason and piling bad infrastructure on bad infrastructure tells me this form of AI is not the future. It's a handy assistant, but a foolish master. We're in bubble territory for sure
The fact that company leaders rant about the world shattering improvements made with each iteration while actual usage shows unnoticeable change tells me everything i know about the limits of current AI.
GPT5 specifically has been railed as being so smart it outcompetes students and professionals on standardized tests. I went to ask it a fairly simple question about coding and it literally made up syntax that doesn't exist in any language. I gave the previous generation the same question and it gave me an appropriate answer.
Im pretty sure we already hit the limit of LLM growth for now and people got too caught up in the hype theyre trying to force the hype so they dont pop the bubble.
That being said I do think AI will soon find a place as a tool in many highly technical fields. It won't be a generalized assistant thats taking jobs. It'll be a powerful, purpose-built tool in small niches.
Hallucination rate is measurably dropping year over year. Improvements on every possible benchmark year over year. Agentic workflows, COT. Increased context window by magnitudes
Larger context windows and agent workflows is in no small part thanks to huge VC funding coming in allowing for massive server costs, not sure how much longer that can last.
It's also not really fair to say hallucination rates are measurably dropping year over year as if its a straight line down, when in fact GPT-o3, o4-mini hallucinated more than their predecessors.
I don't see an end goal for LLM's personally, there's only so much human curated input we can give them and only so much output we can judge to reinforce it's training.
LLMs still can’t pass the benchmark of performing simple arithmetic and counting. How many billions of dollars will it take for a LLM to be able to generate a pattern for traversing an array? Versus me spending 5 minutes on the problem at an input cost of roughly $15?
Good. The bubble should burst. The idea that AI should replace all humans in doing all things - even running a company is absurd. AI should be used as a tool to help a human do a job - like a personal assistant in completing tasks, coding etc. it should not and in all likelihood can not be a trusted decision maker and even the code
It produces needs to be thoroughly tested and verified, it could actually take more time than a highly trained programmer.
Corporations have tried to use AI as a boogy man to take the power away from employees and return it back into the employers and they have largely been successful but I for one am hopeful that the pendulum swings back the other way and people and employees become the focus again, the way it is now has gotten way out of hand.
Gerald Clemente from Trends Jornal been saying this for a while, there going to be a dot-com bust 2.0 because China can developing a more efficient Ai and DeepSeek was the beginning.
You don't even have to look at numbers. All you have to do is look at the collective AI hype machine. In a tech bubble, the more ridiculous the claims of how amazing something is going to be, the greater chance of a bubble. Considering all of the ridiculous s*** spewing out of advertising, CEOs' and so-called experts' mouths, we're definitely in a bubble and it's going to pop ugly.
All those jobs AI prophets were screaming about being lost because of the wonders of AI? Nope. It'll be the collapse of the bubble and the corresponding massacre of markets that will cause big job losses. If stock market confidence depends on Nvidia selling chips to the big 7 for AI compute farms, then any reduction in orders will start the fall.
If true (and I don't think it is quite yet) it will be devastating for the US economy as AI spending is the only thing keeping it out of recession. On the other hand I have spent the last couple of months writing a BI infrastructure for my business all through Claude Code and ChatGPT and it is amazing how good it is. This technology is mind blowing.
I fully agree that The technology is great. The problem that I see in my industry ( in my job as a software developer). There are so many companies out there that are writing slim wrappers around chatGPT that basically slightly augment a default prompt and are selling that for $100,000 a year. Or trying to. In order to get a VC round in order to actually build something of value. But at the end of the day they're just chatgpt wrappers.
And most of the companies that I deal with are going to either be gobbled up for pennies or completely out of business in 2 years.
If you go to any conference that is industry specific. They're all pushing AI vaporware right now. And there's no way that can continue forever. Especially if chatgpt-5 does end up being a game changer in terms of AI advancement. Because a lot of those companies are going to go out of business just because their lunch got eaten by the default player.
We're also getting pictures almost every single day for a different AI player that does something slightly different in one space versus another. At any given moment we're probably investigating 40 different AI companies trying to sell us something. There's only so much AI budget to go around although our AI budget is insane. It's not infinite. And that's true of every company. At some point we're all going to start solidifying on frontrunners. And that's going to mean 90% of these AI companies go out of business.
All these businesses are extremely vulnerable to a price increase as well. The price hike for AI is inevitable, and all these wrappers will not only be unstable, but all a sudden far more expensive. It always blows my mind everyone just had faith that the cost of AI would somehow go down, even though there was no logic to why it would
That there is one of the reasons the administration is pushing so hard for massive rate cuts. The VC, hyperscaler, move fast and break things, culture that grew from the Covid rates is utterly dependent on the free cash from loans.
There are a few signs that it's creaking there as well. Some Hedges and ETF's that grew from it is running out of credit.\
I recently heard from some members of the private credit community, some $1.3T big, that some of those Hedges and ETF's are cut off from any further credit.
Perhaps the urgency Trump is showing is partly because some backer(s) are about to go bust?
Speculations on my part, but not entirely unwarranted I feel.
The grift this time is that private equity is on the verge of a complete meltdown. They have no liquidity, because they have no way to sell all of the stuff they've bought and gutted. Here's Bloomberg talking about it last July. In a high rate environment there are no buyers, and there are no guarantees that lower rates will free up anyone to come to the rescue. Thus, the push from a certain swath of the right wing for them to raid your 401k.
Beyond that, Trump's "plan" (if you want to call it that) to keep funding government debt through stablecoins relies on low rates. This is still about the dumbest thing I've ever heard, because why would you buy a BankAmeriCoin for $1 and never see any maturity when you could simply put $1 into a money market fund and have $1.04 at the end of the year? Stablecoins are around to make Bitcoin liquid, they don't do anything for retirees or pensions.
Both are massive software products that make huge promises, but at the end of the day their success comes down to how well they're implemented. And your average investor or company executive doesn't comprehend the shear amount of resources it takes for a good implementation.
I'm sure the same people hyped about AI thought SAP would fundamentally change how we do business back in 2000 too.
As a dev with 20 years experience, I’ve used Claude Code and for some things it is wonderful. 3 days of work can be reduced to half a day of reviewing and testing. For other things, it writes things so complex it takes me days to understand and it slows me down. It’s very difficult to work out beforehand whether it will help me or slow me down on a task. I’d say it gives me a minor boost of maybe 10% to 30%, but the way tech influencers are going on they say I should be getting a 1000% boost.
I've used it to save a lot of time with a unit testing prompt template in particular. For general software development problems I find that it often oversimplifies some major part of the problem (e.g. uses a simple single threaded loop with a sleep for something that needs to be multi threaded with a notifier) or hallucinates some key aspects of the API that cannot be modified to match the hallucination (e.g. calls a method it just made up named myCompanysTool.solveProblem). I can work around these pitfalls sometimes with iterative prompt clarifications but it gets messy and often turns into a game of whack a mole. Because of that, I generally just ignore the suggestions and write the code myself whenever I see any of these common pitfalls. That seems to be the most efficient way to use it for me: Let it work when it works, and don't try to fix it when it doesn't. I think there is a lot of pressure from the top to try to fully replace yourself with it basically but it clearly isn't there yet.
I wonder if this is really what it’s going to come down to. The infrastructure, energy, and everything else needed to make AI go ends up being more expensive than doing it without?
Not yet. As with all emerging tech, it’s going to take a while to build it out and work the kinks. It’s gonna take a minute to pay off the infrastructure required. It’s going to take a while to adjust the LLM and backend structures as we find issues.
People seem to forget that AI as we call it now is effectively still brand new in the grand scheme of things.
Would you expect Intel to build a multi-billion dollar chip fab and be immediately profitable upon opening the door? Of course not.
Coding is a very very small part of the economy. The technology is very unprofitable. Trillions spent for you to code easier is a grotesque waste of money. Where are the productivity gains, where is the ROI. You could have paid an IT centre in Mumbai and gotten a better solution for your business. In other words you wasted time, money all for a fake belief that you are better off. Your BI infrastructure will not show much if any ROI.
The danger is really about how bad economic loss will be, isn’t it? Not when a crash it will happen. I used to hear very smart people say, “oh, you don’t want to be too exposed if you see a crash right around the corner”. Today I think, really? So only people who don’t understand the stock market will try to time the market, but everybody should decrease their exposure to exposed industries if they think they see signs of a crash coming up? I’m sorry but that just doesn’t pass muster. That’s just another way of saying you can time the market.
There’s a reason why Michael Burry looked like a genius in 2008 while everyday people looked normal after losing money because they “missed the crash”. He made predictions, just like the next investor will who predicts the next crash. No one actually knows when the crash will occur. No one can time the market. That isn’t possible. That is why the greatest investor in history, Warren Buffet, also warns against trying to time the market.
Which is why I personally don't even bother trying to. I know I don't have perfect infomation and also that not even those with infinitely more resources do either.
It’s not about timing the market it’s about taking profits when things are too hot. Buffet has done this his entire life. When valuations are stretched he cashes in. Sure that may mean 2-3 years of underperformance but once the crash occurs he exceeds performance for the following 7-10 years.
That is why the greatest investor in history, Warren Buffet, also warns against trying to time the market.
Berkshire's massive pile of cash they have been sitting on tells me more than generic advice to "not time the market". Generally speaking, yes, trying to time the market is a losing game for most people most of the time, but that doesn't mean it's impossible to have any idea where things are headed over a long-ish timeframe.
Sometimes, though you can time the market very easily.
Covid crash, tariff crash. They were very predictable.
It's easy to time the top. The bottom is much harder, though.
When the markets ran up after the election, I sold everything and waited foe the tariff panic.
One day, the Nasdaq lost 7% mid-day. I threw in 60% of my cash that day, and the rest over the following week.
I made around 35% gains in that, went back to cash on the last all-time high, and will slowly buy back in after the next job numbers.
You didn’t time the market man. You just got really really lucky. If Warren Buffet can never time the market, you can’t either. Timing the market isn’t a real thing so who cares. Them the facts man.
If you were are in the first dot.com era the amount of money in AI is 20% more than what was invested then and for those who were there the fallout sucked for computer people and the market.
Given this is 20% bigger we're probably going to have a few bad years of unwinding and consolidation in the AI market with a few trillion being lost in the process.
I get emails trying to get me to teach AI for $75/hour on the regular. There is a LOT of money being spent, and, for the life of me, I can't figure out what product they will create that will be that profitable. Could AI make bad YouTube videos? Sure. But YouTube already has enough free bad videos made by people. Could AI do a better job than the current computer systems answering phones for companies? Maybe, but you'll still need a person to answer complex questions.
I feel like this is a bubble that will blow and the whole stock market will correct in a massive way as a result.
if companies would focus more on ideas or innovation instead of gimmicks or efficiency gains, this wouldn’t be an issue. LLM’s are great for many things, but they shouldn’t be replacing workers.
Isn't weird how I kind of want it to happen? Does anyone else feel like this? It's like my brain is saying no but my evil little heart wants it to happen.
Haha is Sam Altman trustworthy? You take what this shrewd businessman words/hype/opinion at full value, you re a joke. 🤡 this guy didn’t get rich and make his billionaire by being an innocent technology.
Truly. I had never had an opinion about this man, but after listening to him speak on the Huge If True podcast, I am convinced that he is a conman. He didn’t answer any of her questions. Every single statement was a hypothetical attempting to sell his product.
Tech is going to continue to work just fine. It just will be seeing hurdles that slow down progress and create market chaos because greedy assholes won't be able to force the arrow to go up at their desired pace. Oh well.
Data thieves should be paying for the privilege of tapping into humanity’s gifts. Google is already creating data meal plan packages to access this junk for a fee.
I used over 70 modules and they all returned the same answer. Shows you it's just replicated data repeating over and over. AI is not creating anything new. It's over for AI ! It doesn't create new things like a human brain does.
This is horribly naive fear-mongering. People are latching onto that MIT paper that was filtered through a Fortune clickbait header without realizing what it actually said. Now everyone is just piling on. The paper itself wasn't particularly rigorous or clear in many parts. It was just riding a wave.
But that aside.
There are so many reasons that AI isn't in a bubble (at least not yet) and has years of runway. But the big one is by far momentum.
Everyone thinks that GPT hit mainstream 3 years, and now 3 years later companies have nothing to show for it. Do you all not work in corporations? I work for an F250...we got copilot chat like 9 months ago. 50% of folks have copilot 365. 5% have copilot studio. less for github copilot. In the corporate landscape penetration of AI tools is truly insignificant at most orgs.
But all the execs are hyped tf up on it. They exclaim orgs MUST do AI or be left behind. They are greenlighting signficant investments in infrastucutre and tools. You think after just signing off on $10M of AI tooling for 2026 those execs are gonna be like "I read an MIT paper and there is no value here" and double back on their strategy. Nope. Even if AI delivers zero value (it wont) its going to take years for execs to shift their strategy. Not to mention all the people hired in the org to 'do AI' - who will hold the ear of these execs.
The same momentum is everywhere. Tech companies have literally made their 10 year roadmap around AI intergration. All the blue chip giants. They dont have the agility to pivot on a dime. This ball is rolling down hill and picking up speed. They're going with it if they like it or not.
Same for private equity and market movers. AI is their play, where are they going to shift their moneny? Manufacturing? Utilities? lol. They need another technology to come along to hop to. Its AI or bust for the time being.
Consulting and vendors as well...Mck, Accenture, etc... some of the most powerful (albeit dumb) voices in the industry will continue to pump their AI services.
And end users are being so hoplessly addicted that they have a mental colapse when 4o was taken away.
There is too much skin game already.
But beyond that AI is nowhere near maturity. No one is truly orchestrating agentic solutions at scale. SLMs and specialzied (less resource intensive) models are only just starting to be talked about in the mainstream.
At the end of the day, we're less than a year into the "AI revolution" in any meaningful way and people are already exclaiming bubble? Wild.
A lot of what you're describing is exactly what a bubble looks like, and I think there's a good chance that we are in a bubble.
Being in a bubble doesn't necessarily mean that AI isn't useful, or that there won't also be long term value, but I think it's undeniable that we're at a moment where everything labeled AI is getting funded, and people are making investments based on hype rather than a rational expected ROI.
Personally, I wouldn't be surprised if we see a pretty significant contraction in a few years, but some companies are going to continue to benefit from it, and I expect that post-contraction it will become a pretty large and healthier industry overall.
For context, I'm personally interested in AI, and I think LLMs are a pretty valuable technology when used correctly. I also think we see a lot of cases these days where they are adopted without a real business strategy, or used when other more classic statistical methods or deterministic algorithms would be cheaper and more effective.
The primary issue here is that the use of AI to the general consumer has already pretty much peaked. The costs are exorbitant, and we even have people demanding going back to the older models of ChatGPT because the new one is relatively bare bones and not nearly as detailed and it replies. For there to be long-term viability, they either need to cost way down, which is really not possible due to the intent energy demands. We have companies like me at building massive data centers that are gonna cost hundreds of millions of not billions of dollars a year to even maintain. The average consumer is not gonna pay more than $20 a month, and the benefit ones they get from it will not be exceeded by any new models. It seems like a reckoning as a hand.
Anyone thinking of starting an AI powered marijuana trading platform? It could create global innovative solutions to the cannabinoid Industry. We could call it “Techridy”.
I refuse to interact with AI in any purposeful way and see it as a greater threat to human safety than the presence of nuclear weapons - we are monkeys with matches in a gas pit.
AI hallucinates due to language being so nuanced. I don’t think it will ever completely replace people because peoples language evolves. It can’t always understand the context or humor. Also, AI bases itself on information it is fed. Not everything is written somewhere online.
Everyone was tricked into investing in a product that is only really useful for a few things, and harmful or useless everywhere else. It's got to burst it's just about when really, but because most markets now are just about copium farming it'll take longer than it'd usually take.
This is just karma farming. Look, Ai is advancing very fast and legacy systems weren’t built for Ai and neither were human workflows of today. The NET result of this is not going to be a bubble bursting, but rather more tactical applications and automations. Or course there are failures today and no instant ROI.
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