AI Industry Circularity / Bubble
I have been following AI news and am seeing all these contract and partnership announcements. As someone with rudimentary knowledge of the industry, they seem to be very much a red flag (although as said, I don't directly cover tech or AI).
For example, Nvidia and Microsoft announced they are investing $15B in Anthropic. Anthropic will buy $30B in compute from Microsoft. Microsoft will buy Nvidia chips to power the compute. One big circle of money.
Red flags:
- Nvidia and/or OpenAI seem to be at the center of almost all these contracts, so massive concentration risk
- All the infrastructure spend needs tons of future revenue to support it, Bain estimates $1-2 trillion
- Like greenfield infrastructure, except x1,000 risk since building for a massively uncertain and untested business model
- Hyperscalers are dumping in hundreds of billions annually, so overcapacity risk, similar to the 2000s fiber bubble
Am I missing something or is this all going to blow up at some point?
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