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?
Libero et voluptatum neque ipsam. Et voluptate ea magnam quia dicta qui ut. Sunt ex corrupti ut alias et veniam aut.
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