All these media people who write about markets need to adjust their perspectives on what a sell-off means. A 2% reduction for a market cap of 80 trillion dollars still leaves about 78 trillion dollars in the market. The way the market behaves when there's 78 trillion dollars would be very different from how it would if there were 20 trillion dollars. With volumes of these kind, the instrument becomes a currency in itself causing a sort of runaway effect that will keep it going. When everyone's money is in the market, would the market ever fall?
> When everyone's money is in the market, would the market ever fall?
Price discovery is at the margins: it's determined by (active) buyers and sellers.
If you're a (passive-ish) buy-and-hold kind of person you're generally not involved in the process (except on your (bi-)monthly purchase off your paycheque in for your retirement account).
Money in this context is just proxy for value. You have exchanged cash for an equal value of stock. After this either could go up or down in value as the market determines. Sometimes the market doesn't like one kind of cash even and that value can reduce. On the other hand, if everyone is invested into a certain kind of cash then it's unlikely that cash would ever lose its value. Stocks have to work the same way fundamentally. The difference so far has been the volume at which these transactions happen. But since 2008, the volume of stock transactions has been growing exponentially. Has it crossed a critical mass ensuring its value will be propped up for a really long time?
People often compare this to the dot-com bubble but today's leaders are generating very big cash flows => a valuation reset and a business collapse are two very different things
In the dotcom era the demand was far lower than the projections, and orders of magnitude less than what they were building out to. The "products" like catsdotcom and dogsdotcom had massive investments with 0 real-world demand. Even hardware stuff like fiber rollouts were severely overestimated, and led to very cheap dark fiber for a while, because the demand simply wasn't there. We know now, with hindsight, that the demand eventually overtook those projections and deployments 10-15 years later.
In comparison, today we see huge demand, and all of the providers seem to be swamped. The hardware pricing has gone through the roof. Environment stuff + public "opinion" + outside influence campaigns have led to a very hostile environment for building out capacity. Real constrains for power generation. The providers are so eager to get more capacity online that even the most "religiously self proclaimed good guys" had to sign with spacemanbad to get more compute yesterday. It's that bad.
And despite all of this, all the providers are reporting increasing revenue. Even "wrappers" like cursor reported 4+B/y revenue. The top labs are remporting several B /mo in revenue, and growing. Even goog's cloud stuff is starting to be a sizeable chunk of their revenue, and that's competing with the ads cash cow. Hell, even meta had a record quarter, driven by increased traffic in their products, likely because they deployed chat stuff. There is real demand in the market today, and with model capabilities going up, that's bound to continue for the foreseeable future.
The dotcom bubble and this thing are nothing alike. Any of the large "products" can (and some probably will) fail, but the tech behind it is like the Internet. It will only grow, and be ubiquitous in a decade.
> The dotcom bubble and this thing are nothing alike. Any of the large "products" can (and some probably will) fail, but the tech behind it is like the Internet. It will only grow, and be ubiquitous in a decade.
You dismantled your entire argument with this closing sentence.
I do not doubt that gen AI is here to stay in some form, but that is not what we’re discussing here.
What you’re showing as weak proof of demand is billions in revenue that pale in front of hundreds of billions, soon to be a trillion, in yearly capex spending.
That is not regular spending for a tech buildout unless you are somehow certain that the tech in question can radically upend the global economy. Right now that is very much still wishful thinking. Even the dotcom Internet buildout cost a fraction of this current frenzy, and yet the demand justifying our current situation is moot at best.
Or you want me to really accept that these companies will generate trillion/s in revenue within 5 years to justify the absolutely insane level of investment?
Yeah, no. How much is invested doesn't matter. Look at who is investing. Every big tech firm (literally, each and every one of them). They'll make the money back, one way or another. Unless you're willing to claim that the entire tech sector goes poof tomorrow. They won't. They'll still be here 10-20-50 years, and they'll make their trillions back.
Sure they did. And that's why I said "Any of the large "products" can (and some probably will) fail, but the tech behind it is like the Internet."
But then again they also said the same thing about Amazon. And google. And (at one point) MS. And the others.
To reiterate: some might fail, but the field as a whole won't go anywhere. To look at the past 3 years, look at the current demands, and pretend that they'll all fail is insane. The proverbial cat is out of the bag, and it's not going back in.
Tbh I am unable to find any proving stocks' charts. Anthropic stays flat, openAi lost a little bit, etc. When I read 'sell-off' and 'shakes' I was imagining it differently
Really strange parent comment indeed. Or did we all miss IPOs here? Where did parent even see any prices at all? Searching "OpenAI stock price" would make it very evident it doesn't exists.
There are pre-ipo tokens, which are a bet on the price at ipo and proved accurate fit SpaceX (lots of caveats here).
Anyway we can see it as a prediction market where the price may have information because insiders can trade without SEC oversight or something?
OpenAI and anthropic tokens are down 30% in the start of the month but flat on the week, possibly meaning that market front ran this sell off, possibly not.
What even is a point on looking on stock charts which are detached from fundamentals of companies? Just casino. Usually numbers go up, sometimes they go down.
It has no effect on your life.
It has no effect on companies either. When your market share value is 10USD or 1000USD does not change if you are profitable or not.
"South Korea’s benchmark closed 10% down on Tuesday after the country’s largest chipmakers, SK Hynix and Samsung Electronics, both closed over 12% lower. Japan’s Nikkei 225 was down 3.5% at the close of trading."
This is huge, isn't it? The conservative investors probably put their money into hardware companies, not directly into AI ones. So any scare of bubble-bursting affects memory manufacturing stock first and foremost? Meanwhile the AI stock itself continues to be held by the believers and Musk fanboys alike?
All these media people who write about markets need to adjust their perspectives on what a sell-off means. A 2% reduction for a market cap of 80 trillion dollars still leaves about 78 trillion dollars in the market. The way the market behaves when there's 78 trillion dollars would be very different from how it would if there were 20 trillion dollars. With volumes of these kind, the instrument becomes a currency in itself causing a sort of runaway effect that will keep it going. When everyone's money is in the market, would the market ever fall?
> When everyone's money is in the market, would the market ever fall?
Price discovery is at the margins: it's determined by (active) buyers and sellers.
If you're a (passive-ish) buy-and-hold kind of person you're generally not involved in the process (except on your (bi-)monthly purchase off your paycheque in for your retirement account).
So the active folks can cause prices to go down.
> When everyone's money is in the market, would the market ever fall?
Yes? We had an entire great depression that tanked the global economy for a decade, and smaller dips since.
I regret to inform that the line does not, in fact, always go up. It does go down sometimes regardless of how much money is put into it.
The money isn’t in the market, when you buy shares the money goes to the seller.
Money in this context is just proxy for value. You have exchanged cash for an equal value of stock. After this either could go up or down in value as the market determines. Sometimes the market doesn't like one kind of cash even and that value can reduce. On the other hand, if everyone is invested into a certain kind of cash then it's unlikely that cash would ever lose its value. Stocks have to work the same way fundamentally. The difference so far has been the volume at which these transactions happen. But since 2008, the volume of stock transactions has been growing exponentially. Has it crossed a critical mass ensuring its value will be propped up for a really long time?
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>All these media people who write about markets need to adjust their perspectives on what a sell-off means...
err... they already know. It's click bait stories to get readership.
People often compare this to the dot-com bubble but today's leaders are generating very big cash flows => a valuation reset and a business collapse are two very different things
> but today's leaders are generating very big cash flows => a valuation reset and a business collapse are two very different things
All the new entrants have no existing revenue base like Google and Meta do, and these new companies are heavily funded by investors.
Any self respecting current AI company appears to be worth north of $1bn from day 0... based on investment valuation.
As long as the investors get THEIR money back, they won't care about a collapse.
Elaborate. Are banks not repackaging and reselling debt tied to those valuations? I see that as a collapse risk
> Elaborate.
In the dotcom era the demand was far lower than the projections, and orders of magnitude less than what they were building out to. The "products" like catsdotcom and dogsdotcom had massive investments with 0 real-world demand. Even hardware stuff like fiber rollouts were severely overestimated, and led to very cheap dark fiber for a while, because the demand simply wasn't there. We know now, with hindsight, that the demand eventually overtook those projections and deployments 10-15 years later.
In comparison, today we see huge demand, and all of the providers seem to be swamped. The hardware pricing has gone through the roof. Environment stuff + public "opinion" + outside influence campaigns have led to a very hostile environment for building out capacity. Real constrains for power generation. The providers are so eager to get more capacity online that even the most "religiously self proclaimed good guys" had to sign with spacemanbad to get more compute yesterday. It's that bad.
And despite all of this, all the providers are reporting increasing revenue. Even "wrappers" like cursor reported 4+B/y revenue. The top labs are remporting several B /mo in revenue, and growing. Even goog's cloud stuff is starting to be a sizeable chunk of their revenue, and that's competing with the ads cash cow. Hell, even meta had a record quarter, driven by increased traffic in their products, likely because they deployed chat stuff. There is real demand in the market today, and with model capabilities going up, that's bound to continue for the foreseeable future.
The dotcom bubble and this thing are nothing alike. Any of the large "products" can (and some probably will) fail, but the tech behind it is like the Internet. It will only grow, and be ubiquitous in a decade.
> The dotcom bubble and this thing are nothing alike. Any of the large "products" can (and some probably will) fail, but the tech behind it is like the Internet. It will only grow, and be ubiquitous in a decade.
You dismantled your entire argument with this closing sentence. I do not doubt that gen AI is here to stay in some form, but that is not what we’re discussing here. What you’re showing as weak proof of demand is billions in revenue that pale in front of hundreds of billions, soon to be a trillion, in yearly capex spending. That is not regular spending for a tech buildout unless you are somehow certain that the tech in question can radically upend the global economy. Right now that is very much still wishful thinking. Even the dotcom Internet buildout cost a fraction of this current frenzy, and yet the demand justifying our current situation is moot at best. Or you want me to really accept that these companies will generate trillion/s in revenue within 5 years to justify the absolutely insane level of investment?
Yeah, no. How much is invested doesn't matter. Look at who is investing. Every big tech firm (literally, each and every one of them). They'll make the money back, one way or another. Unless you're willing to claim that the entire tech sector goes poof tomorrow. They won't. They'll still be here 10-20-50 years, and they'll make their trillions back.
Who was investing in the dotcom bubble that wasn't "everyone"? This is an appeal to authority that doesn't check out.
I'm sure someone said that about Yahoo and eBay during the dotcom crash
Sure they did. And that's why I said "Any of the large "products" can (and some probably will) fail, but the tech behind it is like the Internet."
But then again they also said the same thing about Amazon. And google. And (at one point) MS. And the others.
To reiterate: some might fail, but the field as a whole won't go anywhere. To look at the past 3 years, look at the current demands, and pretend that they'll all fail is insane. The proverbial cat is out of the bag, and it's not going back in.
You are creating fake arguments that weren't used to justify your answer. Nobody said all AI companies will go bankrupt.
I guess that if NitpickLawyer says we're fine, there's no problem with the capex we're seeing then. They won't go puff, they'll go Cisco.
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Tbh I am unable to find any proving stocks' charts. Anthropic stays flat, openAi lost a little bit, etc. When I read 'sell-off' and 'shakes' I was imagining it differently
Neither of the companies you mentioned are listed.
Really strange parent comment indeed. Or did we all miss IPOs here? Where did parent even see any prices at all? Searching "OpenAI stock price" would make it very evident it doesn't exists.
you never know what people are smoking
There are pre-ipo tokens, which are a bet on the price at ipo and proved accurate fit SpaceX (lots of caveats here). Anyway we can see it as a prediction market where the price may have information because insiders can trade without SEC oversight or something?
OpenAI and anthropic tokens are down 30% in the start of the month but flat on the week, possibly meaning that market front ran this sell off, possibly not.
AI hallucination? If definitely has that feel.
Sometimes someone wants to 'create' the news, not 'report' the news.
Where did you find information about Anthropic and OpenAI?
As always, zoom out.
Prices go up then they go down
Sometime up, sometime down. Long term up. Short term wiggle dance.
What even is a point on looking on stock charts which are detached from fundamentals of companies? Just casino. Usually numbers go up, sometimes they go down.
It has no effect on your life.
It has no effect on companies either. When your market share value is 10USD or 1000USD does not change if you are profitable or not.
>It has no effect on your life.
Public Pensions, private company pensions and the investments of public organisations and academic institutions are all tied up in these investments.
If they get it wrong, the impact on people is enormous.
In todays financial news, the pension fund of a telecoms firm lost £300m in an investment in a utility company. https://archive.ph/CmA59
Gambling with pensions in a casino? What could go wrong?
Why is the fear wondering if stocks going up immensely and then a little down important for HN? Since when are we talking stock prices here ?
Lately HN has been just a mirror of the anthropic blog page. Any crap they publish appears instantly in HN
Because there is no more tech industry. Only gambling.
"South Korea’s benchmark closed 10% down on Tuesday after the country’s largest chipmakers, SK Hynix and Samsung Electronics, both closed over 12% lower. Japan’s Nikkei 225 was down 3.5% at the close of trading."
This is huge, isn't it? The conservative investors probably put their money into hardware companies, not directly into AI ones. So any scare of bubble-bursting affects memory manufacturing stock first and foremost? Meanwhile the AI stock itself continues to be held by the believers and Musk fanboys alike?
Hunix and Samsung are up 400% at least in a year what are you talking about ? Also what bubble?
I am talking about a stock dropping 10% overnight. Doesn't matter how much it grew, a 10% drop is a significant event, people start paying attention.
Then it bounces back.
or not
Samsung are back up 5% today on news of a planned buyback.
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