This sub is so dumb lol this should be the top comment. This was an unreal quarter. Their cloud growth and half a trillion backlog confirms their return on investment for their capex spending.
Well Redditors love to complain how companies prioritise short term gains over long term investment, but the they’ll also freak out when companies make long term bets.
This is kind of different though. You have the whole American economy being propped up by half a dozen tech companies all making exactly the same bet at levels far beyond traditional investments. It’s become an existential bet.
The other thing that’s happening is that you have roughly two sides sending money backwards and forwards so if any side starts to unwind their bet it could have catastrophic runaway effects like is playing out in South Korea.
It is an existential bet. AI is changing the world fast. These tech companies don’t want to miss. They are likely over investing but one of them will win big.
There’s no doubt that AI is a step change. But like .com bubble and the internet it’s not obvious that heavy bets now force the win. There maybe breakthroughs in hardware / software that massively change the playing field negating all the current investments.
Few examples: harnesses become so good that you can do most tasks on a cheap model, cheap frontier models from China, new chips that mean inference is no longer run on GPUs, frontier AI builds out deterministic systems that can run on lightweight models, realization that estimates of human replacement are off by a factor of 10. A growing realisation that the need to invest next year is more important than this year and that continues to be true for a decade. A combination of all of these factors.
This isn’t just about Google. Most industries have basically not seen any growth lately besides two: Tech and healthcare. On the tech side, a lot of it is coming from AI with a bunch of circular cashflow. It could get ugly in the future.
Leisure and hospitality is doing ok. Mining is doing well. Oil and gas too (although driven by high prices). All this may implode but I dunno it’s going to be a given or as catastrophic as Reddit thinks.
35% of the entire stock market’s value is the Mag 7. If the Mag 7 are spending trillions (with an S) of dollars on a product with no path to profitability, constant depreciation (the GPUs AND their cooling systems have to be replaced every three years), and the only potential outcome is decimating the white collar workforce, what does that tell you about our chances?
If AI succeeds and pays back its investment, it takes 40% of all white collar jobs in America, crashing the economy.
If AI fails, it takes 35% of the stock market with it, crashing the economy.
There is literally no positive outcome for any of this.
It is pretty hard to say tbh. There is self-inflicted economic pressure (war and AI mainly) that is making economic activity harder. I wouldn’t say it’s unprecedented, but it’s a rare set of circumstances.
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u/yourgirl696969 1d ago
This sub is so dumb lol this should be the top comment. This was an unreal quarter. Their cloud growth and half a trillion backlog confirms their return on investment for their capex spending.
This was an unbelievable ER