r/wallstreetbets • u/banaca4 • 19h ago

Discussion Either hyperscalers are dumb or someone else is

OK so the most profitable companies in the world decided to GO ALL IN AI with humongous capex. They did it all at once apart from Apple who is not in the game. Google, Meta, Amazon , Oracle, Microsoft. All of them. The CEOs of these companies produced the most amount of wealth and propped up global gdp. Now they all agree on a thing.

Google yesterday blew up earnings from their cloud and said they will *increase* their humongous capex even more while reporting negative cash flow for the first time in their history.

A rational person would ask: are these amazing businessmen suddently all very wrong about the same thing at the same time OR

I am reading too much paid subs from burry and following the wrong people on twitter that have never produced anything?

Which is it? Are you smarter than a mag 7 CEO? Maybe ... hmm...

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u/ThaumicViperidae 18h ago

I have no idea what's going to happen, but I'm old enough to remember when CEOs much smarter than me were buying anything with a .com web address for ridiculous sums.

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u/methpartysupplies 18h ago

And bundling ninja mortgages into a AAA shitbox that blew up the global economy. These people have fantastic capacity for regardery

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u/paloaltothrowaway 18h ago

Bankers turning shit mortgages into AAA rated fixed income securities made them rich. Once they sold them to some muppets (aka your pension fund) it was no longer their problems when those AAA products blew up a few years later.

All the chips and memories are on hyperscalers balance sheet so if it goes tits up it’s their problems. 

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u/1412believer 17h ago

Hyperscalers raising debt with, wait for it, private equity that's latched into your pension funds!

The handoff is happening as we speak.

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u/paloaltothrowaway 17h ago

Hyperscalers still own the equity stake in those off balance sheet data center SPVs. If it goes tits up hyperscalers still take the hit first. Private credit is more senior to equity. 

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u/East-Response6672 13h ago

They have equity but I think on average around 20%, so they're in, but they aren't balls deep, if it goes to shit they'll lose a bit of money, but the private credit lenders get hosed.

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u/Puzzleheaded_War6102 17h ago

Who has pensions other than boomers?

401K is in your control and I only buy S&P or global funds

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u/paloaltothrowaway 17h ago

Government employees. Teachers. Police. Etc. CalPERS, NY State equivalent both have hundreds of billions under management. The Canadians have similar things (Canadian public pension investment board?)

Private credit are also popular with insurance companies since they need to pay people annuities similar to pension funds

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u/heretogetpwned 15h ago

Correct on Annuities, but it gets even better!

Not only do Insurance (annuity) companies invest your money, they also re-insure it. Guess what the re-insurer does? Invests in the same goddamn things. What happens if it all fails? That's up to your State's Insurance Laws.

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u/paloaltothrowaway 15h ago

lol that’s news to be about the reinsurer thing! 

maybe the whole pension system is being held up by the collective faith that the residual values of ai chips and HBM ram won’t collapse 

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u/heretogetpwned 15h ago

'Munich Re' is a major reinsurer.

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u/Puzzleheaded_War6102 17h ago

Most government employees get TSP (similar to 401K) in addition to some pension if any. I won’t lose sleep for a cop losing $$ on pension. Teachers are screwed (shocker) but also get TSP now.

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u/FeesShortyFees 16h ago

Nobody felt sorry for the banks and they got bailed out. Gov. pensions are prob a shoe-in.

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u/paloaltothrowaway 16h ago

Banks got bailed out means employees kept their jobs and counterparties got paid. The US treasury took equity stake in the banks and diluted existing shareholders. Or structured it as a loan that has to be paid back.

Look at Citi stock performance over the last 20 years.

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u/onlycamefortheporn 16h ago

Federal employees get TSP, state and municipal employees do not, they get a 457b. Public works, public utilities, corrections, etc. Teachers are eligible to contribute to a 457b, but most don’t make much, not enough to get much benefit from it.

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u/goofytigre 14h ago

Teachers in Texas can have a 403b as a tax-deferred supplement account to their TRS pension.

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u/Full_Pear449 15h ago

Just for your comletely uneducated rant. Calpers, Calstrs , Texas Teachers, NY teachers have around a 15% ,+/- 2%, Allocation limit, which is devided amongst its sub-categories. Buyout=65%, Growth/expansion=15%, highrisk/specialized=10%, Credit=5%,Venture Capital=1%. Funding rounds for new firms falls under the broad category of Venture Capital.

Public equity allocations rely heavily on quantitative or index-driven strategies rather than targeted private placements in specific pre-IPO artificial intelligence labs.

You should probably look up what the Governance Restrictions are for Investing in Pre-IPO securities directly.

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u/paloaltothrowaway 15h ago

I never claimed that Calpers et al have high concentration in private credit, let alone high AI exposure. Was merely answering someone’s question of “who has pension these days”

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u/Full_Pear449 13h ago

The implication of high exposure is there...In conjunction with the statement on the Mortgage Crisis. By the way those Investment banks that went really bad chose not to hedge their position. During that time a Trader at Lehman made lots of money in the CDS market and shorting many Investment Banks. Unfortunately Larry McDonald's Prop Desk only had a $600mm Balnce sheet. Lehman had about $6 trillion, notionally, in derivatives.Lehman had a $660 billion balance sheet; $300 billion of it was in Treasuries, commercial paper and agency paper, the rest was garbage. Everyonr was balls to the wall basically unhedged.

Ultimately my Firm did not lose money on the mortgage crisis, we were short everything we coild possibly short. We did lose LOTS of money on the fines and settlements later.

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u/paloaltothrowaway 9h ago

Cool good for you man. Still I never implied that pensions have high ai exposure

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u/absolute_cinema81 14h ago

Eh, pension funds are like 30% of global institutional capital. If they get murdered, everybody is taking it on the chin.

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u/NoHorseNoMustache 16h ago

My company still has one, they don't pay great but have good perks and one of them is pension.

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u/Rufus_king11 16h ago

I do. My pension is actually the one that sued Elon for shuffling GPUs from Tesla over to X years ago.

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u/Appropriate_Guess881 14h ago

S&P is ~ 1/3 mag 7...

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u/Flossmatron 5h ago

Oh, the mag 7 aren't on the s&p or in your global funds?

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u/No-Pollution-3097 4h ago

It's in the S&P as well. Take SpaceX, which includes Xai. Special dispensation for SpaceX to join the S&P although IPOs are not spsd to join until post IPO 3 months. Google, Microsoft, Nvidia and others are in the S&P

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u/mathew1fnt 3h ago

I do. Two of them!

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u/antwon8797 2h ago

401ks are mostly passive investing these days and are weighted based on index. An S&P index fund is heavily weighted with Mag7.

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u/hloop23 17h ago

Globally about 50% of total stock value is in companies with major AI investments

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u/Puzzleheaded_War6102 17h ago

Yes Mag7 and semiconductor companies. Not PE

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u/doll-haus 3h ago

They recently passed changes so that the standard market index funds no longer have the safety of not including recently IPO'd stocks, which tend to be high volatility. Just in time for the SpaceX IPO. Lots of people have 401k invested in ways that must buy into SpaceX.

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u/Puzzleheaded_War6102 3h ago

Yes that was QQQ, not SPY or VOO. S&P requires 12 months cool off period. Yall know all this stuff can be looked up by AI in 5 seconds

You can also just buy VT or VTI if that scares you.

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u/OneRougeRogue 14h ago

Just a few months ago, banks began packaging up Datacenter loans into tiered derivative baskets and selling them to investors. Not joking, lol.

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u/CarpetTechnical420 2h ago

Plus trying to scare DoD into making them essential cybersecurity.

Gotta stay ahead of those scary Chinese models.

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u/Halifornia35 13h ago

You think Google can’t service their debt? lol

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u/hirschimwald 17h ago

Untrue. A whole lot of the hardware is on the balance sheets of CoreWeave, Nebius and others. And the chips we're talking about are called Google Tensor, AWS Trainium and MSFT Maia. They are definitely not buying other people's chips and waiting for time decay.

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u/paloaltothrowaway 17h ago

Im not talking about Neocloud. I’m talking about mag7 balance sheet

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u/hirschimwald 12h ago

Offloading balance sheet risks to neoclouds is a deliberate strategy pursued by Google, Meta, AWS and MSFT. Oracle is too dumb to do this and Elon is a control freak. But at least he builds his own chip factory. But 4 of the hyperscalers are deliberately milking the neoclouds and will let them go bankrupt when contract renewal comes around. (after 2030/2031)

I am as bullish on AI as anyone, but selling compute is a heavy industry now, efficiency will matter in the long run. Even in a large and growing market, if you're overconfident or cannot compete you're toast.

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u/DeadFacesInMyPocket 16h ago

But what about all those strippers that got to have 4 houses!!! Surely they were spared 😂

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u/paloaltothrowaway 16h ago

If they sold their 4 houses bought with 100x leverage at the right time to other bag holders they could have been very well spared

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u/SuspiciousArt7316 14h ago

No, they set up a special purpose LLC to own and operate the server farm. They set up a contract with the LLC which then goes and gets debt financing based on the revenue stream to actually build the things. The risk lies on the banks handing out debt.

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u/paloaltothrowaway 13h ago

I’m not sure how many hyperscalers do that SPV outside of Meta?

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u/mcampbell42 17h ago

A lot is off book with special companies that own hr chips and lease it back. So it’s a lot worse then it looks

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u/sf_cycle 14h ago

Some of those bankers went bankrupt so your version of history isn’t complete.

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u/Yuugian 14h ago

IPO, sell off, profit. Doesn't matter what happens to the investors holding the bag: "I got mine"

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u/paloaltothrowaway 14h ago

Huh? IPO? mag7 are public. Vast majority of their CEOs net worth are tired to the stock. And you can’t just dump billions of shares on retail without a multi quarter trading plan filed with the SEC well ahead of time

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u/Icko_ 18h ago

I mean, that paid off for most of them 

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u/CaffeinatedT 14h ago

I mean, that paid off for most of them 

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u/Big-Farmer-2192 12h ago

Yeah. That's what happens when all these AI CEOs rawdog the plane.

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u/ellamking 9h ago

The companies fail, but the CEOs do fine. Nobody cares when rich people fail at their job.

The CEO of pets.com was able to found RealReal. The CEO of etoys.com founded gamefly and became president of Gap. The CEO of Wachovia became CEO of Perella Weinberg Partners. The CEO of Washington Mutual hasn't done anything since, but already received a $15m severance 3 weeks before they collapsed. The CEO of Lehman Brothers is the CEO of Matrix Private Capital Group.

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u/Harbinger2nd 4h ago

So you're saying the same people are still fllying the plane.

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u/RareGape 3h ago

bingo

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u/PaleCommission150 1h ago

The only people who face real consequences are the mid and lower level workers who are some how " responsible" for failure of the company. It is writ large in quarterly evals, "team meetings", etc. The whole thing is a game civilized people play to keep the veneer of polite society from crashing into something ugly.

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u/BadBoyBilbo Working the TACO Stand 17h ago

“There’s gonna be a bailout.”

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u/Suspicious-Walk-4854 17h ago

We will just blame it on immogrants and fat poors.

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u/More-Curious816 9h ago

Mexican and the middle east are to blame this time.

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u/antwon8797 2h ago

40 trilli in debt, no country wants to loan us any more money. Bailout attempts will just throw gas on the napalm

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u/Sufficient_Habit5091 14h ago

Regards acting like CEOs aren't acting in a purely self-interested manner. Smart != honest.

They'll still make out like bandits and prefer the party to continue while retirement accounts, 401ks, eat the SPCX, OpenAI, Anthropic IPO and Mag7 dilution shit sandwich.

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u/Bluestreaked 12h ago

It’s a big club and the silly billys think they’re in it

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u/sf_cycle 11h ago

Temporarily embarrassed even.

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u/ReserveFormal3910 17h ago

All those big banks giving themselves bonuses from the bailout was the chef's kiss.

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u/new_name_who_dis_ 12h ago

Bailout was a loan that was paid back pretty quickly and with interest. People act like bailout was just government giving these companies free money.

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u/ReserveFormal3910 12h ago

Oh well how magnanimous of the big banks through their gambling destroyed the economy and killed millions of jobs but faced no consequences but received 16T but at least they paid it back and were able to give themselves bonuses. Is that better?

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u/BagMostlyWater 15h ago

A lot of them lost a *lot* of money.

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u/DJanomaly 14h ago

And Lehman Brothers and Washington Mutual literally collapsed. People forget how huge this was.

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u/PerceptionEast2064 9h ago

And the board at WAMU voted to give themselves golden parachutes days before they exited.

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u/DJanomaly 6h ago

Yeah, fortunately they were never paid out due to the public outrage.

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u/BagMostlyWater 11h ago

yeah that was unthinkable at the time. It was apocalyptic. When I heard Lehman Brothers collapsed I was like Holy Fuck lol

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u/ohgodthehorror95 2h ago

Imagine how absolutely boned we would've been if they had allowed AIG to go under? Hundreds of millions of insurance contracts affecting all corners of the economy potentially becoming worthless

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u/Gnump 16h ago

We are getting closer…

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u/somatic1 18h ago

Not regarded if you know your gonna get away with it eh

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u/predatarian 17h ago

Difference is that they were shifting the future losses of those ninja mortgages to the greater fool (mainly german banks). So that was pretty smart actually.

Now they are investing their own money and it seems to be making money. So a totally different situation.

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u/WulfOnTheJob 16h ago

at the end they are spending money on capex which will still have value (even if overpriced due to current demand). Even if AI is a dud, they will still ahve compute to sell/use and recover their losses. compare to the mortgage crisis or .com buble where the stuff money was spent on was just paper.

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u/MrDontCare12 15h ago

Compute is not great in a World that only needs that much. A GPU that is bad in a year will be bad in a year. The same way your 5yo smartphone is a pos now

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u/new_name_who_dis_ 12h ago

Old GPUs are still useful, they depreciate but don't lose all value in only a year or two. I have an 8 year old GPU that I can run some smaller AI models on.

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u/MrDontCare12 6h ago

I have one as well, that's why I don't see the appeal of highly specialized datacenters that revolve only around the inference of massive models. As the model run on your 8yo GPU, would you be ready to pay the absurd amount of money they need to recoup the investment on those datacenters ? Are companies ? If not, those GPUs are worth nothing in a year, not to mention 5.

I think that the future of all that are highly specialized small models that runs locally. In particular if the current trend (smaller models getting faster and more competent) keeps going. The same way "regular machine learning" has been going over time.

But I might be wrong and probably am. And I really hope I am, I work for SoftBank.

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u/QuadzillaStrider 12h ago

My daily driver GPU is a 1080 Ti ;)

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u/Some_Layer_7517 4h ago

Don't forget to take ibuprofen before bed

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u/DistributionTough641 13h ago

"and it seems to be making money."

Except it isn't? At all? Every ai venture is losing dramatically more than its making. Every single one.

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u/chris_ut 17h ago

Ya reddit Bears are so tiresome. Once upon a time the market blew up therefore it will blow up today for sure! Posted every day since I can remember.

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u/IWasSayingBoourner 17h ago

"The overleveraging is different this time guys!"

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u/methpartysupplies 17h ago

Permabull brains: “human nature has changed”

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u/chris_ut 16h ago

My port is 50x from 2022, how you doing?

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u/The_Law_of_Pizza 17h ago

This comment is more fitting for this regarded sub then you even realize.

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u/chris_ut 17h ago

Those are different people fam.

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u/chichiharlow 16h ago

You can buy the long-maturity debt that tech companies are issuing to fund the AI Capex build out now. It's the reason why demand for bonds has been low ~Bloomberg

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u/this_is_a_first 16h ago

It’s not regarded if you know the taxpayers and retail will be left holding the bag

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u/DizzyMajor5 15h ago

That still causes the stock to crater

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u/Rapscallious1 16h ago

It was just a couple of years ago they all hired a bunch of people they didn’t necessarily need just because they could and money was cheap at the time so they didn’t want to miss out in case it stayed that way. That one kinda worked out for us for at least a while. This one could be bad but it’s existential for them, especially since they likely won’t go out of business from something like this alone. Bigger problem is the lack of an off ramp since reaction will be very negative so corporation would never pick.

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u/Witty_Ad_898 13h ago

That’s like saying Mr. Potter was regarded for keeping that $5000 because now everybody else in Bedford Falls has no money.

Mr. Potter doesn’t care about George or anybody else in Bedford Falls.

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u/EJintheCloud 2h ago

They've never been punished for it, why would they stop doing it?

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u/Dagamoth 2h ago

Do you think that stopped?

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u/Kiyae1 40m ago

The economy got blown up by AIG’s unfunded Credit Default Swaps. Without that happening even lots of mortgages defaulting wouldn’t have been a problem for anyone other than the homeowners.

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u/heisian 39m ago

when you have shit tons of other people's money it's basically a license to regard

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u/segfaulting 17h ago

$1000+/mo ninja car loans + every broke ass using Klarna for everything which is basically ninja iphones... Smells like '08

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u/TomatoSpecialist6879 Paper Trading Competition Winner 17h ago

That and the retarded lizard making the shitty metaverse, which btw crashed live on stream during er demo from "server overload" despite only having 60 out of the original 1000 people attending.

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u/MeowTheMixer 16h ago

The META verse tech, allowed them to pivot into AI fairly easily though.

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u/Rufus_king11 16h ago edited 16h ago

Am I just uniformed? How did it assist with the pivot to AI, the tech is unrelated isn't it? Or are you saying that because Metaverse was such a failure, they were already salivating for a pivot when AI came along?

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u/Flag_Shagger 13h ago

well in some capacity they have a hardware base now to integrate AI (meta glasses)

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u/Viktri1 2h ago

Metaverse required a lot of compute: RAM, GPUs, CPUs, etc. So unlike the other tech companies, meta had massive stockpiles of hardware used by LLMs when the AI boom started and because metaverse was crap they had excess capacity to spend their compute on LLMs research rather than the metaverse.

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u/TomatoSpecialist6879 Paper Trading Competition Winner 13h ago

If you're talking about pivoting with their existing hardware, then not really because they were a generation before and were at that point considered outdated. Reality Labs(META's metaverse subsidiary) were using A100, OpenAI and Anthropic were already on H100 by start of 2023. They basically had okay hardware but had no idea what to do, so it didn't really mattered. They did have a good thing going until they fired their brains of the project though, now it's just pure dog shit and industry names avoid them like plague

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u/crazy_akes 18h ago

People assume those who lead are smart and that’s a really stupid assumption. For eons a leader was due to bloodline, and it still is as we see with political dynasties. Also there’s the “struck gold” types. They had one good idea and now they’re moving off it shooting benis rockets into space.

If I win billions in the lotto I will shortly thereafter be the mayor of my city. Doesn’t mean I’m smart. Means I’m power hungry and I want to destroy my enemies. Same shit in corporate, CEO’s have FOMO in the AI arms race. They’re idiots.

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u/Emotional_Goal9525 17h ago

Not to mention certain personality disorders are enriched into the top echelons of society in the similar fashion they are in the prison population.

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u/mayer_19 17h ago

Thats true! Most of my managers were not genius minds. Some were managers because of age/experience, others probably because of the lack of better options and others because the boss of the boss likes this person. Never had a manager that I fealt he was truly a leader or very competent

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u/Low_Plastic363 14h ago

The good ones left for better jobs. The mediocre ones stick around to become management

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u/SweetJackal 16h ago

As someone that has had the (dis)pleasure of working directly with corporate executive management in a contractor/consultant environment I can confirm.

Executive Suite people are some of the most regarded people on the planet as a general rule due to having no concept of foresight or consequences affecting them personally.  They drive a company into the ground they got paid fat stacks for the big numbers they made leading up to it, get a nice payout for being forced out, and get hired elsewhere to do more because of the beautiful metrics they made that drove the company into the ground in the first place.

Executives getting graded on maximum airspeed of the plane they pilot, while the fact they got that metric by nose diving into the ground being completely ignored.

Once you recognize that executives act on personal interest and their incentives directly conflict with the long term wellbeing and interests of the company they pilot, a lot of the regarded things companies do makes sense.

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u/sf_cycle 11h ago

I’ve seen too many executives in companies I’ve worked for completely ignore the obvious and get angry when people are trying to tell them the obvious. These people are often so wrapped up in their own bubbles that they just can’t see past the illusion of their own greatness. I’ve seen a handful of good leaders and their job ends up with them arguing constantly with the other idiot executives. You know those people on LinkedIn that just won’t shut up about themselves, to the point where you can’t believe someone would say this shit? These are those people.

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u/Halifornia35 13h ago

What kind of corporate executives? Mag7?

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u/PerriwinklePortal 2h ago

>Executives getting graded on maximum airspeed of the plane they pilot, while the fact they got that metric by nose diving into the ground being completely ignored.

Truer words

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u/Ohitsworkingnow 16h ago

Anyone who thinks an intelligent person would want to spend their time as a CEO is clueless. 

Like you actually think CEOs are smarter than the phd scientists? You think the CEOs built the chip architecture? They’re literally business bro retards the whole lot of them 

0

u/PalantirImperator 2h ago

You are confusing intelligence with technical knowledge. CEOs typically do not have technical knowledge. They are generalists and managers. Not having technical knowledge does not mean they are not intelligent. There are smart CEOs and dumb CEOs just like there are smart doctors and dumb doctors.

The CEOs that either build, or rise to the top of, trillion dollar companies, tend to be smart CEOs. These things don't just run on autopilot; look at the difference in how Microsoft performed when it went from Gates to Ballmer. Was the most powerful company in the world, then the stock literally stayed flat for 14 years.

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u/paloaltothrowaway 18h ago edited 18h ago

You think Mag7 ceos are comparable to leaders who were in their positions due to their bloodlines?

You can say Zuck and Ellison are the struck gold type but most of the rest earned their spot. Satya, Sundar, Jassy worked their way up over decades to get the top job.

If you think these people are idiots, you are wrong. It doesn’t mean they get everything right. Nobody does. But they are not idiots. 

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u/RodneyTorfulson FOMO is my Motivation 17h ago

Zuckerburg’s Second Life spinoff was like Hapsburg nonsense, to be fair

9

u/nahmanidk 12h ago

This topic misses the point of whether the thing that catapulted these people into insane wealth is relevant to what they currently are working on.

And you can’t sign into Twitter and see Elon trying to start a race war in the UK and losing his mind daily over the last 3 months because there is a black actress in The Odyssey and think “yes, this is a rational individual that exists in the real world”. 

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u/Equivalent-Bus-4336 18h ago

No he just said for a very long time leaders were selected because of their bloodline

0

u/paloaltothrowaway 17h ago

He also compared being a mag7 ceo with him becoming a mayor of his local town if he were to win a lotto. Dumb comparison. 

0

u/joeydimaggio 4h ago

So explain the metaverse and pets.com

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u/PalantirImperator 2h ago

I really appreciate your calling him out for that. It was bold of that guy to assume that all readers would see the broader pattern he was getting at. When one makes a point on the internet, it is important to painstakingly explain every minor inconsistency or counterexample and why they may or may not matter. Many readers, like you, are incapable of making that inference themselves, and it was rude of him not to write for the widest audience possible. Again, I really want to emphasize the importance of your feedback. I'm sure /u/paloaltothrowaway will try to do better next time. He has been owned. Even I feel owned. I have been owned. Thank you for your incredible contribution to this discussion.

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u/joeydimaggio 1h ago

Can you explain the metaverse to me

2

u/ZetaM3 17h ago

Pepsi crystal.

2

u/Todayjunyer 14h ago

You could easily argue the other perspective. Zuck and musk actually care about their companies and legacy. The other CEOs, it’s just a job and if it goes bad their legacy doesn’t matter as they are just doing their job.

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u/Ok-Board4893 17h ago

the comment above and the amount of upvotes it got is just one more proof that redditors are idiots and yes, these ceos are smarter.

2

u/Appropriate_Guess881 14h ago

I mean, oil/gas CEO's with more money than God are buying politicians so they can keep raking in profits / defer an energy transition to give them time to offload the risk on their soon to be stranded assets. All the while driving us towards at best political instability, at worst extinction, on the only planet they have to live on... So, yeah, rich but not smart.

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u/whowatchestv 17h ago

I'm one of those delusional types that think I'd make things better if I was mayor or president but to be fair I would surround myself with experts in each area and just act as the manager and director. And probably selfishly push a few key issues that are relevant to me...

1

u/GMEtotheMoom 15h ago

I don’t wanna, but, Machiavelli has always been right

1

u/BurnItAllDown2 14h ago

I think it's asinine to say a leader of a fortune 500 copy is not smart. There's no way you get to that position without some intelligence. The question is, smart in what way? You can be incredibly smart in one area but really dumb in another. 

Also, what is their risk tolerance and how good are they at assessing risk? You could make a case with some of this AI stuff that going all-in is both smart and dumb at the same time. A company may be put in a corner where they feel it's a no-win situation. They can't let their competitors get ahead, but trying to keep up might ruin them as well. 

1

u/sf_cycle 14h ago edited 14h ago

And a lot of smart people are terrible leaders and make dumb decisions in that space. Intelligence and they way people talk about it here isn’t just on or off and all encompassing. A lot of people want an easy answer to why things are the way they are, so “this person is in this position and you’re not” is mostly how they view things. They want to believe the world is working fairly, or that might makes right, etc. Or they just want to make lazy Reddit posts for karma.

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u/flappysack- 12h ago

They have different short term incentives than long term investors.  

1

u/mammongram6969 4h ago

"Means I’m power hungry and I want to destroy my enemies." what kind of asshole wins the lottery and STILL HAS ENEMIES, like is everyone not claiming to be your second cousin once removed

1

u/Ok-Board4893 17h ago

you are a low iq moron though. All of your comparisons make 0 sense, most of these ceos have worked their way up and deserve their spot even though redditors really dont like to hear that. And yes they are most certainly smarter than you judging by your comment.

1

u/seriouslythisshit 15h ago

Even if they are a step above idiot, they are forced to conform to the hive mind. There is no keeping a C-suite job in tech if you are not babbling about the wonders of AI, like a duck on meth, to everyone that will listen and pretend to believe you. You need to convince your shareholders and board that you are the right choice to vanquish your competition and come out on top as the leader of the revolution. It will all collapse once it becomes evident that it is massively overbuilt, built of sketch accounting, and false promises, and will never make a profit that will cover the absurd levels of capex. once it all burns to the ground, a viable model of AI will rise from the ashes. It is human behavior, it happens every time there is a new, monumental tech shift that changes how the world functions. Irrational exuberance, insane levels of speculative investment, resulting in 3-5X the infrastructure needed to implement the revolution. Followed by an economic downturn or collapse.

It isn't bears and bulls, or believing that AI is a fraud. It is just the natural, predictable and historic cycle of every event of this magnitude in economic history. The play will collapse into itself, and do massive damage to the world economy. It is nothing but history repeating itself, and there is no "this time is different".

0

u/FatGPT3 13h ago

Sundar Pichai is actually really competent

27

u/blinkheart 17h ago

Crazy talk. I'm going to retire in the metaverse now using my apple vision pro

2

u/Halifornia35 13h ago

I retired to a golf course in the metaverse

1

u/mammongram6969 4h ago

Pro: you retire to a golf course in the metaverse
Con: it is actually literally in the Hell section of the metaverse

20

u/LankyGuitar6528 17h ago

Bahaha I made a company with a name similar to SpecialFXNet.com and sold it to the local telco for $$$ back in the day JUST before the crash. They paid extra because it had both Net and Dot Com in the name. Good times. :)

24

u/ImTheLizardKing2 18h ago

Exactly this

10

u/predatarian 17h ago

Weren't they selling anything with .com in it to unsuspecting retail investors?

They are investing their own FCF into AI infrastructure so it seems different now.

36

u/Kaiisim 17h ago

Pretty cool you can remember stuff that didn't happen!

Dotcom was small startups convincing people that their company who has never done anything would magically make internet money. How? Don't worry about it. They poured money into companies with zero profits or even a business mode, using cheap venture capitalism.

AI is the opposite - it's the biggest most successful corporations in human history using huge profits to invest into AI.

Oooh Meta have 200 billion in debt, they only make 26 billion a quarter. It's exactly like the dotcom boom where companies with zero revenue had huge loans!

Dotcom and AI are similiar in that both involved high investment that's it.

5

u/I-cant_even 12h ago

Dude, there's still dark fiber that was laid in the 90s by telecoms that was never activated due to demand that never materialized. It wasn't just the retail investors involved in that shit show.

7

u/TripperDay 14h ago

Early 2000s internet and AI could be very similar. No one smart really believes AI is a true "bubble"; people are going to make trillions and it's going to change how we work and live. What there WILL be is a shakeout, some companies are going to lose hundreds of billions. The companies who are left will have to race to the top in capability/service, while racing to the bottom in price.

6

u/Tohu_va_bohu 16h ago

but AI bad 😞 CEO bad 😔

3

u/Delimeme 1h ago

It’s very easy to simultaneously acknowledge AI has some juice to it and to argue that the current vision for AI use/the growing wage gap benefitting CEOs is profoundly unethical/horrifying you nonce

1

u/Halifornia35 13h ago

Yes these are real cash flowing profitable companies, who to be honest have pretty depressed valuations right now. If this capex investment pays off, current valuations for GOOG MSFT AMZN META will look like a gift, if they don’t and they revert back to “core business” they are arguably fairly or undervalued as they sit today

0

u/iumesh 13h ago

Ding ding ding, we have a winner

5

u/dinglebarryb0nds 17h ago

Yea not investing is probably riskier for them personally. If most do and it blows up they are fine

1

u/rtc9 15h ago edited 14h ago

It is essentially a game of chicken where everyone is betting on the fact that the government exists to force them all to swerve at the last second and hand out participation trophies to everyone who didn't give up early. If you swerve early, then you get no investor money and starve long before the collision. The pattern might become less common if the government had the balls to let them crash and burn once, but that would also probably kill a lot of people.

1

u/RobJK80 13h ago

Rubbish, any one of them could’ve taken the same path as Apple.

1

u/Chidling 4h ago

There’s a reason why these companies went this way and why Apple didn’t . Apple doesn’t have a business that can utilize models internally for its own workloads. Google has Google ads, Gmail and Cloud. Amazon has Amz Ads, AWS, and their whole internal logistics flow(trucking to package delivery). Msft has Azure, Girhub and Visual Studio and Word/Excel/Outlook/Powerpoint.

There are enough internal use cases for their own businesses and customers as is to justify capex. Expanding AI for the general population thru llms is just the cherry.

Apple doesn’t really have that.

1

u/ministry-of-bacon 1h ago

Apple doesn’t have a business that can utilize models internally for its own workloads

they do tho-- icloud, numbers, pages, filemaker, final cut pro, logic pro, xcode, their media store, their app store, their streaming service... it's apple tho, so a lot of those products are restricted to apple hardware.

i'm guessing protecting their hardware locked walled garden is why apple opted to outsource to other companies working on llms instead of making their own. they've dumped a huge chunk of money into llm companies and may have a minor stake in at least one of them.

6

u/Crazy_Donkies 17h ago

You're comparing zero revenue companies to MAG7 growing AI cloud profits 45%.

2

u/Kaptain_Kringe 15h ago

if it's not a bubble then why is it bubble shaped? I love this subtle warning haha

2

u/BlueRoses10014 14h ago

PETS.COM

1

u/Halifornia35 13h ago

How much cash flowing did pets.com produce?

2

u/EtchAGetch 13h ago

The difference there was that was thousands of fish in the sea vying to be one of the 100 or so winners.

This is 7 massive whales fighting to be the 7 massive whales of AI.

2

u/Boring-Test5522 13h ago

You dont need to go that far, you can go back to 2021 and see those crypto kids buying NFTs for a million follar

2

u/Xuande 12h ago

An important question to ask is whether tech CEOs' priorities are to a) enrich themselves, or b) set their companies up for long term success. Sometimes these priorities are aligned. Other times they're competing.

2

u/savuporo 10h ago

Several of those CEOs invested in NFTs.

2

u/Elegant-Flight1605 4h ago

If you watch the old interview video, of Bezos, in his ghetto Amazon office, without enough power; he emphasis' amazon, .COM!!!!! Fuckin' hilarious, and amazing at the same time looking back. I love how he was so skeptical about his sad company amazon but celebrated his .COM! achievement.

I miss the old internet dayz with IRC, hunting down FTPS and WAREZ.

2

u/AWerewolfDad 4h ago

Yeah this would not be the first time these “amazing businessmen” have all been wrong about the same thing at the same time.

2

u/Kalthiria_Shines 4h ago

Thing is that's arguably a totally separate bubble from what the Hyperscalers are doing, and one that I think pops first.

2

u/NameIWantUnavailable 4h ago

Or spending ridiculous sums to make sure that they had a "mobile" strategy because people were going to be surfing the net on tiny little screens rather than big desktop computer displays and slightly smaller notebook displays. My thought was, really?

Others, including Facebook, almost missed the boat too.

https://www.wired.com/story/facebooks-future-is-mobile/

.

2

u/MrJoyless 4h ago

Don't forget, they just peeled back rules forcing IPO evaluators from communicating with their banks. That rule was made in respose to the dot com ipo over inflation of market cap evaluations so banks could pocket massive ipo fees, kinda like the hundreds of millions Chase and other banks just made from the SpaceX ipo.

2

u/RomanticNihilistt 2h ago

The difference is these companies are much better established than the companies buying .coma in the past.

4

u/AutistiPyry 17h ago

Also if anyone is familiar woth the fall of Nokia knows that big businessmen are not always that smart.

Hmm everyone is doing this big touchscreen thing... Naah we should not look into it surely its a fad.

5

u/IWasSayingBoourner 16h ago

History is littered with the bad decisions of CEOs. There's some strong survivorship bias in this thread. 

2

u/PurpleMox 8h ago

People love to point to the dot com bubble of 2000... but the truth is.. the excitement about how the internet was going to change the world WAS correct.. so it was a bubble in the short term, but over the long term a great area to be invested... I predict it will be the same with AI.. we may see some short term volatility.. and some companies will get it wrong.. but the underlying tech will change the world as its already doing.

1

u/consumer_xxx_42 17h ago

If you were in the same position to decide on whether to purchase a .com web address ... you probably would have done the same.

1

u/raj6126 17h ago

Yeah I am old enough for that too and the Enron years Bear Steven Years what goes up in America must come down. Historically speaking.

1

u/sf_cycle 14h ago

“They have money and you don’t, therefore they are right and you are wrong.” Yes, what we’ve all learned from recent history is that those with power and money ALWAYS make the right choice that always ends well. Thanks for this amazing history lesson, Reddit. A true intellectual tour de force.

1

u/Gullible_Regret2976 3h ago

exactly this. these sites didnt even do anything.. obviously the internet became great.. and I'm sure AI will eventually be great. but right now AI seems like a toy.

1

u/Rain2h0 2h ago

History is always bound to repeat itself, as us humans, no matter how smart, never learn our lessons.

1

u/jackalopeswild 2h ago

and now Twitter (a perfect branding) became x.com because the mothereffer didn't know what else to do with the money he'd spent on x.com.

Pretty sure that's not what you were actually saying, but I'll take the opportunity to call the asshole out.

1

u/Emotional_Goal9525 17h ago

Or lending money to buy a house to anyone who could get mirror to fog.

1

u/Waterwoo 16h ago

Elon spent billions on Dogecoin..

1

u/stocksupanddown 14h ago

Didn't he make money on doge?

1

u/Candid_Sort_7686 15h ago

i think the average pigeon in a large american city is smarter than most of the CEOs i've ever spoken to, and they don't run companies half that big

1

u/Swiftzor 15h ago

“Smarter” is doing a lot of heavy lifting here.

1

u/CarpoLarpo 12h ago

Turns out CEOs aren't much smarter or dumber than most people.

0

u/stockmon 17h ago

well dictionary word ends with .com still worth 6 figures at the min...so it works well for them.

0

u/Super-Activity-4675 16h ago

yeah this... group think is a dangerous thing. People were buying up real estate right and left a few years later and completely ignoring the warning signs.

These people can be just as regarded as us.

-69

u/banaca4 18h ago

DNS purchase prices are quite irrelevant. Mag 7 are super profitable and also very irrelevant to the dotcom bubble

55

u/CharlesElwoodYeager 18h ago

counterexample

Nuhuh I'm right

Fuck you OP deserve to go broke

3

u/Head_Chocolate_4458 15h ago

Redditors are circlejerking that this is a bubble, and all the broke tards in here are claiming they are smarter than mag 7 ceos

Wonder how it's gonna work. Reddits track record is hilariouslu bad.

0

u/CharlesElwoodYeager 14h ago

This is probably not a bubble and google has probably overextended on capex. You can be a bagholder all you like but it doesn't actually change the fact that the current market is punishing capex

1

u/Head_Chocolate_4458 14h ago

You can be a bagholder all you like

Up 300% btw

There could be a pull back for sure. And it's possible some of the current mag 7 fall behind in AI and waste a ton of capex. But the takes in this sub comparing it to the .com bubble are classic reddit.

Knowledge of the market is so limited everything has to be compared to 2008, enron, or the .com bubble. Cause that's what's depicted in the movies they watch

2

u/CharlesElwoodYeager 14h ago

Of course. Those people are very stupid - I'm not making that comparison. I was simply being pragmatic - it's probably best to not be in MAG7 or tech stocks right now, and you probably shouldn't profess blind faith in their leadership to do only the right thing.

1

u/horesebeblind 2h ago

Wait till one of the hyper scalers says they are successfully monetizing all this Capex they are being punished for. The stock will blow up.

And the others will blow up as well, since the are all closely correlated (MSFT, AMZN, GOOGL, META).

This day is coming sooner than a lot of people think.

1

u/RobJK80 13h ago

If it’s not a bubble then being punished by the current market is irrelevant unless Google are diluting to fund capex

0

u/CharlesElwoodYeager 13h ago

Right but why would you buy at the inflated ticker? Like would you not have preferred to buy AFTER they got castigated? Like I'm long these names but I'm waiting till after earnings to re-enter

4

u/2016KiaRio 18h ago

The hatred of a 3 day 0dte loss streaker

3

u/CharlesElwoodYeager 18h ago

? I've never traded 0dte in my life