Who gets hurt when the bubble pops? And who will the government need to bail out?
Last time, a lot of the companies were public and the general public saw stock losses. This time the only companies that are publicly really exposed by the AI bubble are Nvidia with all of their circular financing and Oracle. Of course Tesla has always been a meme stock.
Defined contribution plans - for now - can’t have private equity in their funds. Defined benefit plans and endowments are exposed.
Apple famously hasn’t invested that much in AI, Google is spending a lot on infrastructure. But between search and GCP and YouTube they have a real business plan and are funding based on profits. Amazon is in the same boat. Microsoft is bowing out of spending money on training and focused on inference - and they also have Azure. Meta is making money using AI for ad targeting and probably in the future to generate ads.
I can also see consulting companies being hurt (I work in cloud consulting) as businesses are throwing money at them to “AI enable” their business.
Given how investing is heavily promoted by all these neobanks I have a feeling a lot of people will get burnt. Back in the days, not even 10 years ago, you had to research and go out of your way to invest, now you can do things like "automatically round up your transactions to buy NVIDIA" from your bank app. The only ways to get out of the middle class are: lotteries, crypto, putting everything stock market for 20 years and living like a student in the meantime.
Most people in the middle class can’t afford to put any decent chunk in their 401Ks let alone invest any meaningful amount above that.
But funny enough, most of the people I know that do invest in individual stocks, bitcoin etc are people in the servjce industry who are single and make decent money on tips. I live in very heavy tourist town.
But since this is a site of tech heavy participants, if you are a software developer or adjacent, you are on average making twice the median local wage for your area if you are in the US even as a enterprise Dev 2-5 years out of school and should be able to invest at least 15% if your income.
Last time, a lot of the companies were public and the general public saw stock losses. This time the only companies that are publicly really exposed by the AI bubble are Nvidia with all of their circular financing and Oracle. Of course Tesla has always been a meme stock.
Defined contribution plans - for now - can’t have private equity in their funds. Defined benefit plans and endowments are exposed.
Apple famously hasn’t invested that much in AI, Google is spending a lot on infrastructure. But between search and GCP and YouTube they have a real business plan and are funding based on profits. Amazon is in the same boat. Microsoft is bowing out of spending money on training and focused on inference - and they also have Azure. Meta is making money using AI for ad targeting and probably in the future to generate ads.
I can also see consulting companies being hurt (I work in cloud consulting) as businesses are throwing money at them to “AI enable” their business.