the site threw up a modal, blocked me from scrolling, then locked the browser, so I couldn't read everything, but from what I could see the gist is people are still over-ordering therefore the boom is going strong.
I don't think "running out of steam" is the expected failure mode here. We are talking about bulk ordering machines that produce chips that in turn will hit the market in half a decade. That's like adding power plants to the grid that runs the ball pump inflating the ballon. ASML will probably be the last that faces the ripples of the AI bubble going bust.
Even after the AI bubble pops, ASML's machines will be useful. People generally want computers and chips, preferably the fastest an latest-generation ones. The ROI may be lower once the bubble pops, but the machines will earn themselves back eventually.
Once the bubble does pop, ASML will be in trouble, though. It'll take a couple of years for their latest machines to generate as much interest again, so the effects of the market collapse will echo for years after it happens.
If you buy the machines and not use them, at most you lost several hundred of millions of dollars (not really, because that machine still retains value for you or someone else later).
On the opposite end, if you don't buy the machines in time, mispredict the demand and can't produce, you lose tens of billions.
It's certainly an indicator. But, just like airplane orders, the backlog is long enough that you have to put orders in on a speculative basis.
If everything goes as planed, we'll need new equipment in a couple years, so order now. If things don't work out as planned, you might be able to sell your slot, or push it back a few months, or cancel it.
In a frothy market, you don't really know from order backlogs how many orders are based on firm plans and how many are we might want to build chips, so let's order a machine and see if we want it when it comes up.
I’d think that orders for long lead time rivalrous slots of a very finite resource are basically OOTM call options for future demand. It says something that firms think demand is plausible but not a whole lot about how probable it really is. You can always idle these things, you can’t conjure one immediately.
> Capital equipment suppliers have been increasing their forecasts for revenue growth in 2000 as chip manufacturers begin to add new wafer fabs and backend assembly plants. Last week, for example, Applied Materials Inc.–the world's largest semiconductor equipment supplier–announced it had increased its forecast for industry growth in wafer fab equipment sales to 46% from a projection of 19% at the end of last year (see Feb. 16 story).
> The strong wave of new orders “confirms the strength of the current market cycle,” said Stanley T. Myers, president of SEMI.
Even AGI might just be a 'meh' moment. It will take a while before you get through social, political and physical barriers before we start seeing it make a meaningful impact.
Agreed. The "singularitarians" always seem to overlook one simple truth: we don't use the intelligence we already have. The appearance of a 100-fold increase in cognitive resources will have no immediate effect at all.
"immediate" is doing a lot of heavy lifting there.
"The intelligence we already have" is why we're splitting atoms and the other primates are splitting rocks. That took us a few hundred thousand years, of course.
But if you have our mere equals in digital form, that only takes as long to change everything as it takes to build a factory to produce the same number of equally dexterous robots.
People forget the fact there may not be enough capital in the world to invest in AI, and so while some companies will go under the market could grow for literal decades. I don't know the future, but this is not a guaranteed bubble.
"No, no, you don't understand. If you keep putting bigger and bigger engines in a car, it'll somehow turn into an aeroplane at some point! There's no other way, believe me!"
No it isn't. It doesn't matter how real the technology is. The bubble will still pop, because when a technology is seen as revolutionary, you get rampant overinvestment. And only a fraction of those investments will pay off(or, indeed, none, in the case where frontier labs are eventually made irrelevant by open models, which seems very likely to me).
The internet and web were revolutionary, no one can deny that. They completely transformed our society. Nevertheless, the bubble popped. The current bubble is no different.
I don't doubt there will be a big crash at some point, but I actually doubt we've reached that point yet. So far stock increases have been driven by earning increases, not speculation. I know an "earnings bubble" can be a thing, but given how useful I know these models to be, and how few use them in the way they can be, I think we have far to go still.
So you are saying, just like the Internet, there may or may not be painful AI burst in a few years, then exponential grow in decades to come? What is the time window to fit your narrative?
Yeah I always find dot com burst comparison apt because like, yeah market corrections will probably happen, but even if you invested in big tech RIGHT before the burst you would probably still be very rich today if you just held.
This is the definition of survivorship bias. There are a ton of tech stocks that you would have lost your shirt on had you invested in them just prior to the crash.
Even if you invested in a company that ultimately became a winner, you'd need to be able to hold on to it throughout the correction. You put your savings in tech stocks, the tech sector undergoes a significant correction, the stocks dive, you get laid off because you also work in tech and now you have to liquidate your stocks to meet your obligations. (Or you just retire at the wrong time.)
> This is the definition of survivorship bias. There are a ton of tech stocks that you would have lost your shirt on had you invested in them just prior to the crash.
Which is why you buy an index, rather than try pick individual stocks.
Buy individual stocks in blue chip companies. The return is always better but if you do buy individual stocks, you have to actually pay attention to that individual company that you invested in does, in short continue to do your homework, in the current bubble, invest in the companies that have great fundamentals (revenue and actual profit) do not invest in those companies where the financials are terrible and have been terrible for years, yet they still command a high price, eventually the party ends.
Currently, there are three companies owned by the same person, the financials and their relative performance/competitiveness is not good despite the oversized hype in comparison to other blue chip companies. But many people have gotten great returns however, it is a don’t get caught holding the bag type of stocks Hint: The three companies are owned by same guy and has a cult like following.
In most western countries, pets are on #2 after spendings for children in households, so your bet made sense. Though, as a lot of companies, tractions wasnt big enough back then.
Today, e.g. ZooPlus is one of the biggest pet-stuff-retailers (2023 revenue 2.5billion)
I'm pretty sure that housing, cars and food are #1, #2 and #3. Your definition of household spending seems a little unconventional. If pets are household spending, surely so is food for humans?
If you invested in XLK (State Street Technology Select Sector SPDR ETF) In March of 2000 (just before the .com bust), you would have underperfomred SPY (S&P 500) until June 2026. As of today, the spread between the two is just over 1%, with good reason to believe that we are in another tech bubble.
One problem for internet vs AI is the internet boom laid down a bunch of fiber, which has a usable life of decades. The AI boom is 10% datacenter, 90% GPU, and the GPUs are consumables on a timeline of ~3-5 years, and even that's being optimistic compared to rumored real-world degradation rates. 2000 put a couple trillion in the ground that we got to dig up later, 2026 is setting a couple trillion on fire.
The infra and its lifespan isn't what created the value that came out of the Internet. The question I think is how much value will people create with these investments
> the GPUs are consumables on a timeline of ~3-5 years
When newer GPUs with clearly better perf/$ are released at a yearly cadence, then older GPUs might indeed become _obsolete_ at this pace, meaning that it makes more economic sense to swap them out because datacenter occupancy is extremely limited. Many of these GPUs might themselves still be functional.
The usable life of a model is infinite. You can always fine tune it for current events and technology, or distill into a new one with a more efficient architecture.
If Anthropic or OpenAI go bankrupt they will have to auction off all their IP including code and weights. Claude won't disappear just change its name if someone else buys the trademark.
The parent described "exponential returns", which I was reacting to.
For what it's worth, the S&P dividend yield is typically 1-2%, and below inflation for the majority of relevant years. So you are not ahead in real dollars until roughly the dates I mentioned.
I was there, and this is why I consider the 2000s a lost decade.
Honestly we only just started to get back into the swing of things from 2012-2016 when Obama's reelection provided enough market confidence for electric cars to reach MVP status in 2013 and solar panels to begin scaling until Trump slapped a 30% tariff on them in 2018. Progress in sustainability is my litmus test for the economic viability of getting real work done in the economy, sort of like grading a steakhouse on how good its least-ordered mushroom appetizer tastes. We could also choose healthcare, education or any other field whose success is determined by the social good it provides.
If it weren't for the arrival of AI, I'd call this a wasted quarter century.
Can’t speak for the original commenter, but back in the spring (maybe early summer?), I expected the bubble was going to pop whenever we get a full S-1 filing for one of the frontier labs, and that’s still my expectation. I don’t think the selective leaks have prepared the market for what “positive margin on some products yet incredibly unprofitable” is likely to look like in detail.
I like the dot com bubble comparisons mainly so that I can look at the differences. That is where the information is, and it's what you want if you're going to navigate this market.
The internet bubble popping did not cause internet traffic to decline -- on the contrary internet traffic increased rapidly during the bubble pop.
Similarly, I don't think the AI bubble popping will cause token demand to decline. On the contrary, I predict the bubble pop will happen because of a recognition that tokens are a highly competitive industry, thus the margins of frontier AI firms aren't sustainable, popping their valuations.
I don’t buy this argument. Everyone who suggests there’s a bubble speaks about the excessive data center buildout, low demand, excessive debt financing.
All of these arguments don’t matter if you think demand will increase.
What bubble is left? Really. Just people with OpenAI or Anthropic exposure? Not that high.
low demand? Got a source for that? Anthropic is paying crazy sums to direct competitors to meet demand, so it seems that demand is quite high. Could be wrong, though.
> What bubble is left? Really. Just people with OpenAI or Anthropic exposure? Not that high.
The stock prices of 9/10 of the top S&P 500 stocks have significant AI exposure. A drop in valuation of them will be widely felt.
And there's a significant bubble in the hardware layer. The Nvidia overvaluation alone far exceeds that of both OpenAI and Anthropic. When the bubble pops people are going to want dedicated inference chips without an 80% profit margin rather than the B200.
Despite the fact that chip making machines come before chips, this seems like a lagging indicator, not a leading indicator.
These would be among the first orders placed in a build-out plan, and the build-out plans are first in a boom. The bust phase would very well happen before the orders are completed, and orders would not decline until the bust phase starts?
So weird that they're inverting knowledge and/or causation.
AI is a bubble because the demand story is implausible. The fact that someone is willing to make ASML orders (which is a >= 10 year indicator) doesn't tell you anything at all about whether AI companies can, in fact, get MANY ORDERS OF MAGNITUDE of revenue growth.
I think tying this to resilient AI spending is misleading. The current AI spending boom has jolted a lot of fabs and companies into realizing that they’re not adequately prepared for the next few decades of semiconductor markets regardless of how AI turns out. That the previous market of divided consumer and business segments is ill-suited to a future where compute is more universal between the two, and that if they want to avoid one going bust when the other booms (like the current memory apocalypse) then they need to be ready to meet that sort of demand. Then you mix in nationalist tensions and China quickly rising to fill the consumer gap with older (but still excellent) specced hardware like DDR4, and the writing is on the wall for the traditionally Western-dominated compute industry: adapt to changing demands or die, just like manufacturing did.
What I’m watching is the timeline. If China can get DDR4 kit out in volume (or even better, DDR5) faster than the AI bubble deflates or markets correct, then the future consumer compute players will be Chinese, not American, especially if they can ship kit at pre-COVID pricepoints.
This current bubble will be the last big payday for the three Hyenas of memory, rest of the world (most of it) will be buying Chinese memory after 2030, and a few other companies will probably be designing an engineering memory in house and getting it fab at TSMC. And AI models they will be better and smaller, and the hardware? It will be up to the task of running the models on your desktop.
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[ 2.4 ms ] story [ 101 ms ] threadSo nothing was eased.
Once the bubble does pop, ASML will be in trouble, though. It'll take a couple of years for their latest machines to generate as much interest again, so the effects of the market collapse will echo for years after it happens.
On the opposite end, if you don't buy the machines in time, mispredict the demand and can't produce, you lose tens of billions.
If everything goes as planed, we'll need new equipment in a couple years, so order now. If things don't work out as planned, you might be able to sell your slot, or push it back a few months, or cancel it.
In a frothy market, you don't really know from order backlogs how many orders are based on firm plans and how many are we might want to build chips, so let's order a machine and see if we want it when it comes up.
- John Maynard Keynes, 1927
https://www.eetimes.com/record-orders-for-chip-gear-push-sem...
> Capital equipment suppliers have been increasing their forecasts for revenue growth in 2000 as chip manufacturers begin to add new wafer fabs and backend assembly plants. Last week, for example, Applied Materials Inc.–the world's largest semiconductor equipment supplier–announced it had increased its forecast for industry growth in wafer fab equipment sales to 46% from a projection of 19% at the end of last year (see Feb. 16 story).
> The strong wave of new orders “confirms the strength of the current market cycle,” said Stanley T. Myers, president of SEMI.
This time it's different.
"The intelligence we already have" is why we're splitting atoms and the other primates are splitting rocks. That took us a few hundred thousand years, of course.
But if you have our mere equals in digital form, that only takes as long to change everything as it takes to build a factory to produce the same number of equally dexterous robots.
The internet and web were revolutionary, no one can deny that. They completely transformed our society. Nevertheless, the bubble popped. The current bubble is no different.
Even if you invested in a company that ultimately became a winner, you'd need to be able to hold on to it throughout the correction. You put your savings in tech stocks, the tech sector undergoes a significant correction, the stocks dive, you get laid off because you also work in tech and now you have to liquidate your stocks to meet your obligations. (Or you just retire at the wrong time.)
Which is why you buy an index, rather than try pick individual stocks.
Currently, there are three companies owned by the same person, the financials and their relative performance/competitiveness is not good despite the oversized hype in comparison to other blue chip companies. But many people have gotten great returns however, it is a don’t get caught holding the bag type of stocks Hint: The three companies are owned by same guy and has a cult like following.
Today, e.g. ZooPlus is one of the biggest pet-stuff-retailers (2023 revenue 2.5billion)
#2 "after all payments done for yourself/husband"
#1 will be the kids
It took the companies that survived a decade or more to recover.
You still have to pay bills while you endure inflation and the opportunity costs in the meantime.
https://www.etftimemachine.com/en/compare/XLK-vs-SPY?start=2...
Had you invested in XLK when it opened in 1998, then following the .com crash, it would take until early 2020 to return to parity to the S&P 500.
When newer GPUs with clearly better perf/$ are released at a yearly cadence, then older GPUs might indeed become _obsolete_ at this pace, meaning that it makes more economic sense to swap them out because datacenter occupancy is extremely limited. Many of these GPUs might themselves still be functional.
If Anthropic or OpenAI go bankrupt they will have to auction off all their IP including code and weights. Claude won't disappear just change its name if someone else buys the trademark.
An Nasdaq would not materially exceed until 2016.
Yes, this ignores dividends, but that really only helps manage inflation.
You would have done much better being out of the stock market until the 2009 crash.
It’s the total returns that matter, not just stock price.
For what it's worth, the S&P dividend yield is typically 1-2%, and below inflation for the majority of relevant years. So you are not ahead in real dollars until roughly the dates I mentioned.
Honestly we only just started to get back into the swing of things from 2012-2016 when Obama's reelection provided enough market confidence for electric cars to reach MVP status in 2013 and solar panels to begin scaling until Trump slapped a 30% tariff on them in 2018. Progress in sustainability is my litmus test for the economic viability of getting real work done in the economy, sort of like grading a steakhouse on how good its least-ordered mushroom appetizer tastes. We could also choose healthcare, education or any other field whose success is determined by the social good it provides.
If it weren't for the arrival of AI, I'd call this a wasted quarter century.
When the stock market slumps like that, continual investment lowers your average cost basis.
e.g.:
Year 1: Buy 1 stock at $100
Year 2: Buy 1 stock at $50 (post-crash)
Year 3: Buy 1 stock at $60
Year 4: Buy 1 stock at $70
Year 5: Buy 1 stock at $80
If we just look at "Year 1 = $100, Year 5 = $80" then it looks like we lost $20/share.
However, our average cost basis is $72, so we actually made $8 per share.
That’s not really a great return but it’s not horrible considering the circumstances.
The peak is always before the fall by definition.
Just because something has peaked SO FAR is a very poor approximation that it has peaked completely.
Similarly, I don't think the AI bubble popping will cause token demand to decline. On the contrary, I predict the bubble pop will happen because of a recognition that tokens are a highly competitive industry, thus the margins of frontier AI firms aren't sustainable, popping their valuations.
All of these arguments don’t matter if you think demand will increase.
What bubble is left? Really. Just people with OpenAI or Anthropic exposure? Not that high.
> What bubble is left? Really. Just people with OpenAI or Anthropic exposure? Not that high.
The stock prices of 9/10 of the top S&P 500 stocks have significant AI exposure. A drop in valuation of them will be widely felt.
> The stock prices of 9/10 of the top S&P 500 stocks have significant AI exposure
not true.. only ~2-3% exposure at model layer. rest are at hardware layer..
These would be among the first orders placed in a build-out plan, and the build-out plans are first in a boom. The bust phase would very well happen before the orders are completed, and orders would not decline until the bust phase starts?
AI is a bubble because the demand story is implausible. The fact that someone is willing to make ASML orders (which is a >= 10 year indicator) doesn't tell you anything at all about whether AI companies can, in fact, get MANY ORDERS OF MAGNITUDE of revenue growth.
What I’m watching is the timeline. If China can get DDR4 kit out in volume (or even better, DDR5) faster than the AI bubble deflates or markets correct, then the future consumer compute players will be Chinese, not American, especially if they can ship kit at pre-COVID pricepoints.
By submitting this title you make yourself the enemy of the USA.
Remember it is called SI - for "Super Intelligence".