Excellent analysis. Berkshire Hathaway recently bought 10B worth of Google shares at 350/share in private placement. Surely they are aware of everything mentioned here. Are they betting that this will all work out for them in the long run? Or, did the new CEO succumb to AI FOMO?
Very thorough and well founded analysis. Another interesting aspect is the evaluation of the limits of possible AI demand. My fear is that AI may turn out be a giant machine that converts energy and matter into waste heat, slop, shitty code, and porn. There will be some real value of course, but the EROI of the whole system may turn out to be negative, limiting demand and usefulness. On the other hand, if AI turns out to be ultimately useful, it will lead to severe unemployment,, which in turn will decrease consumer demand and feed back into limited end demand - corporations can save labor costs, but who will they sell their products to, if they destroy consumer demand in the process?
A lot of what you've spoken on - GPU ABS, AI financing via SPVs, etc - I've touched on in my older pieces. I also thinks banks will use SRTs to shift AI-related credit risk away from themselves down the line.
Thanks I’ll take a look at your posts. I’ve been reading up on the SRTs but that market is very opaque so it’s hard to decipher exactly what’s going on. FT had a good piece about it recently. The use of SRT (along with Magnetar’s involvement, coincidentally) are another thread I’m pulling on that seems to fit with the 2008 analogy.
Should've mentioned it in my original comment but your piece was well-written and shines a light on an opaque corner within the financing side of the AI infrastructure buildout. I also have a primer on SRTs if you want an overview on credit risk transfers - it's not exactly 2008 but there are parallels for sure. I'll have to check out the FT story with Magnetar's involvement.
Excellent analysis. Berkshire Hathaway recently bought 10B worth of Google shares at 350/share in private placement. Surely they are aware of everything mentioned here. Are they betting that this will all work out for them in the long run? Or, did the new CEO succumb to AI FOMO?
Very thorough and well founded analysis. Another interesting aspect is the evaluation of the limits of possible AI demand. My fear is that AI may turn out be a giant machine that converts energy and matter into waste heat, slop, shitty code, and porn. There will be some real value of course, but the EROI of the whole system may turn out to be negative, limiting demand and usefulness. On the other hand, if AI turns out to be ultimately useful, it will lead to severe unemployment,, which in turn will decrease consumer demand and feed back into limited end demand - corporations can save labor costs, but who will they sell their products to, if they destroy consumer demand in the process?
Very well done - clearly articulated
Solid.
Thank you.
Very thought provoking!
excellent piece
Great article. Here is a perspective from a few weeks ago. We will only build a small fraction of announced AI data centers.
https://needsofthemany98.substack.com/p/the-two-bubbles-america-is-building?r=gwg0&utm_campaign=post&utm_medium=web
A lot of what you've spoken on - GPU ABS, AI financing via SPVs, etc - I've touched on in my older pieces. I also thinks banks will use SRTs to shift AI-related credit risk away from themselves down the line.
Thanks I’ll take a look at your posts. I’ve been reading up on the SRTs but that market is very opaque so it’s hard to decipher exactly what’s going on. FT had a good piece about it recently. The use of SRT (along with Magnetar’s involvement, coincidentally) are another thread I’m pulling on that seems to fit with the 2008 analogy.
Should've mentioned it in my original comment but your piece was well-written and shines a light on an opaque corner within the financing side of the AI infrastructure buildout. I also have a primer on SRTs if you want an overview on credit risk transfers - it's not exactly 2008 but there are parallels for sure. I'll have to check out the FT story with Magnetar's involvement.
Thanks for reading!