Burry dropping bombs: SpaceX, OpenAI, Anthropic IPO wave could hit $4 trillion — bigger than the dot-com peak.
It is already bursting.
Why do you think the AI companies are rushing to get IPOs? They are trying to offload the bag before skipping out.
Meta launches AI leaderboard to track employees, then shuts it down within days
This is a good and interesting article about how much of the AI market is smoke and mirrors, with large tech firms inflating their books through circular financing and aggressive spending: The Great AI Loop: Why ‘Circular Financing’ is Raising Alarms on Wall Street
You also have Michael Burry doubling down on the AI bubble thesis and doing a good job explaining his perspective on his Substack and how the market is not reflecting sound metrics.
Personally, I think a lot of this eventually has to come down. Many of the AI services being sold to businesses and the value being offered at massive scale and cost can be replicated for a fraction of the price using local LLMs and in-house infrastructure. The current bottleneck is that businesses still need knowledgeable people to help them navigate implementation and integration.
As more consultants and smaller firms figure that out, many of these heavily inflated AI companies will find themselves having overinvested in infrastructure and growth that won’t generate enough long-term revenue to justify the spending. It’s most likely that the bigger tech companies will just buyout the ones that can’t financially make it for pennies on the dollar.
h/t Seattle-Washington