Goldman Sachs High-Beta Momentum Index down -24% month-to-date through first half of July, the worst performance since Apr 2009.
Morgan Stanley Tech Momentum Index 17-day rate of change down -35%, worst ever recorded thru 27-year history.
‘Sam Altman will crash AI bubble.’
The AI bubble isn’t a result of any actual return on investment — whether that be in purely monetary terms, like revenue or profitability , productivity gains, or anything tangible or measurable. Rather, it’s an episode of cult-like psychosis that infected the brains of some of the most powerful and wealthy individuals and institutions, where the powerful mythology of a company inspired — and been used to inspire — the greatest capital misallocation in history.
As much as this’ll piss some people off, I fully believe that the only reason this has kept going so long is that OpenAI has yet to collapse. Its failure would be a watershed moment — the Lehman Brothers of the AI bubble, and an event that would define the end of one epoch, the start of another, and that would shake the afflicted out of that psychosis. Absent this wake-up call, NVIDIA has continued to sell GPUs, the coffers of the semiconductor industry have continued to swell, and more and more spending commitments have been made.
Look. OpenAI intends to burn over $852 billion by the end of 2030. It accounts for $748 billion of the remaining performance obligations of Microsoft, Amazon, and Oracle, on top of at least another $70 billion of RPOs across Cerebras, CoreWeave, Nebius, IREN, Lambda, and Nscale (per Kakashii), and plans to spend indeterminate billions’-worth of Broadcom “Jalapeno” chips. It intends to spend $50 billion or more on compute this year, which I estimate is more than 50% of all global AI compute spend (with OpenAI taking up 50%+ of all AI compute infrastructure).
OpenAI can only afford to pay that as a result of its latest (assuming it fully closes) $122 billion funding round, of which it has received at least $50 billion, with $20 billion from SoftBank (of $30 billion, with the third tranche due October 1, 2026). NVIDIA mentioned in its latest quarterly earnings report that it “estimate[d] that one AI research and deployment company contributed to a meaningful amount of [its] revenue by purchasing cloud services from [its] customers in the first quarter of fiscal year 2027,” referring, of course, to OpenAI.
h/t —–Marcel—–