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Bloomberg
  • 19 hours ago
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00:00I think we probably are in an AI bubble of some sort.
00:03The question is, is it going to burst?
00:06Is there going to be a so-called correction?
00:09Meaning it's not so much that there's this huge drop in the market, 20% drop in share
00:15prices for the big tech companies, millions of people lose their jobs.
00:20This would be a little bit more like the 2008 financial crisis.
00:23I don't think we'll necessarily get to that point.
00:26And the reason for that is so much of the AI boom has been financed by large tech companies
00:35that are extremely well capitalized.
00:38They have tons of money on their balance sheets.
00:40Meta, for example, made more than $60 billion last year, net profit.
00:46Google made even more.
00:47These companies, in theory, can afford a lot of this, but not all of it.
00:52And so a lot of the shortfall in the costs, which have been estimated to be $3 trillion
00:58over the next three to four years, is going to also have to come from debt trading by banks.
01:06Clever financing.
01:07There's still a question of market sentiment.
01:10I think that's where we might see some kind of correction, if you will.
01:15We saw an example of that in January of this year, when DeepSeek, this little company out
01:20of China, released a model that was as good as ChachiPT, but built for a fraction of the
01:26price.
01:26And they put all the information out on the internet for anybody to copy.
01:30That sparked a huge freak out in Silicon Valley.
01:33Share prices dropped.
01:35And there was a sense that all the money that people were spending on AI in the US and in
01:39the West was just a big old waste of money.
01:41That sentiment has flipped back, like, oh, this is actually worth the money and worth
01:47the investment.
01:49But I think that showed how volatile or how potentially volatile the market could become.
01:55It's almost like when you blow up a balloon, the bigger it gets, the tighter the balloon
02:01becomes.
02:01And so you only need a very small thing to potentially pop it.
02:06And so what might that small thing be?
02:08It could be a profit warning from one of the AI companies.
02:13It could be someone like Anthropic or OpenAI saying, we had thought we were going to make
02:19X billion next year.
02:21It's probably going to be half of that.
02:24Something like that, I think, could create a big kind of another freak out in the market.
02:29And we could see some share price drops.
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