Any data center that can remain profitable selling open source tokens at commodity prices will be fine. Any data center that relies on OpenAI/Anthropic level token prices and margins might be in trouble. After clearing their debts through bankruptcy, they'd likely be quite profitable selling open source tokens at commodity prices.

I'll believe it the day SpaceX - the AI company that is mostly making money selling datacenter compute using gas turbines for energy - takes a single day 90% or greater drop in stock price.

Is there anyone serious who thinks that the future is local models anyway? All computers used to be the size of rooms like these data centers and then they got smaller and faster until the home computer came. Is that not a possibility down the line as we improve efficiency of the models and increase compute?

There are two different clocks here. Financials could change in months, but the electrical infrastructure needs to be planned with years.

Gas turbines are all practically sold out till 2030, delivery time changed from 2-3 years to 5-7yrs.

Many announced data centers where destined to delay, independently from financial markets, due to the available infrastructure.

If the AI/data centers fomo dissapear, the effect on electrical production will take years in take effect, because capacity is already reserved and paid.

In oposition to software, energy infrastructure is not flexible: you can't speed up a turbine projected for 2032 neither cancel the order without a considerable cost.

The AI Bubble should more accurately be called the Data Center Bubble. Private credit sold everyone on the idea that AI needs massive data centers right away, because they needed a new narrative to lure investors into funds that are sitting on rapidly deteriorating assets from years of bad loans. As it becomes more and more obvious that these massive data centers are neither wanted nor needed, the Data Center Bubble will burst. AI is going to be just fine, but private credit and the hyperscalers, pension funds, and insurance trusts that they suckered in will be left holding the bag.

I have generally been bullish on data centers independent of how AI demand/load evolves. People will find a way to use that compute, even if it isn't the precise use we expect. As scale increases and the price per computation comes down, we will be able to brute force solutions to problems that otherwise would be intractable or prohibitively expensive to solve. And there are effectively an infinite set of those problems.

This tracks the evolution of how we use cloud computing and GPUs over the last 20 years. Cloud computing was originally just about saving companies from needing to maintain their own server racks, but has unlocked previously unserviced demand by allowing people to build an app or service and scale it to meet rapidly rising use without needing to invest a ton upfront in hardware. Suddenly a hobbyist could spin something up in their spare time that previously required many thousands of dollars of investment. Or when someone wants to run a single large scale computation, they can do it without needing to waste capital on maintaining idling servers to meet an occasional demand spike, like when a company I used to work at moved from running atmospheric calculations on a server in a closet to the cloud and were able to achieve double digit accuracy increases with the increased scale, while spending less overall on batch computing jobs.

GPUs, as the name implies, were created for graphics, and primarily for gaming graphics, but then more or less accidentally ended up enabling the present AI boom, which depends on a scale of computation that would have been impossible with older CPU architectures. Maybe someone at some point predicted this, but I think for the vast majority of people, it was extremely surprising that a niche gaming product would enable an industrial revolution level technological leap forward.

LLMs are just one way that increased compute scale unlocks seemingly magical results, but they are far from the only example and I have no doubt that there are many unknown examples remaining to be discovered yet.

While it seems there are other examples in the article, still, leading with Wall State is skeptical of SoftBank doesn't make the point land very hard.

One of these companies wanted an IPO valuing them at over $50B. To put in perspective what kind of crazy number that is, the entirety of Visa raised a valuation of $34B; and this company's parent, Softbank, had an IPO valuation of $64B.

This just doesn't pass the smell test.

It's just the scam is reaching its end.

The idea that everything will be fine after the data centers file for bankruptcy seems a bit naive

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I cannot get into the article or the archive link, from the title seems even Wall Street is seeing AI as a funding black hole.

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