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The key to a correction or bubble burst is IMO "Which companies or segments are not making money and therefore are unsustainable"
Nvidia, Microsoft, AMD, Memory companies are making money and growing. Somehow only Intel has managed to not grow in revenue during this unprecedented boom
Who are the company that are not making money and will eventually have to pull the plug? Right now it seems like there is so much money available, there is no reason to correct.
The key to a correction or bubble burst is IMO "Which companies or segments are not making money and therefore are unsustainable"
Nvidia, Microsoft, AMD, Memory companies are making money and growing. Somehow only Intel has managed to not grow in revenue during this unprecedented boom
Who are the company that are not making money and will eventually have to pull the plug? Right now it seems like there is so much money available, there is no reasong to correct.
One difference from dot-com is so much of the capitalization in AI is in VC funded private companies. OpenAI, Antrophic, Perplexity, xAI, Figure, ect.
None of them are making money, but spend from these companies is what's making money for the publicly traded semicons and hyperscalers.
My view is that the private company spending needs will eventually outgrow the VC market and beyond 2026 will need to raise money from public markets which are less tolerant of losses. I think there will be a wave of AI IPOs in the next 2-3 years which will mark the top of the market. I think if these IPOs do well it will be seen as good news initially since it puts capital back in the hands of VCs to keep the cycle going, but if these companies start to underperform in the public market it will lead to a collapse.
There was a bit of a preview of this with clean tech companies after the SPAC wave where public market valuations collapsed for clean tech companies, to the point where public market valuations are lower than private market valuations, and it became almost impossible for anyone who did not exit at the top to exit at all.
The key to a correction or bubble burst is IMO "Which companies or segments are not making money and therefore are unsustainable"
Nvidia, Microsoft, AMD, Memory companies are making money and growing. Somehow only Intel has managed to not grow in revenue during this unprecedented boom
Who are the company that are not making money and will eventually have to pull the plug? Right now it seems like there is so much money available, there is no reasong to correct.
OpenAI is the obviously unprofitable one. Apparently losing $8.5bn on around $12bn sales for 2025. And with profitability not forecast until 2019 earliest. Assuming the reported values mean what we think they do (a glance at OpenAI's corporate structure chart suggests caution may be in order). As count has just noted, these AI companies may have outgrown the VC funding pool.
