AI is too expensive to make Wall Street nervous

It’s fundraising season, and investors are surprised by Google: increase in valueto $205 billion – from the last quarter’s $190 billion. Even at the very end of the new version of Google – $ 195 billion – it is more than the company had previously predicted. top end money. Now, look, I’ve noticed that there is a desire to say things like “What is $15 billion between friends?” but from an investor’s point of view, Google has said that it cannot accurately predict its value, which is a dangerous thing. Also, Google is spending more money than they make. And Google is also facing challenges to compete with Chinese AI equipment, as well as price pressure to keep the cost of its models low.

You don’t have to be a financial expert to see that spending more than you make is not a good business strategy. What is it, increase spending money in places where you need to keep your prices or to fall it’s not going well. You’re spending more and getting the same back, or – worse – spending more Less money.

These pressures are not exclusive to Google. They are lighting the entire AI system. Meta, Amazon, and Microsoft have all reported earnings this week, and there are plenty of people who think they will also announce it they spend more money than they expected in data center design.

There are a number of other things that are happening at the same time that indicate that investors are starting to panic. First, people seem to have noticed this SpaceX is a challenge; As of this writing, its shares are worth about half of what they were at their peak. Second, investors are nervous about Oracle’s datacenter buildout debtand it is important to remember that Oracle is the public marketplace for OpenAI. Third, Nvidia has been involved in discussions that require integration one third of a trillion dollars. Nvidia – more so than OpenAI – is in the middle of the money round in the AI ​​ecosystem. If it is pumping more money into supporting the construction of AI, this could be a sign that real demand is weaker than expected.

In particular, Nvidia confirms the debt of OpenAI, a contract of $ 250 billion, “is a great reminder of the investment that is used in the development of AI as a sign of demand,” Billy Leung, Global X Management’s tech sector investment strategist, he said Bloomberg.

Above all, a Chinese developer released a new modeland people cringe every time that happens. One reason for that fear is that China’s biggest obstacle that they- at least in theory – they don’t have access to GPUs like the US companies, but their AI systems are still competitive. If that’s what’s happening, then Nvidia (and other chipmakers) are out. In addition, it may mean that companies are building more data.

I’ve talked to a lot of smart people who are more optimistic than I am about the AI ​​boom. (I’ve been asking how AI companies plan to make money (for three years now, and I still haven’t found a good answer.) They all think we can build more data centers during this boom. He also thinks that many AI companies will die when the inevitable improvement comes. They are put in place because they think that the companies that survive will make them more money than what they will lose the ones that die.

So AI advocates are looking at the top of the market like everyone else; they know it is inevitable. It’s hard to know what the top market is in advance, of course. But some investors are getting cold feet about the whole AI thing, and they’re moving their money elsewhere.

We can get funding from some of the big tech companies that are promising investors, and this period of AI anxiety will pass. On the other hand, if you are looking for high quality signals, Elon Musk and very goodand SpaceX he said just go public. Good luck to all of us, I think!