- the hit to microsoft the other day was pretty interesting
I saw reports attributing it to a miss on earnings from Azure but they were off by 0.4% on 39% growth. That's 39% instead of 39.4%. And the company stock dropped 10%. This is all of Microsoft - 10% down (!).
It has to tell you there are a LOT of people primed to sell in a hurry on bad news. The "bubble" talk subsided a lot after nVidia smashed earnings last quarter, but largely overlooked how much their whole situation is based on pent up demand. It completely masks the fundamentals.
I still feel like we're sitting on a volcano and seeing puffs of smoke and feeling earth tremors.
- The intense race to dump the risk on the public and cash out (OpenAI ipo, Musk folding xAI into SpaceX for that IPO) is very telling.
- You would think the effect was the opposite. I think this is worse for OpenAI.
So far, the circular financing from Nvidia has been peanuts for the company. It's roughly equal to giving 5% discount on hardware, not a big deal when the profit margin is 70%. Trying to prop up new neoclouds and competition is a good idea.
As I understand it, the OpenAI investment was much bigger effective discount but still safe because Nvidia invests gradually in installments only when OpenAI invests in data centers: tit for tat. Maybe OpenAI wanted to get the money now and invest it later, as they seem to be running out of cash.
- >It's roughly equal to giving 5% discount on hardware, not a big deal when the profit margin is 70%.
using your numbers, Nvidia didn't drop 70%, it's more on the order of the 5% so at least from that angle, the news narrative holds together superficially.
- > You would think the effect was the opposite. I think this is worse for OpenAI.
How do we know it wasn't? OpenAI isn't a publicly traded company, and I guess no one who dares writing anything here actually knows how the numbers look on the inside, so for what we know, it could very well have been worse for OpenAI than Nvidia.
- You can make a good guess, though - OpenAI had a significant lead, its moat was being a generation or 2 ahead of the competition, and as of the end of 2025, OpenAI, Google, xAI, and Anthropic are pretty much neck and neck. Grok and Gemini are likely to be the top 2 within the next couple months, and the Chinese open models are hot on their heels.
OpenAI is going to be competing for third or fourth place with Anthropic unless one of them pulls off a big capabilities or efficiency leap while remaining believably as good as the other top models. Google and xAI have advantages that the others don't, and are capitalizing on them like crazy. It remains to be seen whether xAI can compete with the Google hardware advantage, but they have economies of scale, differences in mission, and Elon's billions on their side, so it's turning out to be a very interesting race.
Sama could also finagle a funding rabbit or strategic partnership out of his hat and also have the next top tier model, amazing everyone again and keeping a plausible "best in class" lead for a while; OpenAI would have to be down for at least a year before I counted it out completely. It's not looking very pretty for them right now, though.
- The open source models are showcasing a lot of cool research ideas that will undoubtedly end up in future frontier models from OpenAI and others. We're at a point where the big proprietary AI firms barely do any foundational research anymore, they're purely about incremental improvement. All the proven substantial progress recently has been coming from the open models side.
- No one believes Grok will be top 2 in a couple months. OpenAI and Gemini, in one of the two orderings, will continue to be far ahead of Grok in "the next couple of months". I encourage you to bookmark your claim here and return in 2 months to take stock in your ability to predict/bluff.
- My best guess is that Nvidia is unhappy with how OpenAI is fishing for compute with its competitors (Jensen had some opinions on the AMD-OpenAI deal when it was announced). If this actually becomes a feasible reality, it gives OpenAI (and co) negotiating power - which is bad for Nvidia
Nvidia might have wanted more exclusivity/attachment. And OpenAI still seems to have no problem raising money. So maybe there was just a commitment mismatch
Pure speculation though
- > the circular financing from Nvidia has been peanuts for the company.
Enron thought the same thing. Until they had a closer look at what their middle managers were actually doing to the books.
- Possibly good for Nvidia as I have doubts OpenAI will be able to pay their massive IOUs in a timely fashion, if ever.
Did Oracle spin off Cerner yet?
- How long after the collapse of OpenAI will the DDR situation come back to normal.
- hopefully never, so we just have to run cheap screens connected to AI servers /j
- Down to levels as low as where they were a few days ago, lol
- The hits are coming closer.
Microslop CEO begging for AI $$$ because astronomical overprovisioning is becoming obvious, all big spenders frantically trying to hide CapEx from their books and hallucinate revenue projections like its Enron reloaded and Oracle is already getting sued by bondholders over AI spend [0].
It will be worse than the dot com bust.
0: https://www.reuters.com/sustainability/boards-policy-regulat...
- To me CoreWeave is the one to watch. They have to actually bring all these promised datacenters online, operational, and profitable. They basically got a $2B bailout from Nividia a week or so ago but they're back to sinking.
https://ts2.tech/en/coreweave-stock-slips-as-class-action-no...
- Consumer can eat all the GPUs they have and more if we stop trying to force B2B
Right we have a loop where AI is so expensive (because it's priced to feast on B2B margins) that the best consumer experiences aren't affordable, and they're not affordable so they don't go mainstream, and they're not mainstream so no one is willing to take less money and bank on the incredible volume that would emerge if it went mainstream.
If we can get model pricing cheaper AI entertainment alone will probably carry things (I'm 99% sure NovelAI is already one of their largest customers outside of major AI labs)
If you believe it will happen in the next 6 months how do you prepare for that?It will be worse than the dot com bust.- If you truly believe this, slowly divest everything into cash, wait for the crash, then buy back in. Even buying in slowly over the course of a crash, on the way down, will save you a ton of money if you're out before it hits.
But you're more likely to just cash out early, lose a bunch of gains, then buy back in later at higher prices.
If you can time the crash you can make a shitload of money. But you can't, so you'll come out better if you just keep buying in every paycheck and ride it out just like you have been.
- It doesn't have to be 'ride it till it dies' or 'sell everything'. The AI bubble is almost exclusively contained to the US stock market and a few east Asian manufacturers.
You're right that selling everything and 'going to cash' would be a mistake, but diversifying away from US large cap growth absolutely wouldn't. I'm 60/40 stocks/bonds. My stocks and bonds are 50/50 us/intl. ~ 10% of my us portfolio is small cap value.
What's funny to me is that nobody learns from the past. This is far from the first tech bubble we've had even before the .com crash (canals, railroads, radio...). The answer, every time was diversification.
- The east Asian semiconductor manufacturers are selling shovels in the gold rush and being very cautious about expansion given how capital-intensive the whole sector is. It's hard to come up with a scenario where they outright lose, even with the bubble popping.
- Yes to this. Take no alternative actions. Just keep investing and don't watch the market for a year or two.
- Doing nothing different is the kind of plan I can easily execute !
- Buy Puts
- Almost all the gains in the SNP500 are NVidia, and other huge tech.
https://www.investopedia.com/your-s-and-p-500-index-fund-mig...
https://www.cnbc.com/2025/10/22/your-portfolio-may-be-more-t...
- >It will be worse than the dot com bust.
And whose fault is that?
- Big scale fraud like this always has its origin and motive force in the executive suite and board.
However, the consequences are always applied to everyone but the executives and board.
- The post dot com winners? Ironic.
- > And whose fault is that?
Primarily the fault of our governments not using anti-trust laws for real in, like, decades.
Governments actually do have the power to regulate the economy and to prevent catastrophic crashes from occurring. The warning signs for the AI bubble have been visible for well over a year now, when the entity relationship map between the major players began to resemble a Habsburg family tree... and yet, nothing was done.
- [flagged]
- It isnt God - Sam went a little overboard with his pushing that.
AI still isnt just hype tho and remains the greatest digital tool ever made by people.
The reality remains that if you adopt AI into your workforce, not replace your workforce with AI, use AI to help with your work - you can do a lot more and faster too.
I just downloaded deepseek on my Win 11 PC - Copilot is obviously more integrated but its not that bad at all. Copilot is very limited in the boxes Microsoft built into it but it is a great tool for average people that only need to interact with AI occasionally to search the internet.
- There are two types of engineers/companies:
1. Clueless: AI is the future, grant it access to everything and let it do everything, from management to execution. These engineers will be unemployed and companies go bankrupt. This is the majority of the market right now, look what is happening to them from companies to the products themselves.
2. Smart: AI is a tool to improve my work so I can spend less time doing the boring stuff and more time learning and doing cool stuff. This is the minority and the only companies thriving right now.
- Wanna make a forecast I can hold you accountable to for 6 months out?
(Something concrete)
86 points by greatgib 3 hours ago | 32 comments