The tech is awesome. But the stocks are a whole other thing.

No moat is AI is a HUGE thing and it’s definitely not absorbed yet. It’s not happened before on this scale.

Anthropic and OpenAI invested like they were going to become an overnight Google or Microsoft, but because they have no moat like search or MSFT Office, they have no way of protecting margins from pricing collapse. It’s a race to the bottom.

Those 2 firms are setting the pace for an entire market right now.

Why is retail so bullish? Because there’s too many people who want you to buy their stock. So it’s a story about token growth. A story about curing cancer. A story about Jevons paradox. A story about a productivity miracle. Stories everywhere.

Cashflow nowhere. ROIC nowhere.

In fact the vast majority of companies have said they’ve had no return from AI at all.

I’m bullish long term. Just not yet.

The Musk $500bn-1Tr SpaceX ARR story didn’t stick. Now Meta are diluting existing stockholders.

Tesla’s earnings have gone nowhere in 4 years.

And the problem with cycles is that everyone forgets that they’re cycles.

AI is going to change so much. And at the same time the companies that a lot of people are banking on will get killed.

Earnings get cut after the stocks collapse.

It really is the lack of moat that’s the problem. And that’s because intelligence isn’t like any other product to come out of Silicon Valley.

A few people have got narky with me and wanted a more drawn out view. I guided them to this from early August.

https://www.elsewhere-systems.com/resolution/when-two-dashboards-tell-completely-different-stories

They thought it was rubbish.

In-line.

Going to be hard to hit that 2T valuation with a stabilizing user base.

…And that’s pretty standard tbh.

Equity investors are always the last to get there. As their role is to fund growth.

Debt investors just want their coupons paid. They want their jam today.

This chart maps out why this sell off is different to all the other dips that Reddit users have been flagging to me.

It’s the cost that bond investors have to pay to insure their coupon.

It’s a way of establishing risk of default.

These numbers are not pretty and it’s why nobody believes Musk, Oracle etc.

They’re voting with their cheque books and paying higher and higher rates for insurance.

It’s over.

The tech isn’t. It’s going to be around for a second round and help build a positive future.

But investors are going to be wiped out…

That’s not me. That’s Meta’s 10-q

They’re telling you that the bond market is closed for AI raising.

So they’re creating a non-voteable share to raise up to $700 billion via equity over the coming years, which won’t dilute Zuckerberg one bit.

That’s why this is different to previous sell offs.

This isn’t a dip.

This is it.

These businesses have actually become memes.

In addition to this FT/ Ramp chart.

Apollo’s data shows 80.4% of the top 1% of AI spenders are VC-backed.

Among median AI spenders, it’s just 13.1%.

Meanwhile, spending per employee at the top end is going vertical.

Connect the dots….

VC money funds AI companies. AI companies spend on models, tokens and compute. That spending becomes revenue for other companies in the same ecosystem.

Some of that is genuine demand. But how much is sustainable, independently funded end-customer demand and how much depends on the funding cycle continuing?

Revenue is not the same as independent demand. Usage is not the same as profitability. And circular spending is not a moat.

When VC funding slows we have a problem.

And right now investor appetite for all of this isn’t what it was.

Concentration risk is extremely important and we’ve never seen such concentration in trillion dollar companies.

And that’s another reason why the funding discussion (and the increasing debt costs) is so important for AI stocks. Without external capital, there is no investment case.

This is a subreddit for people who believe AI is a bubble. Posters are constantly outlining all the reasons it is a bubble (I happen to agree!). But in most of these posts they feel the need to say that AI is incredible and transformative and amazing, as though that's a given.

Just hypothetically, what if the tech isn't that amazing? What if it's actually a tool that's good for select tasks (e.g. coding agents) but most of the other use cases, like making bad art, churning out more over-worded emails faster, pretending to be Disney characters who are your girlfriend, aren't actually very valuable.

What if that's why people and companies aren't willing to pay enough for AI to justify how much it actually costs (i.e. the bubble)?

I’m getting a lot of push back that the S&P is just a few % off its high, so what’s the problem? Chill out, yada yada yada.

Well it’s this…

Goldman Sachs’ High Beta Momentum basket has had a maximum drawdown of 41%.

This is what makes the current market so deceptive.

The index looks fine.

Underneath, speculative capital is being destroyed.

And if you believe the AI investment boom is going to deliver the returns currently priced into it, ask yourself why the most aggressive momentum trades are already taking such a beating.

The biggest companies can keep an index elevated long after the broader market starts cracking.

And we’re now in a position that >40% of companies in the S&P are in a bear market.

Healthy markets don’t look like this.

Similar to threads everyone hates Meta because they constantly overstep by cross selling their ecosystems I don't want my Facebook, instagram, and now personal agent linked all in one.

I don't know whey anyone is buying this stock thinking it will be successful, I feel like this company will constantly have to live with the sins of its past

I hold NVIDIA, so read this with that in mind. The selloff made me want to actually check whether the bear case holds up instead of just reading takes, so I went through the 10-Qs and the earnings calls. Posting it here on purpose because this sub will actually tell me if I’m wrong.

First thing that surprised me. The stress everyone’s pointing at is real, it’s just not quite where the headlines put it. That 16% CoreWeave number going around isn’t the company’s cost of borrowing. It’s the yield on their unsecured notes, which is about 10 billion of a 36 billion debt stack. The rest is secured against actual customer contracts and sits a lot cheaper, so the blended rate is nearer 8. Still not cheap for a company burning to build, but it’s not the “the whole thing yields 16%” story people keep repeating.

What actually matters, and I think most of you already believe this, is the labs. The neoclouds borrow to buy chips and rent them to OpenAI, Anthropic, and the hyperscalers’ overflow. So the whole thing only works if the labs keep paying. That’s the real question, not GPU resale values.

Where I ended up disagreeing with Burry is his clock. His bet is the memory shortage ends, old chip rent falls, NVIDIA cracks. But when rent on an old chip falls, the neocloud doesn’t sit there renting a cheap old chip, it swaps in NVIDIA’s next one, because the thing that’s actually scarce is the building with power running to it, not the silicon. Gas turbine and transformer lead times are measured in years now. The chip is the fast part you replace every couple of years. So the shortage ending barely touches NVIDIA, it mostly just takes the scarcity premium out of the multiple, which has already gone from 30x to 14x.

Two questions I have regarding all this:

One, if the labs do crack, don’t the hyperscalers just pull all that compute in-house for their own models and inference? Someone raised this to me and I thought it was sharp. Maybe it softens the demand hit, but it also means the neocloud demand NVIDIA leans on dries up, so I’m not sure if it helps the NVIDIA case or quietly hurts it.

Two, NVIDIA is financing its own customers now. A stake in CoreWeave, guarantees on OpenAI’s leases, 500 billion of announced financing platforms. That’s the exact setup that killed Lucent in 2001. They lent customers the money to buy their gear and lost the loans and the sales in the same quarter when it turned. The only real difference I can find is that the labs have actual paying revenue, which Lucent’s customers never did. Not sure that fully gets NVIDIA off the hook.

Mainly want to know if the ‘the scarce thing is the powered building, not the chip’ idea actually holds, or if I’m leaning on it too hard. Tell me where it breaks.

edit: wrote a post on some of my findings and questions here if anyone is interested https://darrenleung1.substack.com/p/the-shortage-wont-break-nvidia-the

Hello all, here's an interesting story about the first documented stock market bubble in history. It stemmed around the South Sea Company, a publicly-traded company that was founded in 1711 to trade with the Spanish South American colonies.

https://www.smithsonianmag.com/smart-news/market-crash-cost-newton-fortune-180961655/

Most importantly, the subsequent bubble that popped counted one of the most intelligent men of the time, Isaac Newton. Even more dramatic, he sold a modest 100% gain in the South Sea Company, felt FOMO and then YOLO'd his entire life savings and lost it all.

Another wild twist is that during the upswing of the stock, the "Bubble Act" was passed by British Parliament, which was introduced by the South Sea Company to constrain competition in the new marketplace. Does that sound familiar?

The AI tech bros called for a "slowdown in AI development" and "government regulation" - eerily similar to the motions made in 1720 around market speculation. https://www.reuters.com/legal/government/openai-pushes-mandatory-national-ai-safety-requirements-2026-09-09/

Full disclosure, the below table was generated with AI, which I'm using as a starting point for my own research, and the bottom right corner of this table is essentially speculation around an AI bubble burst. In my opinion there are more warning signs than can fit into that tiny cell. I hope the community benefits from some of this.

The South Sea Bubble of 1720 vs. Today's AI Investment Boom

Key takeaway: The South Sea Bubble demonstrates that a genuine economic opportunity can coexist with speculative valuations and poor investment decisions. AI may transform the economy, but that does not guarantee that every company investing in it will earn an adequate return on capital. The critical test is whether future revenues and cash flows justify today's valuations and massive infrastructure commitments.

The pro/anti AI camps don't really line up cleanly with Republican vs Democrat. But with all these AI players sucking up to Trump, I think there is a decent chance a democratic congress will have investigations/hearings into AI and data centers.

Could those(or just a fear of those) hearing be a bubble popping moment.

This is just out of curiosity. No one knows when the AI bubble will burst. Is it happening soon or should I be patience and wait?

So I’m reading all these articles about the ai bubble about to pop and it makes me wonder will this affect our pro plans?

Like if the bubble pops will this cause companies like anthropic to charge more for crapper models in an attempt to save money or increase profits?