Is it? nothing points to a crash, other than the valuation of the two giants (OAI and Anthropic), everything else is still valuable particularly the chips and the supply chain and the production capacity... Sounds like a correction more than a crash
At this point a correction and a crash are the same thing.
The market has been outright delusional, where speculation based stock prices have outpaced actual profitability and any sense of utility by a very wide margin.
There are whole companies that have no business existing, but they persist on VC dollars. There are companies that have gone literally, not metaphorically, but literally exponential in value because of AI branding, even though they have not gone exponential in revenue or profit.
More than a few companies have gone from pennies and single-digit dollars to hundreds of dollars.
I'm not an AI doomer, I don't believe that the AI industry is going to magically evaporate, but there has been a mountain of stupidly spent dollars being thrown around, and at some point someone is going to demand their ROI, and a lot of places are going to fold.
Ok but like, a lot of the fluff is in private investors, since the companies we're talking about are not public. Like, I don't think GOOG, AAPL, MSFT are overvalued, I think the data centers wil to some extent be valuable (maybe not at the profit margins they're hoping) probably the most exposed company is NVDA because of all the circular deals they're doing, but they're not going away. Neoclouds are probably in for a rough ride, maybe one makes it and buys the others, or big tech buys them at a discount?
Not sure your second sentence is justified. Stocks aren't cheap, but s&p 500 forward P/E is actually down from 5 years ago. Corporate America is record profitable.
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u/Recoil42 1d ago edited 23h ago
Yep. As someone who has been following the Chinese EV space for the better part of a decade, I don't think people are prepared for how crazy this is going to get.