Tim Bray1/2 In which I cover a couple of the weird/scary aspects of the #genAI bubble and try to get a feel what the post-bubble hangover will feel like. Tl;dr: Not like the dot-com bust. https://www.tbray.org/ongoing/When/202x/2025/12/07/Thin-Spots-In-the-AI-Bubble
2/2 “I was going to post a link to Paul Krugman’s “Talking With Paul Kedrosky”. It’s great, but while I was reading it I thought “This is going to be Greek to people who haven’t been watching the bubble details.” So consider this a preface to the Krugman-Kedrosky piece. If you already know about the GPU-fragility and SPV-voodoo issues, just skip this and go read that. https://paulkrugman.substack.com/p/talking-with-paul-kedrosky
Matthew Reinbold@timbray Good stuff. Thanks for the write-up and sharing.
Andy Gocke@timbray I'm not clear on how you connect the SPVs to tech profits. Unless the SPVs are funded on-balance sheet, wouldn't you expect the equity investors in the SPVs to take the loss? Is the assumption that the equity trail somehow leads back to the hyperscalers? Or are you making a distinction between, say, Google and Oracle?
@agocke Not complicated I think? if AI fizzles and they still have to pay all those billions for data centers they're not using, that's gonna blow a big hole in their profitability. The question is whether there’s an escape hatch; if so, it’s as you say, the SPV investors eat the losses.
cliffordheath@cliffordheath @agocke Well, the Big Techs have what look like binding contracts to pay the SPVs, whether they're using the data centers or not. But, they’re complex, so who knows for sure.
Matt Panaro@timbray how do you think the current attitudes towards/awareness of this bubble compare to those during the lead-up to 2008? I feel like, this time around (not that it's actually helping anything 😝), a lot more people are aware of/raising alarms about being in a bubble; compared to back then? But I'm not sure. Maybe I'm also seeing more of it as a technology person, since it's (primarily) a technology bubble?
cchelberg