Ok im just gonna spam my 6am thoughts who cares. Yeah AI is real and it's not going anywhere. Demand for compute is exploding. Yes. But here's the obvious problem. Nobody has demonstrated that AI can generate enough profit to justify the absolutely outrageous amount of money being thrown at the infrastructure build out. FOR EXAMPLE. Meta just blew through $35 billion on capex in ONE F QUARTER and ended up with negative $2 ish billion in free cash flow. Maybe it wasnt all on AI cant remember but that's still Meta, with its money printing instagram reeling ad business. So now i have to think about what the f happens to stuff like neoclouds (aka debtfarms) that dont have this kind of biz to fall back on? WELL these debtfarms like Coreweave, Iren and Nebius BORROW billions to buy GPUs, build data centres and rent out compute, all while praying to the reverend baby billy that the revenue eventually catches up. But will those contracts actually generate decent returns after interest payments and depreciation and the next inevitable round of GPU upgrades from daddy jenson and mama su? Fuck knows but I do know that revenue means sweet fuck all if the cost of generating it eats your shareholders alive. Yesterday even Elon was predicting mass guppy as in the fish? death and consolidation among the neoclouds. And my thinking is that its basically the dot com infrastructure boom all over again. The internet changed the world. Sure. Yes. But that didn't stop a rocket lab load of telecom investors getting wiped tf out. So seems like there's a paradox. These neocloud debtfarms don't even need to go bankrupt to destroy shareholder value. Even if they survive they could dilute shareholders into oblivion. Some could collapse. (In which case even if infrastructure doesnt disappear it would be acquired at pennies on the dollA..and none of that would help you as chief bagholder.) So AI will transform the world while also probably destroying hundreds of billions in investor capital in lots of places like neoclouds. So basically it's a bubble and it's not a bubble. The tech is realand the demand is real. But the investment economics are still complete dogshit at this time. So ill prob buy more neocloud puts. TLDR: AI might change the f world but that doesn't mean the bagholders who paid for the GPUs are getting rich.
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