cmiles8

Reports indicate GPUs are increasingly being put on shelves in warehouses. There’s a scarcity of power and data centers to host them, but data increasingly suggests the world has an over supply of chips at the moment.

Like most “scarcity” scenarios things flip from under supply to massive oversupply real quick. Remember during COVID when lumber got stupidly expensive and then almost overnight folks couldn’t give wood away.

Correct. The people that control the pot of money these labs ultimately need to survive seem increasingly unconvinced that giving these labs money is a good idea. At least at the levels the labs need to not go bankrupt.

The market is a cold beast and doesn’t care. If things hit the fan it will happily take ownership Opus 5.5 in bankruptcy court and slit everything else out on the street.

The math doesn’t math here. There isn’t enough spent on online ads to dig them out of this hole.

Is that potential source of revenue? Maybe but folks are verbally very negative on AI ads.

Is that a viable business plan for Open AI? No.

There’s no business in tokens. Zero. The only business is selling compute and Anthropic rented all its compute.

Structurally they’re in a terrible position on what’s unfolding now with the completely collapse of model valuations. With truly “open” models gaining more and more momentum models are basically worth nothing and “token” prices are collapsing to the cost of compute. That doesn’t leave anything on the table for the Anthropic and Open AI’s of the world.

CFOs looking at tons of 2026 token spend but with no clear ROI have joined chat.

Is this a surprise?

By any sane normal sense of business and financials these AI labs look terrible on paper.

Any loan would be speculative at best, and the rating would simply reflect that.

Investing in these companies is like going wild at the casino. Sure you might make a fortune but strong odds are you’re gonna lose your shirt.

What happens? Then folks move on and build other businesses.

It’s been sort of funny to watch the tech industry realize that the main thing being disrupted by AI is tech itself.

As if France doesn’t need even more ways to regulate itself into global irrelevance.

Maybe focus on the riots in the streets and sort that out vs wasting energy on nonsense like this. Just saying.

We still need all the grid enhancements, just not for the data centers communities don’t want.

In many places if people charge their car and run the AC on a hot day the grid struggles. So the grid investment won’t go unused if AI implodes.

The “R&D” isn’t convincing folks anymore hence the drop.

Also, it’s mostly not R&D either. It’s infrastructure buildout for a thing that doesn’t have a demonstrated business case that actually pays for all the infrastructure.

There remains a scary small amount of truly new money coming into this circular flow between VCs, chip makers, startups, datacenters and such. At some point there needs to be a $hit ton of new cash coming in from the outside to actually pay for all this and that’s not materializing.

The market is going to react badly to even the slightest hint of a slowdown on AI. The whole AI space is so heavily leveraged up with debt and VC cash at the moment that even a slight slowdown will cause the whole thing to collapse in a financial $hitstorm the likes of which we’ve not seen in a while.

Theres “big bets” and then there’s heavily leveraged bet the farm with leveraged debt. The first one hurts when it pops. The second one wipes people out.

It seem very unlikely AI will get a bailout. Politicians don’t want to touch that with a 100 ft pole. This is very different than 2008 in that regard.

This is going to be a “let it burn” scenario that will be absorbed by VCs and private credit markets.

Remember too though that even if a bailout does occur investors typically get wiped out. The companies live on but the investors and employee equity typically get reset to zero.

There is a use for older GPUs, but the chips do have reliability issues. Turns out running chips hard 24/7 causes them to burn out. So it’s less will they be “useful” a while from now but more will they still work.

Folks are leaning it’s like these LED light bulbs that say they’ll last 15 years but after 2 years they start flaking out at a high rate.

Separately, the broader point is still directionally correct. We’re still using fiber from the .com network infra implosion today and will for a long time. The deprecation cycle is incredibly long. The increasing reports of GPUs sitting on shelves because there aren’t data center to power them is very concerning considering all the high interest debt being used to buy what is ultimately a rapidly depreciating asset. Financially, that’s a disaster waiting to happen.

It’s a not very well kept secret that many of these pages for less-than-notable people were created by the person themselves or their “publicist.”