Net buying of corporate equities by American households, trusts, funds and non-profits has averaged $660bn per year for the last few years [1]. $200bn is not fundamentally a stretch for the American equity markets, let alone capital markets more broadly.
The faster your cash loses value, the stronger your incentive to trade it for something else. That something else can be financial assets.
> It's not got loads to do with large-scale, institutional investments
For investors, particularly retail investors, the consumer price index is most relevant. But for whatever it's worth, producer prices are up over 16% in April (7% excluding "foods, energy, and trade services," which jumped over 50% annualized) [1].
To be clear, I'm floating a hypothesis here. I have seen no evidence linking inflation to demand for these companies' shares. (If anything, it should be the inverse.)
That depends. Inflation is a measure of the cost of living in terms of currency. It can be high either if goods and services required for living become scarce, or if currency supply increases. Currency supply increasing does affect asset prices.
> the crash (that we all know is coming) will do that. Until then, history teaches that we'll just keep going up and up
Stock prices don't have to crash. They can just stagnate while profits catch up and multiples compress.
Debt binges, on the other hand, tend to go bust with a bang. But after the recent private-credit scare, the AI build-out has been predominantly financed with stock. (I think.)
Hasn't there been a _lot_ of debt to buy up Nvidia GPUs? I follow this stuff somewhat closely and it feels intentionally confusing, so I've likely lost track.
> Equity bubbles don't have to crash. Prices can just stagnate while profits catch up and multiples compress.
Is there is historical evidence for that? As someone who used to follow Jeremy Grantham a lot (he considered himself a "bubble historian"), IIRC every bubble he studied always mean reverted, and it usually (maybe always, can't remember) overshot on the downside during the correction.
> IIRC every bubble he studied always mean reverted
This really depends on how we're defining these things. Let's call a stock-market bubble a period of elevated multiples. That can mean revert by prices decreasing while earnings stay constant or by prices staying constant and earnings rising. (Alternatively, both earnings and multiples can rise and fall.)
So they're not just racing to gain dominance in AI, they're also racing to IPO before the music stops?
IPOing and getting a bunch of cash, even if your stock subsequently suffers in the crash, is a lot better than being unable to get that capital infusion before the house of cards collapses.
I don't think OpenAI or Anthropic are predicting that the AI market is going to collapse. In fact, I think both are bullish that the public still isn't pricing in exponential growth.
I think what is happening is that OpenAI is racing to IPO before Anthropic because their growth isn't as impressive. If you are the weaker company, you should IPO first to lock up the cash.
I can’t imagine them actually being bullish about exponential growth, when both seem instead to be stagnating. I’m more inclined to believe they’re just maintaining a level of hype in public because that’s what you do.
> Perhaps they’re afraid announcement would trigger divestment
S&P don't get a choice around whether they announce their methodology or not.
That said, the rule change at the NASDAQ 100 doesn't seem to have impacted pricing or allocation. I can't imagine that many people are that concerned about this. (I posted the public-comment request from S&P to HN [1]. The response was crickets.)
It's worse for the new investors. (If it crashes.) It's great for the old investors. They got an opportunity to sell if they wanted. If they didn't, they still own their shares, except in a company that has that IPO cash sitting in its account.
People keep predicting "house of cards" and keep being wrong. AI bubble was supposed to burst as far back as 2023. When was the last time since 2009 there was a $500+ billion tech valuation that lost 90% or more? After a certain point , 100% market penetration is achieved and these products become mainstream and profitability follows. See Uber and Tesla for examples.
> people always think everything is fine ... until it isn't
History is also replete with people constantly predicting collapses that don't come. Timing the market is very hard with numbers, it's total nonsense if one is just going off vibes.
Can the stock market remain legitimate after such a brazen example of dumping? Regular everyday people can’t access private shares and participate in upside even if they want to. They don’t have the connections like VCs, and aren’t accredited investors. And companies ban secondary transactions, which should be forced by law to be always allowed.
And then after all that, the public have to deal with their index funds, ETFs, mutual funds, pensions, 401ks, etc buying up these overpriced stocks. You have a space company that also acquired a failing social media platform and failing AI company with little revenue justification for the valuation, and a lot of other obligations that make it financially a disaster (like payments owed for spectrum). And two frontier labs with no real moats, each looking for regulatory capture based on safety or ethics or whatever.
To the everyday person, the stock market after the fast listing rule, these three IPOs, and AI job loss, will feel no more legitimate than prediction markets or crypto.
> then they have to deal with their index funds, ETFs, mutual funds, pensions, 401ks, etc buying up overpriced stocks
Only about a third of American stocks are held by passive capital [1]. Out of that, index funds are about 16%, and most of those in America reference the S&P 500, which has not yet announced whether it is changing its rules.
Why wouldn't it? There huge demand for these shares. It's not like $3+ trillion is dumped at once. It's a tiny percentage of it, and the high multiple does the rest of the work.
So what people seem to be unaware of or are purposely ignoring is that OpenAI and Anthropic have invested trillions in a rapdily depreciating asset. There was a HN post from a day or two ago where someone bought a V100 for 150 pounds and connected it to their computer. Well that was a $10k GPU in 2017. That's the fate of H100/B100 GPUs in 5-10 years (and I suspect closer to 5). What do you do if you've invested $1 trillion that will be worth $100 billion or less in 5 years? I think it'll be worse than that because modern hardware at that time will still probably be the same Wattage but have much higher performance so you'll be getting much higher performance-per-Watt and that's going to really matter.
The only company I'm confident will survive this hardware crunch and still be relatively successful in this space is Google.
OpenAI in particular is a bet that there will be an AI moat and that OpenAI will "win". I don't think there will be a moat and China is a big reason why (eg DeepSeek).
SpaceX is a little different. Yes, launching rockets is a business but it's not a trillion dollar business. 100 Falcon 9 launches doesn't even break $10 billion in revenue. Plus, Starship faces cost overruns, delays and significant headwinds.
But the real kicker is that SpaceX was used to bail out Elon from the Twitter purchase and the xAI investors from the first Twitter bailout. That's a problem because xAI is burning $1 billion a month in a company where that really matters and I don't think Grok will "win" here. Like, at all. SpaceX would be a significantly more attractive company without xAI.
The big potential growth area is Starlink. For that to justify this valuation I think you need handheld Starlink phones. That requires a lot of satellites at a relatively low orbit, which also means they have a relatively short life (because they burn up in the atmosphere). And for that Starship must succeed.
All the AI data center in space stuff is complete bullshit. It makes no sense. It'll never be viable. It's not going to happen.
"OpenAI and Anthropic have invested trillions in a rapdily depreciating asset".
Anthropic raised a bit over 100B and has 47B ARR. Where are you getting trillions from ?
Flagged from the front page for defeatism. Like in the Soviet Union.
Every time an article is AI critical or attracts too many AI skeptical comments, it is flagged. Is this process automated with openclaw by now?
Net buying of corporate equities by American households, trusts, funds and non-profits has averaged $660bn per year for the last few years [1]. $200bn is not fundamentally a stretch for the American equity markets, let alone capital markets more broadly.
[1] https://www.federalreserve.gov/releases/z1/20260319/html/f22... line 26, 2023 to 2025
The way I've been thinking about it: there is too much money trying to pour into the market. That's why valuations are so high.
Maybe getting more of these big private companies public will bring valuations down a bit.
(Just my impression. No math or financial studies behind it :)
> there is too much money trying to pour into the market
Keep in mind that inflation ran over 7% annualized in April [1].
[1] https://www.bls.gov/news.release/cpi.nr0.htm
Inflation is a measure of the cost of living. It's not got loads to do with large-scale, institutional investments.
> Inflation is a measure of the cost of living
The faster your cash loses value, the stronger your incentive to trade it for something else. That something else can be financial assets.
> It's not got loads to do with large-scale, institutional investments
For investors, particularly retail investors, the consumer price index is most relevant. But for whatever it's worth, producer prices are up over 16% in April (7% excluding "foods, energy, and trade services," which jumped over 50% annualized) [1].
To be clear, I'm floating a hypothesis here. I have seen no evidence linking inflation to demand for these companies' shares. (If anything, it should be the inverse.)
[1] https://www.bls.gov/news.release/ppi.nr0.htm
That depends. Inflation is a measure of the cost of living in terms of currency. It can be high either if goods and services required for living become scarce, or if currency supply increases. Currency supply increasing does affect asset prices.
Inflation then is already higher. Cost of living is driven mostly by rent
No, the crash (that we all know is coming) will do that. Until then, history teaches that we'll just keep going up and up
This is one of those "everyone who dies, breaths air" statements.
It's frustrating people who parrot it think they're smart by saying it to others with no basis and finally when it does happen they're like SEE SEE!?
> Until then, history teaches that we'll just keep going up and up
And this is the more important part. As long as you're <40 you SHOULD always buy SPY or VOO, even at the very top.
People have been saying the crash has been coming since 2022. If you believed this and acted on it, you would've missed 3-4 +10%/yr returns.
As Buffet has said: You can't time the market, be in it.
> the crash (that we all know is coming) will do that. Until then, history teaches that we'll just keep going up and up
Stock prices don't have to crash. They can just stagnate while profits catch up and multiples compress.
Debt binges, on the other hand, tend to go bust with a bang. But after the recent private-credit scare, the AI build-out has been predominantly financed with stock. (I think.)
Hasn't there been a _lot_ of debt to buy up Nvidia GPUs? I follow this stuff somewhat closely and it feels intentionally confusing, so I've likely lost track.
> Equity bubbles don't have to crash. Prices can just stagnate while profits catch up and multiples compress.
Is there is historical evidence for that? As someone who used to follow Jeremy Grantham a lot (he considered himself a "bubble historian"), IIRC every bubble he studied always mean reverted, and it usually (maybe always, can't remember) overshot on the downside during the correction.
> IIRC every bubble he studied always mean reverted
This really depends on how we're defining these things. Let's call a stock-market bubble a period of elevated multiples. That can mean revert by prices decreasing while earnings stay constant or by prices staying constant and earnings rising. (Alternatively, both earnings and multiples can rise and fall.)
So they're not just racing to gain dominance in AI, they're also racing to IPO before the music stops?
IPOing and getting a bunch of cash, even if your stock subsequently suffers in the crash, is a lot better than being unable to get that capital infusion before the house of cards collapses.
I don't think OpenAI or Anthropic are predicting that the AI market is going to collapse. In fact, I think both are bullish that the public still isn't pricing in exponential growth.
I think what is happening is that OpenAI is racing to IPO before Anthropic because their growth isn't as impressive. If you are the weaker company, you should IPO first to lock up the cash.
I can’t imagine them actually being bullish about exponential growth, when both seem instead to be stagnating. I’m more inclined to believe they’re just maintaining a level of hype in public because that’s what you do.
> when both seem instead to be stagnating
What's the evidence for Anthropic stagnating?
What are they offering the public (not me and you writing code in our free time)?
They are offering the public an opportunity to become shareholders and they are giving their investors and employees liquidity.
I mean as a long-term product, not as a offer to join a hype cycle.
Automating white collar work, accelerating scientific discoveries, brain for robotics, etc.
The only reason I can think of for the accelerated S&P 500 inclusion of SpaceX is a pump and dump
> the accelerated S&P 500 inclusion of SpaceX
To be clear, S&P hasn't announced a decision on this yet.
Perhaps they’re afraid announcement would trigger divestment
> Perhaps they’re afraid announcement would trigger divestment
S&P don't get a choice around whether they announce their methodology or not.
That said, the rule change at the NASDAQ 100 doesn't seem to have impacted pricing or allocation. I can't imagine that many people are that concerned about this. (I posted the public-comment request from S&P to HN [1]. The response was crickets.)
[1] https://news.ycombinator.com/item?id=48054324
Better for whom?
The company. Worse for the investors. It's a classic bagholder play, but it can give the companies a comfortable runway post IPO.
Typically, you IPO when your private funding is drying up and/or some of your early lenders want to cash out.
> The company. Worse for the investors
It's worse for the new investors. (If it crashes.) It's great for the old investors. They got an opportunity to sell if they wanted. If they didn't, they still own their shares, except in a company that has that IPO cash sitting in its account.
Yes, correct. Although, even for some company folks, if it crashes, they get burned since they typically have blackouts post IPO.
Of course, some special souls are excluded from blackouts lol.
> if it crashes, they get burned since they typically have blackouts post IPO
In the alternate timeline they would have held shares in a private company. They're still not really getting burned other than getting a tax bill.
People keep predicting "house of cards" and keep being wrong. AI bubble was supposed to burst as far back as 2023. When was the last time since 2009 there was a $500+ billion tech valuation that lost 90% or more? After a certain point , 100% market penetration is achieved and these products become mainstream and profitability follows. See Uber and Tesla for examples.
Read history: people always think everything is fine ... until it isn't.
This is one of those arguments that is so vacuous you can apply it to anything and always be right.
> "There's no way you'll hurt yourself walking to the living room"
> "Read history: people always think everything is fine ... until it isn't."
Nasdaq is 5.4x higher now than peak dotcom.
So just buy the dip if it actually crashes.
> people always think everything is fine ... until it isn't
History is also replete with people constantly predicting collapses that don't come. Timing the market is very hard with numbers, it's total nonsense if one is just going off vibes.
Can the stock market remain legitimate after such a brazen example of dumping? Regular everyday people can’t access private shares and participate in upside even if they want to. They don’t have the connections like VCs, and aren’t accredited investors. And companies ban secondary transactions, which should be forced by law to be always allowed.
And then after all that, the public have to deal with their index funds, ETFs, mutual funds, pensions, 401ks, etc buying up these overpriced stocks. You have a space company that also acquired a failing social media platform and failing AI company with little revenue justification for the valuation, and a lot of other obligations that make it financially a disaster (like payments owed for spectrum). And two frontier labs with no real moats, each looking for regulatory capture based on safety or ethics or whatever.
To the everyday person, the stock market after the fast listing rule, these three IPOs, and AI job loss, will feel no more legitimate than prediction markets or crypto.
> then they have to deal with their index funds, ETFs, mutual funds, pensions, 401ks, etc buying up overpriced stocks
Only about a third of American stocks are held by passive capital [1]. Out of that, index funds are about 16%, and most of those in America reference the S&P 500, which has not yet announced whether it is changing its rules.
[1] https://alexchinco.com/double-what-you-think-it-is.pdf
Why wouldn't it? There huge demand for these shares. It's not like $3+ trillion is dumped at once. It's a tiny percentage of it, and the high multiple does the rest of the work.
There was a huge demand for the World Online IPO in The Netherlands in the late 2000 bubble. Retail investors bought it thinking they got a unicorn.
Turns out it was a scam and shares fell on the first day. Soon after the entire bubble burst.
That said, I don't even see "huge demand" for the AI triocorns right now. Unlike in 2000, most people are skeptical.
Meanwhile, Anthropic is adding ~$10-$15b ARR every month.
I personally think there is massive demand. I think Anthropic will easily eclipse $2 trillion marketcap on first day of trading.What a headline
So, The Economist's paywall is unbypassable?
Download the Bypass Paywalls Clean browser extension.
https://en.wikipedia.org/wiki/Bypass_Paywalls_Clean
The project has been going on for years, it moved to gitflic after being banned from github and gitlab.
So what people seem to be unaware of or are purposely ignoring is that OpenAI and Anthropic have invested trillions in a rapdily depreciating asset. There was a HN post from a day or two ago where someone bought a V100 for 150 pounds and connected it to their computer. Well that was a $10k GPU in 2017. That's the fate of H100/B100 GPUs in 5-10 years (and I suspect closer to 5). What do you do if you've invested $1 trillion that will be worth $100 billion or less in 5 years? I think it'll be worse than that because modern hardware at that time will still probably be the same Wattage but have much higher performance so you'll be getting much higher performance-per-Watt and that's going to really matter.
The only company I'm confident will survive this hardware crunch and still be relatively successful in this space is Google.
OpenAI in particular is a bet that there will be an AI moat and that OpenAI will "win". I don't think there will be a moat and China is a big reason why (eg DeepSeek).
SpaceX is a little different. Yes, launching rockets is a business but it's not a trillion dollar business. 100 Falcon 9 launches doesn't even break $10 billion in revenue. Plus, Starship faces cost overruns, delays and significant headwinds.
But the real kicker is that SpaceX was used to bail out Elon from the Twitter purchase and the xAI investors from the first Twitter bailout. That's a problem because xAI is burning $1 billion a month in a company where that really matters and I don't think Grok will "win" here. Like, at all. SpaceX would be a significantly more attractive company without xAI.
The big potential growth area is Starlink. For that to justify this valuation I think you need handheld Starlink phones. That requires a lot of satellites at a relatively low orbit, which also means they have a relatively short life (because they burn up in the atmosphere). And for that Starship must succeed.
All the AI data center in space stuff is complete bullshit. It makes no sense. It'll never be viable. It's not going to happen.
> What do you do if you've invested $1 trillion that will be worth $100 billion or less in 5 years?
I think the aim would be to generate at least $900bn of cash flow from those assets.
"OpenAI and Anthropic have invested trillions in a rapdily depreciating asset". Anthropic raised a bit over 100B and has 47B ARR. Where are you getting trillions from ?
Source on the trillions invested?