Fund Managers Warn AI Investment Boom Has Gone Too Far (ft.com) 18
A majority of global fund managers think companies are overinvesting, as market anxiety grows about the sustainability of the AI spending boom. From a report: A net 20 per cent of fund managers surveyed this month by Bank of America said companies were spending too much on their investments -- the first time this has been a majority view in data running back to 2005. "This jump is driven by concerns over the magnitude and financing of the AI capex boom," said BofA analysts.
The surge in investment to develop AI infrastructure has been a dominant theme in the record rally in US tech stocks this year -- with chipmaker Nvidia becoming the world's first $5tn company last month -- but growing concerns about the sustainability of this spending has caused a pullback on Wall Street in recent weeks.
The surge in investment to develop AI infrastructure has been a dominant theme in the record rally in US tech stocks this year -- with chipmaker Nvidia becoming the world's first $5tn company last month -- but growing concerns about the sustainability of this spending has caused a pullback on Wall Street in recent weeks.
Duh... (Score:2)
Good to see that the "professionals" are looking up from their greedy profits and starting to realize that the Jenga tower is tottering.
Re:Duh... (Score:5, Insightful)
They went from buying low to selling high and are now shorting the stocks.
They're winning either way.
Re: (Score:1)
They're winning either way.
Vegas rules, the house always wins. The taxpayers will bail them out when all else fails. This is standard operating procedure.
Re: Duh... (Score:1)
Did taxes pay for 2008 and 2020 Fed bailouts?
Re: Duh... (Score:1)
What if COLAs became politically popular with people like you? Are you afraid of hurting Volcker's feelings?
Remember how inflation was not a problem for 12 years after 2008, despite mainstream economic predictions?
If inflation is noise, why not use indexation to desl with it? Are you afraid of hurting mainstream economists' feelings?
Re: Duh... (Score:2)
Oh look. a bliking red light on the dash.. (Score:3)
These "experts" are going to do, upon seeing all the warning lights that are starting to light up, what every goddamned moron that has a car, and doesn't understand cars will do when faced with a lit Christmas tree, some of it blinking:
Derrrrrr... look, a blinking red light on the dash.. should I stop? Eh, it's probably nothing important.
-- some time later --
*BANG* Motherfucker, I just lost the engine... why? WHY DO YOU DO THIS TO ME?!
Because the Experts are as stupid as the average "motorist." They will ignore the signs and run the bitch ragged, then sell it and move on.
Now.. if this time the investors *listen* and dont' fall for the AI hype, maybe the trouble will be averted. But, there is rare evidence of there being prior acts of common sense, so.. I expect this too will be a huge bubble that pops and takes down many with it.
I, for one, am too old to welcome our new AI overlords and their attendant economic crash, now with added social upheaval. This one will likely take me down. The others (2008, etc etc) have nearly always indirectly or directly wiped me out, and i'm getting tired of it.
One can start from near zero only so many times.
Different image (Score:2)
Re: (Score:2)
Re: (Score:2)
but but but... this time it is different!
But are still investing heavily in said bubble. (Score:5, Interesting)
From the Same BoA Global Fund Manager Survey
"Average cash level dropped to 3.7% of holdings. Cash levels of 3.7% or lower has occurred 20 times since 2002 and on very occasion stocks fell and Treasuries out-performed for the following 1-3 months" Past performance, not a guarantee, etc etc
My takeaway is that it seems like everyone is saying the same thing. AI bubble. The CEO's of the firms involved, press, government, retail investors, now global fund investors. Yet investment managers still have to be deeply invested in this bubble to compete with the returns of the other managers...to get your fat Xmas bonus, etc.
Two cars racing to a finish live, but with a cliff soon after the line. Neither is slowing, indeed peddle to the metal, assuming the other guy will chicken out first and that they will be able to hit the brakes just in the nick of time to avoid going over the cliff.
Pretty sure both are going over
Re: But are still investing heavily in said bubble (Score:1)
So when one of them goes off the cliff do they take all the spectators with them? Or does the Fed act as a value buyer and put a safety net under the cliff edge?
Re: (Score:2)
My takeaway is that it seems like everyone is saying the same thing. AI bubble. The CEO's of the firms involved, press, government, retail investors, now global fund investors. Yet investment managers still have to be deeply invested in this bubble to compete with the returns of the other managers...to get your fat Xmas bonus, etc.
"The market can stay irrational long than you can stay solvent."
Fund managers with more than 10 years of experience knew that trying to short the market during a bubble is just as likely to bankrupt you as to make you rich. The most difficult part of a bubble is no one has yet found a way to predict with any confidence when it will burst.
For fund managers whose bonus is tied to how they compare to "the market" (i.e. everyone else), the safest path during a bubble is to dive into bubble like everyone else.
Congratulations.....you can math now (Score:4, Insightful)
However, you'd have to have almost every working aged man and woman in the USA AND Europe to be paying for AI tools for these companies to get back their investments AND turn a profit. And for that to happen, every working aged man and woman would need to get a lot of value out of it - and that's assuming that that kind of scale doesn't cause the losses to become even larger, as from what I have read, the scaling issues associated with LLMs are currently at a place where the only way to turn a profit would be to *massively* increase prices on the current paying user base, (and possibly, dump all of the freeloaders).
And that could mean power users paying upwards of $1000/month for their LLM usage, and that would mean that a significant portion of their jobs would have to be doable with AI for there to be much savings. Enterprise users are essentially a different type of Power User - Just Much Fucking Larger. So, Enterprise customers will be paying millions a year, and that requires some Seriously Fine ROI.
The math isn't mathing.
Re: Congratulations.....you can math now (Score:1)
According to Reagan should your taxes be much higher right now to pay off the debt he ran up? Why aren't they? Is your story totally unrelated to how insurance and forgiveness and can-kicking work in the actual world?
Rich people... (Score:2)
Bursting at the seams (Score:2)
Bursting of the AI bubble can't come soon enough. Far too much tech bro nonsense, DRAM / GPU prices way too damn high while unhealthy levels of collateral damage accumulate.
There is too much value in the ability of corporations to custom train models on internal datasets for the whole world revolves around our centralized AI service thing these AI corporations are dreaming about to have ever worked.
To make matters worse generative AI space is stagnating. Going forward cost of local inference is declining a