They have unlimited resources and can keep this floating longer than any of us can imagine.
No they can’t do it forever. Exponentially growing demands outrun everything eventually. The onl, way out of this are either controlled deflation of the bubble or a hard crash. The former is possible but unlikely.
“Markets can remain irrational longer than you can remain solvent.” - John Maynard Keynes
But fact of the matter is that the people who run the market are the ones that decide who wins and loses. And they never lose.
Softbank doesn’t.
With the VC money faucet being cut off, there is no way OpenAI or Anthropic will be able to cover their debt repayments that start in 2027. The media is failing at basic math at this point.
They’ve been failing at literally every step in AI coverage, especially at just parroting whatever the fuck anthropic and openai claim to be their newest breakthrough without questioning anything. Failing basic math is just icing on the cake.
Like the article says, their internal risk management models are telling them to get the risk off their books.
Taking on the debt in the first place is like agreeing to store a gallon of milk in a fridge for an undetermined amount of time. The milk is going to go bad, and when it does the jug (or bag) might explode forcing a cleanout of the fridge, throwing out other things in the fridge, and maybe replacing the fridge altogether if the milk leaked down into a lot of crevices. Everyone knows the milk will go bad, but the big banks will know how old the fridge is, what coolant it uses, how old the compressor is, how many times a day the fridge has been opened, the average time it stays open, the dairy the cow who produced the milk, and the name of the cow if they can get it. The milk is going bad quicker than expected, and they’re finding out they don’t want to be the ones to guess when the jug will explode, and they’re also finding out that nobody else wants to buy the jug.
Oracle pulling a “god did it” was probably a part of this, but nobody involved is going to give a real answer.
Uh brother! (or sister on non binary sibling).
You just sell the entire fridge as a sub prime fridge and watch the number go up.
We could put a lot of nicer groceries up front and hope nobody looks deeper!
But then what happens if someone notices we’re selling a lot of fridges? They could buy insurance on the price of our fridges (options), and that wouldn’t be good because we know the price is going down, that’s why we’re selling them (duh). So we’ll have to sneak all these things out the door and hope nobody looks or notices until we’ve got them all sold.
I guess that’s kind of a rough metaphor, but that stuff all still goes on. The math that tells you when to sell the fridge is where all the real value is.
My youtube algorthim is filled with AI-skeptics (Eli the Computer guy, Ed Zitron, Prof G Markets) so this has been the slowest car crash I’ve ever gotten to watch happen. If Donald had actually focused on inflation all of these debt-sensitive AI plays could’ve continued to whistle through the graveyard. The skeptics have called out coreweave as being potentially the first domino to topple and their 6 year debt is trading at 15% right now. Thanks to plummeting token costs, they need to double their token sales every 90 days.
AI bubble is light speed car crash compared to the climate crisis.
Stop using YouTube. The algorithm is not good for your mental health, nor to learn anything of substance.
The algorithm is dog ass. YouTube is still full of plenty smart people with something to say, though. It’s a video sharing platform; that doesn’t inherently mean every content creator who uses it is also dog ass.
Probably related to the now three Oracle data center that can’t get electricity.
Wisconsin passed a law that fast tracking large projects requires a high credit rating or collateral, to pay secure costs for building the power plants needed for the data center. In July Oracle’s debt rating was downgraded to near junk levels.
That means Oracle can no longer get Wisconsin to supply power to the data center so it’s a $15 billion dollar paper weight. Thats putting even further downward pressure on their credit rating and ability to secure loans to meet their $500B in obligations.
Now Oracle’s New Mexico data center is stuck due to contract issues with water and gas turbines, so they can’t move foreward. Oracle has a 9% interest rate on the loans to build that, then they raise 2% after construction, because their credit rating is dogshit. So now Oracle is claiming force majeur to get out of their increased debt obligations, which you can imagine, is killing interest in lending to them.
In Texas they just blocked new grid hookups over political backlash to skyrocketing electricity prices. That killed another Oracle expansion they just canceled, and another one is trucking in gas for gas turbines as an alternative to the electrical grid, which you might imagine is expensive.
Which brings us to now. The banks are looking at local opposition blocking these projects (local action is working), states are blocking them to avoid getting voted out, hardware costs are shooting up, and the assets backing these loans are too small for so much investment.
So the level of risk no longer works.
—
My personal theory is that Oracle is a sacrificial lamb. It’s a dead end tech company that lives on licensing fees, and they’ve fucked themselves on these expansions. They’re failing at being a hyper-scaler as margins decrease.
I bet we see someone take Oracle private when their stock collapses, freeing the board of fiduciary duty to the stakeholders with a payout. This move is critical because it blocks other hyperscalers from putting in an offer to acquire their assets to shore up debt.
OpenAI will acquire the now private Oracle through a special funding round and buy up their hardware for pennies on the dollar. This will absolve them of the debt obligations Oracle has to OpenAI that have killed their credit ($500b), and stabilizes the Oracle balance sheet.
OpenAI will write this down and offer Oracle’s creditors equity stakes in lieu of cash, and will have acquired all their next gen hardware far cheaper than their competitors.
This might even fuck over Nvidia, the incestuous funders of the AI circlejerk. If Oracle gets to write off their GPU debts then Nvidia loses a fuck ton of sales, tanking their stock price — they take that OpenAI equity offer and look like they’re playing the game. OpenAI wants to build their own chips anyways, just look at jalapeño.
Oracle can no longer get Wisconsin to supply power to the data center so it’s a $15 billion dollar paper weight.
Fucking lol
It’s even better because they signed contracts that guarantee that capacity to OpenAI, guarantee payments to their creditors, and Oracle is on the hook for it all with no outs.
Which is why I think it’s all a play, oracle famously is very lawyer heavy, they wouldn’t sign such stupid deals for no reason.
they wouldn’t sign such stupid deals for no reason.
Greed. The reason was greed. They bought into the hype and thought they could print money.
And all the tech companies are doing it, Oracle was just the sick man of the bunch, and will be the first to fall, dragging the rest down with them.
All because they’re offloading trillions in debt to special purpose vehicles, the same thing that tanked Enron, the difference is that Enron, with $400 million in debt, was lying about it, and the current tech companies doing the exact same shit, are disclosing the debt legally, but still hiding it in the fine print of their disclosures.
The debt will still crash the economy, but at least it’s out in the open?
Also Larry is not nearly as sharp or thorough as he used to be, and he’s turned into a bit of a crumugeonly headstrong dick in his old age. No 82 year old is as sharp as they ised to be, despite how people like to lie about it. No 70 year old feels 40 anymore either. He has made numerous mistakes inside Oracle, and now he has run the whole company straight off a cliff, as aging boomers will tend to do.
isn’t he also personally on-the-hook for debt used in recent ‘media ventures’, too?
Getting AI FOMO and mortgaging your entire company’s future for it. smh
And tanking the entire economy is the process.
Also, Larry Ellison (who can fuck right off) has leaned on his Oracle stock to fiance the buyout of all the media companies he’s gobbling up to build yet another right wing propaganda ecosystem.
I don’t think it says anything about specific data center risks: capitalizing loans is standard operating procedure for these banks. It gets the loans off their account books, so they don’t have to hold capital to balance the risk, but they still get to collect management fees on the loans, regardless of whether they default. The big stories back in the 00s were residential real estate loans, but they do the same thing for commercial and industrial property.
Isn’t fact they are having a hard time offloading that debt an indication that other investors are shying away from it because they see the data centre risk?
Well now, that looks familiar. Rats leaving a sinking ship.
It’s about time for the ultra-wealthy to create another 2007 so they can wrench the last bits of wealth off anyone who isn’t already a $100Ms-billionaire.
Is this similar to the Dot.Com bubble burst?
Speaking as an ancient person that has survived 40+ years of a capitalist hellscape, Yes. The bubble always bursts.
It is a thing that bubbles do.
I remember the wall coming down and Denmark winning the UEFA cup in '92…
I think the AI bubble is gonna be so much worse than dotcom or housing in 2008. To me this AI bullshit is the dotcom on steroids.
And we won’t even get infrastructure out of this. Just a bunch of half finished data centers & $500B in currently warehoused specialized GPUs that can’t easily be repurposed.
AND an industry that has an inflated sense of pricing
I think we’re getting close to a pop.
I have an idea: they could package all the AI debt into securities and then sell it off in small pieces to individual investors. By spreading out the investment over many different loans, the risk of default will be greatly reduced. It’s not like ALL the AI companies are going to default all at once, right? Ha ha.
Buckle up kids. It’s gonna be a fun ride.
Another once in a lifetime event.
GenZ Literally never having seen a functioning economy (at least while being old enough to meaningfully comprehend its existence) I imagine Generation Alpha is gonna have it even more fucked.
2008 calling? 📞 ✨
Don’t worry, the people responsible in 2008 were held accountable. They also didn’t profit massively off the economic collapse. Frodo also got the ring to Mordor. He had some help, but the ring was ultimately destroyed.
My favorite quote from The Big Short:
In the years that followed, hundreds of bankers and rating agency executives went to jail. The SEC was completely overhauled, and Congress had no choice but to break up the big banks and regulate the mortgage and derivatives industries.
Just kidding. Banks took the money the American people gave them, and they used it to pay themselves huge bonuses, and lobby the Congress to kill big reform. And then they blamed immigrants and poor people, and this time even teachers.
Obama’s biggest failures are not going after these fuckers and the W war criminals
I thought his biggest failure was his raining hellfire on whistleblowers, kids protesting, and immigrants, but I’m willing to debate this. The real sting is that we had such high hopes and we got …that, instead, and then Biden after. I was so happy when Obama was elected the first time.
2009 should have been the end of trying to “reach across the aisle.” 2010 should have been the end of the filibuster.
Dr. Burry! If the investors withdraw, what’s gonna happen here? Are we done?
Honestly, I don’t know! The… the… The bonds aren’t going down! They won’t move! It’s possible that we are in a completely fraudulent system.
Or… you’re, you’re wrong.
Sure! It’s possible, I just don’t know how!
You’ll never guess Burry’s current companies he’s shorting lol
Banks are in the business of underwriting debt and reselling it to private investors.
We’ve been reading this “End is Near” shit since COVID. Put something more on the table.
Owning a debt from the AI industry is a fairly insane amount of risk
Is it? They’ve been outperforming every other debt class for five years running.
Even Enron was outperforming, just saying…
Spoken like a person familiar with the scandal
So did .com in the early 00’s and houses in the late 00’s
If you bought into Microsoft in '01 and have owned a REIT since '07, you’ve made oodles of money.
Yes, if you invested in the right company you made a lot of money, if you invested in the wrong company, you lose all your money. The onvestment was high risk back then it is high risk now.
Yes, if you invested in the right company you made a lot of money, if you invested in the wrong company, you lose all your money.
That’s how investing works.
The onvestment was high risk back then
I would be curious to see how you try and calculate EV on a stock.
Do you think they can maintain that for another 5 years? Another 20? Is the product AI companies providing worth the valuations?
Are 5 AI companies providing more value than every other tech company in the last 50 years? Thats what the valuations are trying to say. Im still waiting on ChatGPT to cure cancer.
Do you think they can maintain that for another 5 years? Another 20?
I think expecting NVIDIA to fail inside the next five years is a wild reach. You might expect Oracle to take haircut in the next five years, based on their atrocious debt load. But even then, the idea that they’ll miss a credit payment?
Twenty years out, these firms are an even safer bet. Long term demand for compute and hosting services is only going up. And they’re so heavily consolidated. Too Big To Fail in every sense of the word. Are you going to bet against JP Morgan and Goldman Sachs on the eve of the financial crisis, even? Twenty years later, how are they doing?
Are 5 AI companies providing more value than every other tech company in the last 50 years?
It’s not a question of value, it’s a question of earnings growth. Will these top 5 AI companies be seeing stratospheric earnings growth in the next ten years? All signs point to “Yes”. The race to cement these data center footprints is a scramble for limited resources. The Capex budgets won’t be inflated to this degree forever.
Dismissing them for their rapid expansion would be like betting against New York and Chicago real estate markets because you didn’t trust skyscrapers to be profitable in another 20 years. Or betting against U.S. Steel and Standard Oil at the apex of WW2, because the resource demand from the conflict can’t go on forever.
AI is just the NFT version of the GFR, again, in 2026 and much worse. No one will be hype farming it after this crash. All the larping “AI bro” channels will go. Influencers sitting on the beach with their laptops, shilling how it makes them $100,000 a month while they sleep. Those people will go… What I suspect will remain of the industry is a completely niche sector for specialised applications in schools, hospitals, higher education, and film & sound design; it can reduce some of the burden at work if implemented well. But most of the public will remain staunchly opposed to a subscription-based life where AI drives every IoT device in their home or vehicle and generates sloppy, hallucinated content that doesn’t help them but harms them.
NOTE: In a survey, over 60% of Microsoft users say they actively seek ways to bypass online account processes for local accounts and encourage others to do the same. If you can’t sell the idea of mandatory sign-in just for syncing desktops because everyone understands why a PC is exactly that “a Personal Machine”, everything is supposed to stay & run locally if it is indeed “YOUR COMPUTER”… I don’t see the big 5 generating the revenue through online subscriptions to get them out of that debt spiral; local open-source AI models and cheaper hardware are the only way I see plausible mass adoption happening.
the NFT version of the GFR
You’re confusing a cryptocurrency side hustle with mainstream business application suites.
I’m not saying they will fail I’m saying they will not maintain their rate of growth. Very, very different things but i guess you can pretend i said something else and argue against that or whatever idk dude lol
I’m not saying they will fail I’m saying they will not maintain their rate of growth.
They’ll hit a saturation point eventually, sure. But demand for capacity continues to outstrip supply.
If you will hit a saturation point, at some point the demand will stop outstripping the supply. Once you cannot exapand, the supply will catch up simply because the demand decreases, not considering that the supply could simply increase.
So how would a (by now inevitable) government bailout not trigger an untenable treasury yield?
Print more money lol, although that’s sometimes referred to as a “soft default”
Oh NO! We NEED to Raise Taxes to PAY for these things OTHERWISE who’s going to Take Our Jobs while Poisoning Our Water while Killing Our Children while making Subpar Fruit Videos?
-US Politicians!
I work in commercial real estate. This is a normal common practice in commercial real estate. They honestly do this for pretty much every type of real estate and for as many as they can.
They securitize it in portfolios and sell off interest in those payments to others. They intentionally mix and match properties in portfolios so if one fails, there is less risk to the whole thing.
I’ve seen fast food restaurants, malls, airports, billboards, cell towers, hollywood studios, aerospace firms, law firms, hotels, apartments, everything. And yes, also data centers
$40B for banks are pennies. This website writes about $1.5T debt plan trough 2028 https://axis-intelligence.com/ai-data-center-financing-statistics/
That’s still not much compared to gross profit for 2025 of the 5 biggest players listed on US stock exchange Google $240B
Amazon $360B
Microsoft $225B
Meta $164B
Nvidia $153BSums up to $1.1T
Oracle will get bailout or those investments will be acquired 100% if you think billionaires won’t protect themselves from basically owning this planet you’re stupid.
Wait, so NVIDIA is not top #1 by profit yet? And where’s apple?
Apple gross profit $195B. Cloud is real cash cow because of enterprise. Cloud companies hope to double their earnings by with ai offering. That’s the business. So all those servers are being build for enterprise offering of not existent products that no consumer want but corporate will force them because they want total power over people and corporatocracy.
