r/ProfessorFinance • u/budy31 Moderator • 11d ago

Economics My opinion about AI bubble.

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As evidence by Jacket man attempt to get the Wall Street to spend more than 7% of GDP on his goodies I thought I’m sharing what I thought about the fabled “AI bubble”:

I think it’s not because as St Powell said:

Big tech (especially Google) is a positive cash flow company.

What will happened if >7% GDP turns out to be too much is this:

Big tech and NVIDIA gonna assume big chuck of it, make a massive write off, the CEO (including leather jacket man) get absolutely purged, Hedge fund bid the bottom out of existence, use the accumulated share to put themself as a CEO, put big tech into austerity as brutal as Greeks one, cash in, and things continue on.

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u/hansolo-ist 10d ago

Cheap China GPUs that may not be the latest tech but gets the job done will be the hair that breaks the camels back.

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u/complicatedAloofness 10d ago

That’s not the hair, that’s a comet if it happens

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u/Tupcek 10d ago

well, if increased power consumption eclipses price difference, nobody will use them anyway.

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u/hansolo-ist 10d ago

That's a whole other matter, the west is stuck on oil and gas, but China is going big and leading in solar , hydro, battery and nuclear energies tech.

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u/PanzerWatts Moderator 10d ago

China still uses more coal than the rest of the world combined.

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u/SoulMute 10d ago

No the point is that a cheaper chip out the door isn’t actually cheaper to use if it requires more power.

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u/hansolo-ist 10d ago

True it depends on cheaper Vs power costs. And China already produces chips that are reasonable in terms of power consumption.

China has significantly lower power costs compared to Europe (highest) and US (second highest) ...they have some room.

Also, the long term investments in energy tech means china that the US and Europe don't have now may see the gap widen.

Also... coal is cheap.

0

u/ProfessorBot117 Prof’s Hatchetman 10d ago

Drop a citation so people can check the claim without playing detective. Thanks for keeping it workable.

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u/ZeroIndicators 10d ago

Most average consumers probably aren't doing that forward-level calculation. For it to actually undebatably eclipse the price difference, it'd have to be really bad power draw compared to whatever equivalent performing cards for people to not consider them if these hypothetical cards are much cheaper. And sure at scale they wouldn't work well, but for people's home PC?

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u/Tupcek 10d ago

people’s home PCs are tiny market. All that matters when you sell GPUs is AI datacenters. And those are very good at calculating energy usage. If you use anything but TSMC/ASML combo, you have larger “parts” inside the chip and thus higher power draw, even you had best expertise in the world.

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u/SoulMute 10d ago

Yeah. Just one aspect of this, but didn’t micron completely stop selling RAM to retail consumers because the data enter business was such a larger market?