This is much closer to the dotcom boom than the subprime stuff. The dotcom boom/bust affected tech more than anything else. It didn’t involve consumers like the housing crash did.
We are starting to see larger economic exposure to AI.
Banks are handing out huge loans to the neocloud companies that are being collateralized with GPUs. These loans could easily go south if the bottom falls out of the GPU market. Hopefully it’s a very small amount of liquidity tied up in those loans.
Tech stocks make up a significant part of the stock market now. Where the tech stocks go, the market will follow. Everyday consumers invested in index funds will definitely see a hit to their portfolios if AI busts.
But it does involve a ton of commercial real estate investment, as well as a huge shakeup in the energy market. People may not lose their homes, but we'll all be paying for this one way or another.
The dot com boom involved silly things like Pets.com IPOing pre-revenue. Claude code hit $500m in ARR in 3 months.
The fact people don't see the difference between the two is unreal. Hacker news has gone full r* around this topic, you find better nuance even on Reddit than here.
Do you mean pre-profit/without ever making a profit? I found an article about their IPO:
> Pets.com lost $42.4 million during the fourth quarter last year on $5.2 million in sales. Since the company's inception in February of last year, it has lost $61.8 million on $5.8 million in sales.
You'd think after all this time nerds would stop obsessing about profit. Profit doesn't matter. It hasn't mattered for a long time because tech companies have such fat margins they can go profitable in months if they wanted to.
Yes, $5m in sales. That's effectively pre-revenue for a tech company.
They're not claiming that it's like the dot com boom because no one is actually making money. They're claiming that this is more like the dot com boom than the housing bubble, which I think is true. The dot com crash didn't cause Jane-on-the-street to lose her house while she worked a factory job, though the housing crisis did have those kinds of consumer-affecting outcomes.
It's nothing like the dot com bubble because that was based on speculative future value and zero present value. There is more present value in AI than at any point in software in the last 30 years.
What you're missing is how that value comes about. People seem to think it's an infinite fountain but it's more like strip mining the commons.
We also know that AI hype is holding up most of the stock market this point, including the ticker symbols which you don't think of as being for "AI companies". Market optimism at large is coming from the idea that companies won't need employees soon, or that they can keep using AI to de-leverage and de-skill their workforce
Pets.com could have traded at a significant multiple of the entire combined revenue of the pet space if investors simply poured infinite dollars into it.
The could have even got into the programming space with all that capital. Pawed Code
That’s a good point. Pets.com raised $82 million from its IPO pre-revenue (bad) and Anthropic raised $500 million from Sam Bankman-Fried pre-revenue (good)
I’m admittedly not very good at math. You pointed out that Claude Code got to $500mm ARR in 3 months, but it kind of looks like it actually Anthropic over four years and many billions of dollars to make a product that generates significant revenue (I appreciate their modesty in not bragging about the net profit on that revenue there). I’d say that the users bragging about being able to cost Anthropoid multiple orders of magnitude in costs beyond what they pay them kind of makes the ARR less impressive but I’m not a fancy management scientist
But I’m bad at math and grasping things. If you simply pick a point in time to start counting things and decide what costs you want to count then the business looks very exciting. The math is much more reassuring and the overall climate looks much saner than the dot com bubble because we simply don’t know how much money is being lost, which is fine becau
The fed could still push the real value of stocks quite a bit by destroying the USD, if they want, by pinning interest rates near 0 and forcing a rush to the exits to buy stock and other asset classes.
By the time it catches up with them they will have IPO’d and dumped their problem onto the public market. The administration will probably get a golden share and they will get a bail out in an effort to soften the landing for their campaign donors that also have huge positions. All the rich people will be made whole and the US tax payer will pay the price of the bail out.
And Microsoft or whoever will absorb the remains of their technology.
