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S&P 500 is 'bizarrely overvalued' and could crash 49% as recession sets in, elite strategist says
(markets.businessinsider.com)
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this post was submitted on 17 Mar 2024
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No they are not. They are losing far more money than they are making. They are 100% running on VC funding made possible by cheap loans. Once inflation hits too hard this will all crash.
We do not disagree that AI has a future, however currently AI is not yet automating away all these workers. It's still not used very often in professional settings aside from programming. And it's nowhere near capable to replace humans yet.
Current AI companies are not the be all end all. In one year time multiple startups managed to beat OpenAI's GPT4 model. The head start companies currently have is not that big. If the market crashes another company can easily take over. Nobody uses Netscape and Yahoo anymore either.
What companies are you even talking about? Certainly not those in the S&P500 then, this is all about. Of course this is no golden rule, but a few exceptions don't mean bubble.
AI is now integrated in people's office packs and into every coffee machine. It's also already used by a lot of people, students write their thesis with them. People buy AI images from high quality AI sources. Music will be replaced next. Video is in line.
If anything, large companies like Google, Meta and Microsoft, have made sure no startup will ever catch up on this ever again. In AI image and video creation, the gap is widening already, as large companies wall off their sources, have more money for bigger servers and only provide those services by paying. Any remaining ones currently free, will cost money in near future, once people got hooked. No startup will have access to those huge data piles of the big players, who already out speed any smaller competitors.
As we speak those big lobbies bring laws in place, to stay at top. Like overlay pricey regulation no startup can maintain etc.
Then you have all the hardware and service companies managing this for the big players, they have value behind to a certain level of course. If say Meta for instance, cancels their Nvidia order, sure it hurts, but it's not a dot-com total failure.
Yes but who pays money for them? This is exactly what i mean. Just like with the early web, companies are providing "free" services using VC funding. If that dries up who is going to fund these fun enterprises?
Nvidia is a key player here that they will certainly survive the fall, but OpenAI and others are the first to get cut when there's a crisis. They make no profit, yet they cost money
OpenAI isn't in the S&P 500.
Microsoft is which is basically OpenAI's parent company now.
Yes which supports the op's claim that it is different because the companies doing ai hype are S&P 500 giants with multiple revenue streams, not startups with nothing to fall back on.
For example, MS's stock was at $300 before the AI hype and now it's at $400. It's stock jumped after several quarters of exceeding expectations on revenue from their cloud services- which have little to nothing to do with AI.