It’s hard to square this with the post 2024 AI-investment economy. Interest rates have stayed higher longer than expected, while many, many companies (Vercel, Cursor, Wave-whatever that got bought out last year, whatever Alexandr Wang’s thing) got billion dollar valuations with no path to profitability and no revenue.
It seems that ROI has become more important in the last 5 years, but then again you have these Space or Rare Earth shitcos trading at -200x PE while all of their industrial promise is directly undermined by rising costs from AI.
The likely forecast for this year is either rate hikes combined with further labor market deterioration and consumption somehow going negative, or inflation eating up all of the (still non existent) profits from AI mega caps themselves.
It’s hard to see how this ends well without a lowered cost of capital or more interest in taking on capex risk, which seems frankly unlikely. The worst case scenario seems to be a lot of bad debt with nobody except for perhaps Berkshire or China who would be interested or capable when it comes to salvaging it. Armchair economist here, grain of salts a plenty.