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Comment by weird-eye-issue | Hacker News Reader

> This is because a crash can only happen if prices go down (which is good) or Chinese models become as good as frontier (which is also good).

No... This is not accurate at all. AI valuations are based on high future growth. Prices could stay the same but growth slows and that could cause a crash by itself.

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Right. AI companies have P/E ratios rarely seen for very large companies. Except for TSLA, which has a P/E ratio of 383, unheard of at that scale. No other large-cap company is much over 40.

TSLA should have crashed by now, but the hype just keeps on coming. Eventually reality will set in, but the market can remain irrational for longer than you can remain solvent. Big AI may be like that.

Investors like a story that lets their imagination run wild. TSLA offers that. AI / NVIDIA has that 10-fold. It’s “man’s last invention” - you couldn’t come up with a better hook to raise capital.

Short of an emergency rate hike to 10%, nothing stops this bubble.

NVIDIA would have a market cap of 50 trillion if it matched the TSLA pe ...

Anthropic IPO will be a better example.

NVIDIA is still a widget business.

It's just circular financing - we give you GPUs, you give us your shares of a promised future $ 2,000,000,000,000 valuation. Despite they are unprofitable today and tokens are getting cheaper and cheaper.

False. They are based on future revenues that companies can capture. If the companies can’t capture the value and there’s no moat, then the public stands to gain from it.

Why is this controversial?

I think what you don't fully understand is that if these companies crashed and stopped getting in new investor money then lowering prices would not be the answer because they would not actually have enough revenue to even pay their own bills. Right now the AI costs are partly being subsidized just like when Uber first came out and rides only cost like $6 when it might now be $40. While what you are saying might come true it doesn't mean that it's directly related to what we are talking about, these companies crashing is not going to magically just result in lower prices. Lower prices are likely but would be due to other factors. Also, lowering prices is not going to cause a crash by itself. Just look how cheap and capable GPT-6 Luna is compared to GPT-3.5. That didn't cause OpenAI to crash, did it?

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