AI Bubble Burst
seekingalpha.com
seekingalpha.com
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> Caterpillar inventories increased to $22.2 billion at the end of September […] The 22% increase in inventory signals future demand weakness or overproduction, and the reason is lower AI capex, as reported by Alphabet and Microsoft.
Maybe I’m not getting it. But it’s alphabet and Microsoft spending less than someone external said they should spend, not what they themselves said they would spend. How is that a miss?
If it was believed that they be purchasing N, then that belief was priced in. If they only bought N-1, the price needs to be adjusted to reflect the new information.
Here, the argument is "the more hardware we have, the more compute we can sell, the more compute we sell, the more profit we'll have" and so investors were expecting a higher level of profit and now are not.
All of this is why stock value and company value often share little with each other. The people working at the company and the people investing in the company have different views of what one small piece of the company is worth. You'll see PE ratios vary by sector, over time, by strength of underlying economy, near lows/highs etc. Any company's value is only set by what people are willing to pay for it at any given time.
Later this afternoon he'll probably ride a nuke down ... gIRANimooooooo!
INTC: -30.5% RDDT: -29–31% NBIS: -14.2% CRWV: -13.6% GOOGL: -13.3% GOOG: -13.0% AMD: -11.4% AMZN: -11.1% MU: -9.3% AVGO: -7.1%
Only AAPL "and META" are unscathed, and only if for META you don't look too far back.
Then, there's international. In the last few months. China tech: 50% down from ATH (all of them combined, just don't look), South Korea: -40% ATH, Japan: -15% (all the stock market combined), Taiwan -10% (entire stock market).
Not that I mean to imply everything detonated at the same time. Even within the US stock market. GOOG had a large drop (arguably META was first, but that was 2 weeks ago). It's more like a slow motion disaster, one stock market blowing up after another, and it just keeps going.
It's actually "getting better" too, the US drop isn't nearly as large as the one in China from a few days ago. In fact, if you look at the S&P 500 as a whole, nothing much happened, really.