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Strategies & Market Trends : Bear! -- Ignore unavailable to you. Want to Upgrade?

To: Harshu Vyas who wrote (269)	11/4/2025 1:53:59 PM
From: Sean Collett	1 Recommendation Recommended By sjemmeri Respond to of 291

I do think AI is a bubble, but I also agree with you in that it's not entirely the same thing as the dot-com. I also have no skin in the game so I watch from the outside on this one. I will say hearing $MSFT CEO Satya Nadella say they are sitting on a ton of unused $NVDA chips because they can't actually get access to power to run them is a major tell. CAPEX spend has been insane and now we have these companies starting to tell us they have bought inventory of stuff they can't actually use, which will age fast, and their obstacle isn't one solved fast either. They're now up against power access and then government regulation to build more plants. What does this mean for stocks like $NVDA, $TSM, $AMD and even further up the chain like $SMCI? Growth will be slowing that's for sure. <<telco companies were saddled with debt through acquisition-led growth. I don't see AI as this extreme.>> To be fair though, Google just racked up $25B in debt ranging from 2-50 years of maturity to fund AI investment. The 50-year crap yields 1.07% more than US treasuries LOLOLOLOL I think the real trouble is going to come when the AI CAPEX spend naturally slows and drags $NVDA revenue down fast. For the data center builders the maintenance CAPEX for these companies will start to eat into FCF and my guess is the ROI on these will never produce the dollars invested. The other big challenge will be if/when a recession does occur and advertising spend slows this will pull the revenue down from $META or $GOOG which will also squeeze things. Like I said to you on November 1st "AI is more just a bunch of big companies trading dollars between themselves, but they are real dollars. It will slow at some point and drag equities down eventually but the real action is happening elsewhere IMO." - I could be wrong as I see private credit as a broader impact to the economy as AI will be contained to an extent. It will drag down that top of the "K" economy though. MIT had that study that 95% of enterprise projects fail to deliver an ROI. I have used AI and the amount of correcting I have to do is insane for something that is sold as this major innovative and lifechanging solution. I feed it PDF documents, XLSX files, and various other things and the times I have caught the AI not even opening the document then "hallucinating" the answer is terrible. If I didn't know the answer before I tried to use it I would likely be fooled by the misinformation. Imagine what's happening out there. <<Think your private credit loans example is another example of something to be wary of. But hidden. I wonder if there's a way to actually lift the hood and find out what's going on.>> This is what makes private credit so fun. So little transparency into the deals, but when they start bubbling it will be felt everywhere. First Brands again is our canary. -Sean