Please forgive the first version. I drafted it while sitting in my lounge chair on my phone. I didn’t proof read. It is late.

Nevertheless, here is a reduced-type version:

First, thanks to Ed A. for bringing this article to my attention. I lived in Silicon Valley and worked in the semiconductor industry during the dot-com and internet bubble. I remember how fiber optic companies were all the rage. Then the bubble burst and there was frequent talk of all the “dark fiber” in the ground. Dark fiber are all the fiber optic cables laid in the ground for the “guaranteed” growth in internet traffic. Well, like all technologies, adoption takes time.

The WSJ article provides other examples of hype-driven overspending and subsequent bubble bursting such as UK railroads. It did not mention another recent and prominent example: 3D printers. If you forgot about the hype and subsequent bubble burst of 3D printers, all you need to do is look at a 5 or 10 year chart of DDD or SSYS to jog your memory.

So in short, an unprecedented amount of growth is priced in “AI” stocks and data center construction projects. There’s also a lot of potential damage to the rural areas where these centers are going up: higher electric bills, water pollution, air pollution, increased housing costs, etc.

If you read the book AI Snake Oil, it too talks about not only the hype but the drivers of the hype: the very companies selling you their AI products, the media that needs clicks and views, and public figures incorrectly placed on pedestals as knowing the future.

Have a look at the WSJ article. The numbers are staggering. Then put it in the context of the circular financing we saw announced over the past week or so (e.g., Nvidia invests $100B in Open AI so Open AI can buy $100B of Nvidia chips, Open AI striking a “deal” with Oracle for $300B for “planned” purchases). Lots of plans and intents. Lots of data centers being constructed with no customers too.

Maybe “this time is different.”

Maybe it is not.

-Dr. Moore

https://www.wsj.com/tech/ai/ai-bubble-building-spree-55ee6128