Subscribers’ Comments of the Day
Jim F
15h ago
Is AI FOMO dying?
Early financing came from PE firms buying equity. With OpenA and Anthropic latest private raises at $800B and $850B respectively it’s getting harder to pitch huge upside in exchange for lack of liquidity. We know because both companies are looking to IPO. Something they wouldn’t do if they could still access private capital markets at higher valuations.
This leaves debt markets. Here I’ve been reading about frictions as well. Recent article about a coreweave project that the banks wouldn’t fund because the end tenet was OpenAi. The banks didn’t feel their revenues were sufficient to back the debt. Last week I read a Bloomburg article about debt backed by Ai infrastructure is getting more expensive. Spreads over SOFR have risen 100 bps over the last year. They even referenced a recent deal where the rate had to be increased mid deal to attract enough demand. Now you have the most concerning evidence yesterday. This dog and pony show around this $500B MOU with NVDIA and some big wall street firms. First off it’s a non-binding MOU. It’s basically Blackrock saying if NVDIA needs a sales desk to push Ai debt we are willing to participate. Ok so you’re saying as a company that makes its money selling financial products. You would be willing to sell financial products if the deal is right. Ok great, thanks. Even worse CEO’s of all these companies came on CNBC to push a narrative that compute is now a huge and important “asset class”. This feels like those making money off this buildout are having increased resistance from investors that used to say AI, sure I’m in! that’s before they even heard anything more than it’s Ai.
FOMO is great when the product is scarce. That’s not the case anymore. Now it’s hard not to be overweight Ai. SPY’s and Q’s are overweight Ai. Caterpillar is even overweight AI buildout. Doesn’t mean the ride is over but it means those that once feared under exposure are now thinking about overexposure.
stockrenter
15h ago
Lots of good points you make , and yes Investors arent as willing to open their wallets at the rate we saw last year / earlier this year as supply has increased & there is a bit too much leverage creeping in on the entire AI sector .
Duly noted as we go thru the maturation process of AI
Its not as clean of a story as it used to be.
NVDA 5YearCDS jumped by almost 6bps.
phogan
14h ago
Excellent points!
Positions: None
