This is The Takeaway from today’s Morning Brief, which you can sign up to receive in your inbox every morning along with:
Can we stop with all this AI bubble talk, please?
I get it.
Those hunting for a dot-com style stock market explosion want to make names for themselves by predicting a bubble. Who doesn’t want the fame and fortune associated with being right in a big way?
Who doesn’t want to spend a month reporting on stocks going down 75% because of a freak warning out of Nvidia (NVDA) and OpenAI (OPAI.PVT)?
Entire years could be made for content platforms in a week if the stock market were to get blown up because of a Lehman-like meltdown in tech valuations. If you are over the age of 40, you remember the trading screens during the height of the great financial crisis. Massive declines, a full-on sea of red. Every. Single. Day.
But I’m here to say we have to give these AI bubble predictions a rest. Ditto the predictions that we are in a tech bubble. It’s just not what’s happening out there yet.
First of all, AI is a real technology being deployed in real ways inside of Corporate America.
Second, this technology is requiring more physical assets in the ground — which are being built to support AI’s real-world application. What Zach Dell (son of Michael Dell) is working on at startup Base Power (which just raised $1 billion) impressed me this week. It’s addressing a key issue —power availability and costs in part because of rising stress on the grid due to AI development.
Next, the spending on AI infrastructure doesn’t strike me as reckless.
I talk to CFOs and they walk me through their thinking, which seems logical. They aren’t foaming at the mouth with wild-eyed predictions of grandeur similar to the late ’90s.
Plus, the tech giants making the biggest AI investments are fueling their ambitions by cash on hand — not loading up balance sheets with debt. The upstarts in AI are well funded, not being 100% stupid in their organizational build-outs. They’re working on tangible technology that has actual orders behind it.
“I would say that’s probably thinking too small,” AMD (AMD) CEO Lisa Su told me about concerns of AI overspending this week (video above). “You have to really look at what the power of this technology can do for the world.”
AMD is “investing at the right pace because we want to accelerate … this is a place where [and] when companies and partners make bold moves, it will be rewarded.”
