Are we in a bubble?

[Milu]

10 hours ago, Libs said:

But here's the rub. When I ask enthusiasts of Claude / Gemini Open AI etc. how much they are paying, it's always "zero" or "$20 a month." And when I ask how much more they would pay, I get a blank stare or 'nothing.'

I’d count myself in the enthusiast bucket. Currently paying €20 a month to use clause pro, my employer provides copilot as the standard ai tool for staff but I haven’t found it great. As to what I would pay each month, if I had to I could see myself paying €100 per month for it. It’s too useful to for the work I do that I’d hate to have to go back to the old way. And I’m not even the target market for Claude code, I’m a consultant with some average coding experience rather than an actual software engineer. I can only imagine how much value a proper software engineer gets out of it. 

[Masterofnone]

How  as an investor, can one currently identify a Netscape from a Gmail in the AI landscape?

[vinod1]

It is wrong to think "how much are consumers going to pay?"

 

Consumers are not going to pay much if any at all. It would likely be free to consumers.

 

Enterprises are going to pay. Just like they did mainframes. 

 

Because, AI can help companies in a million different ways. We are way past the point of even asking this question. If you look at enterprise processes, it is riddled with manual drudgery, boring processes that can be automated. Health care billing itself is $100s of billion of expense that can be automated. That is one part of one industry in one country. You do not need any new advances in AI. Applying existing AI tech would get you there. 

 

The question really is who are the beneficiaries?

 

Vinod

 

 

[gfp]

Good stuff - $20 Billion fund in less than 2 years, eat your heart out ackman

 

https://www.wsj.com/finance/stocks/the-24-year-old-ai-wiz-who-counts-jane-street-as-an-investor-1c30d751?st=zmer9Q&reflink=desktopwebshare_permalink

[Parsad]

9 hours ago, gfp said:

Good stuff - $20 Billion fund in less than 2 years, eat your heart out ackman

 

https://www.wsj.com/finance/stocks/the-24-year-old-ai-wiz-who-counts-jane-street-as-an-investor-1c30d751?st=zmer9Q&reflink=desktopwebshare_permalink

 

Like so many at the peak of other bubbles, no one will have heard of this guy 10-15 years down the road!  Cheers!

[frommi]

You are not alone.

[Red Lion]

On 6/6/2026 at 5:47 PM, tnathan said:

AI will only increase margins for companies in industries where competitive intensity is low / where the company already has a moat. If a bunch of retailers all use AI to cut headcount needs, ultimately those savings will be passed to consumers if there is a lot of competition. Small caps in general tend to have less moats, so wouldn't be surprised if in the medium and longer term this didn't happen.

 

This is a great point, and I've been thinking about this post and just haven't had time to respond. 

 

I think using retailers is a good example for the point you're making, but I think you'd probably need an individualized analysis across industries to really look at the potential impacts of AI adoption. 

 

Many small caps have good gross margins, but do not have the economies of scale to convert those into great net profit margins. I feel like a massive increase in productivity could certainly flow to the bottom line in these types of scenarios. 

 

Looking even smaller, non-publicly traded mom and pop type businesses are at the bottom of the food chain. They have the least access to good employees, and higher administrative costs to spread over a limited revenue base. These types of businesses have huge tailwinds from tools like AI (just like they did with the internet/cloud computing/ credit card software / the advent the smartphone / etc.) as it can help level the playing field.

 

As a general matter, employee productivity has been increasing for decades along with higher profit margins. This coincides with the adoption of technology which has assisted the labor force with improved productivity gains, and overall, this has indeed improved profit margins. Just from my own experience dabbling with AI applications, I believe we will probably see a significant increase in employee productivity in a surprising number of fields. 

 

I think it's a reasonable probability that service businesses sprout up to offer small/mid cap/private companies access to information, technology, legal, HR, market research, etc. services that have historically been available to Fortune 500 type companies. 

 

There will certainly be winners and losers, and retailer seems like the great example of an industry that will stop at nothing to compete its profits away. I think Buffett said something along the lines that the only way to make money in a commodity business is to have the structurally lowest cost of production, and that probably applies to retail as well. I would say for industrial or services type business that already have good unit economics, improved productivity is likely to flow at least in part to improving the bottom line. 

[Pellom]

Kind of feels more like the nifty fifty bubble to me than the dot com bubble, at least in the sense that the market keeps going up in stark opposition to what feels like economic, social and political unrest (and geopolitical instability). 

 

We think of the dotcom bubble first because technology has benefited this time around, but that might just be due to that fact that our biggest companies are tech companies unlike the late 60s/early 70s. 

[Red Lion]

16 hours ago, Parsad said:

 

Like so many at the peak of other bubbles, no one will have heard of this guy 10-15 years down the road!  Cheers!

 

But his carried interest from the last 2 years will have him splitting his time between his yacht and his private island either way as long as he doesn't keep rolling it over.

[Libs]

I found this humorous. Not sure how accurate it is.

 

https://isaiprofitable.com/?utm_source=substack&utm_medium=email

[gfp]

Sign of the times!  A wall street journal article.  Never would have occurred to me to try hiding out in profitable companies - genius

 

 

[Parsad]

14 hours ago, Red Lion said:

 

But his carried interest from the last 2 years will have him splitting his time between his yacht and his private island either way as long as he doesn't keep rolling it over.

 

Unless he left it in there and this blows up on him badly...we don't know if he's using any leverage or exactly how concentrated he is.  Cheers!

[kab60]

10 hours ago, Libs said:

I found this humorous. Not sure how accurate it is.

 

https://isaiprofitable.com/?utm_source=substack&utm_medium=email

 

I'm a bear, but it's definitely not accurate. It's very hard to figure out ROI outside of the infrastructure/hardware layer (chips, memory etc.).

 

But, I think one of the biggest winners of 'AI' so far is META (although it doesn't trade like one!). While they've wasted a ton of money on Llama with little to show for it externally (hardly at the frontier...), a lot of their capex is to improve their recommendation engine > higher ad conversion. And their revenue and profitability has really leaped upwards (some of it due to cost cuts).

 

Then the big Q is the hyperscalers. How much of their cloud growth is AI?

 

There are so many open questions. But given the lack of obvious revenue, outside of the AI labs like Anthopic and OpenAI, it's really hard to discern ROI. And it's also kinda funny that everybody chasing AI is currently chasing the bottleneck companies. But bottlenecks, obviously, increase costs and should, all else equal, lead to less demand near term and more supply long-term. But I guess everyone is looking to exit at the top, just before hyperscaler capex growth slows down.

 

 

 

 

 

 

[Spekulatius]

I agree  META’s ads have become scary good in terms of targeting. Same for Google. I do wonder if this is improvement is a step function and there is a point where progress peters out.

 

I think the playing the Capex boom is dangerous at this point too. It’s clear the growth rates need to taper off and these second derivatives the changes are mostly what will impact stock prices. I think the share prices of the Capex plays will peak way before revenue does.

[Spooky]

17 hours ago, gfp said:

Sign of the times!  A wall street journal article.  Never would have occurred to me to try hiding out in profitable companies - genius

 

 

 

[Parsad]

No longer the FAANGs, but now the MANGOS' that are the high-flying bubble stocks!  Cheers!

 

https://finance.yahoo.com/sectors/technology/articles/not-faang-anymore-mangos-160914663.html

 

 

[MungerWunger]

https://finance.yahoo.com/markets/stocks/articles/anthropic-resists-sharing-financial-lenders-184859548.html

 

"Speaking of that Anthropic debt deal, the company has resisted sharing financial information with lenders considering buying pieces of the debt, people familiar with the matter said.

 

Some of the lenders being pitched to buy a slice of the $4.6 billion notes that don't have a backstop from Broadcom — meaning they are pure exposure to Anthropic — say they haven't received a detailed look at the AI company's numbers, causing some to pass on the deal, the people said. Such disclosures are standard in lending deals."

 

#s look so good they're not sharing it 

[Spekulatius]

54 minutes ago, MungerWunger said:

https://finance.yahoo.com/markets/stocks/articles/anthropic-resists-sharing-financial-lenders-184859548.html

 

"Speaking of that Anthropic debt deal, the company has resisted sharing financial information with lenders considering buying pieces of the debt, people familiar with the matter said.

 

Some of the lenders being pitched to buy a slice of the $4.6 billion notes that don't have a backstop from Broadcom — meaning they are pure exposure to Anthropic — say they haven't received a detailed look at the AI company's numbers, causing some to pass on the deal, the people said. Such disclosures are standard in lending deals."

 

#s look so good they're not sharing it 

Perhaps a stupid question but why are they issuing debt in the first place? Most startups just issue mandatory convertible debt or preferred debt.

 

Also, what is the benefit of buying debt from a startup? Is there an equity kicker? With straight debt, the upside is limited, so why would you lend to them unless interest rates give you an equity like return? I don’t understand either sides motivation.

[MungerWunger]

https://www.reuters.com/technology/openai-considers-drastic-price-cuts-anticipating-war-users-with-anthropic-wsj-2026-06-11/

 

OpenAI considers drastic price cuts, anticipating war for users with Anthropic, WSJ reports

 

[Libs]

10 hours ago, MungerWunger said:

https://www.reuters.com/technology/openai-considers-drastic-price-cuts-anticipating-war-users-with-anthropic-wsj-2026-06-11/

 

OpenAI considers drastic price cuts, anticipating war for users with Anthropic, WSJ reports

 

As if they aren't losing enough money! 

[Eldad]

52 minutes ago, Libs said:

As if they aren't losing enough money! 

Race is on to file that IPO as well. Market is now starting to hate all of this. META now at 17x as market begs them to stop. 

[Spekulatius]

50 minutes ago, Eldad said:

Race is on to file that IPO as well. Market is now starting to hate all of this. META now at 17x as market begs them to stop. 

Well the winner of a nice chunk  of the spent is NVDA. A significant chunk of the capital raised will go to them as well as the FCF that all those Mag7-1 used to have.

 

Thats why Jensen is pumping all those stocks and buys a piece of the action.

[Peregrine]

14 minutes ago, Spekulatius said:

Well the winner of a nice chunk  of the spent is NVDA. A significant chunk of the capital raised will go to them as well as the FCF that all those Mag7-1 used to have.

 

Thats why Jensen is pumping all those stocks and buys a piece of the action.

 

Jensen's pumping has become comical at this point. I wonder if it's possible for people to NOT get drunk on their own ego and hype when they're in the limelight this much?

[gfp]

I know I would own more NVDA stock if he would cut it out with the leather jacket, that's for sure.

[Eldad]

1 hour ago, gfp said:

I know I would own more NVDA stock if he would cut it out with the leather jacket, that's for sure.

Haha yeah. And the no collar one makes it worse. It says ”I’m from the future, and I know.”

Edited Thursday at 07:19 PM by Eldad