Wall Street Sees AI Bubble Coming and Is Betting on What Pops It
Posted25 days agoActive22 days ago
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It's one of my main arguments against a crash: why would one (1) or a few choose to do that?
No investor has thus far invested something they can’t yet cash out.
In some ways the technology companies, which such large growth, are their own consumers.
Unless they feel pressure from another growth story or a technical monetary effect, and I emphasize story because its about future returns, its unlikely.
Additionally this has grown so quickly that there is amazing talent being applied to these problems, its hard to imagine every good person has been sufficiently compensated that progress will stall.
Make 'real infrastructure' and 'housing' companies attractive products for investors to buy and they'll buy. (No idea how to do that, don't ask me! :))
Why did we decide that return on capital investment is the metric to optimize for, at the expense of everything else?
In practice, capitalism itself doesn't really promote competition, but competition is an externally-maintained situation required to keep capitalism from going off the rails.
There is no need for hedging language, it is entirely weaponized greed.
> but in a way that tries to promote competition and thus create actual value.
No, its in a way which tries to remove constraints from the power of the capitalist class, and full enable their dominion over society -- that's what drove it and how it evolved from prior systems.
The assumed existence of competition (along with other assumptions) making it optimal was a much later, after the fact attempt at rationalizing it in response to criticism, and actual attempts to promote competition were later yet reforms limiting capitalism, not part of its essence.
We need to kill the idea that a) this is what investors should be looking for, and b) it's even possible aside from a 1 in 1,000,000,000 fluke.
All of these economic instruments are supposed to be there to serve the needs of real human people, not just to make the wealthy even wealthier. We need to break this cycle of ever-escalating capital chasing capital, and get investment in things that will actually make people's lives better.
(If you have real things that are actually producing 30x growth then that's fine, obvs.)
Who am I to say they're wrong? A human being, that's who. A human being who lives in a modern society that does not have to prioritize the whims of the wealthy few over the needs of the many. We can choose to set stringent requirements on people who have that much money, and therefore power, and that is not evil. Indeed, it is the furthest thing from it.
Look at the reply from the guy I was questioning. It took just two or three mild questions for him to go full Hitler, talking about how his comrades will have to "discipline" a whole generation of "oligarchs" (i.e. anyone who makes things he doesn't personally prioritize).
Collectivist thinking always leads to violence, and eventually societal failure.
Also, as I'm sure you're aware, I was using "discipline" as a term of art to mean "withhold our labor until their profits suffer and they are willing to negotiate". This was the strategy employed the last time we seriously dealt with concentrated capital getting high on its own supply. It is also not a form of violence. What's the alternative? Capital using force to require labor to work against their will? Would you call that slavery? Or just serfdom? Which do you advocate?
The results of votes are enforced on the losers using the police, who will do so violently if required.
You mentioned the Fordist truce. The unions the auto industry dealt with weren't just a bunch of people refusing to work. They were frequently violent, and they also used stealing other people's property as a standard tactic to prevent anyone else from working also. Those were violent times.
This statement is so blatantly, staggeringly false that I can't even fathom how to begin to discuss this topic with you.
Fat lot of good that does me: all the client-side software I use is as bloated as ever.
Can someone from the dear HN financially savvy users clarify what kinds of specific bets could be placed to that avail?
Consider diversification in your portfolio. Maybe you divert a little more away from the US market, for example, which is heavily dependent on 7 stocks largely tied to AI.
You are better off being in the market than betting on an idea that you don’t know will even happen or when.
I definitely think there is over enthusiasm in the space but at the same time I am not convinced that the demand for compute has let off yet.
My take is always you could build up some cash reserve in treasuries or somewhere like that and deploy it if a pop does happen. You will miss out on the potential growth but if you wanted to participate that is one way imo.
Look at stocks: everything is synchronizing, for years now. Either something like 85% of stocks all go up, with a predictable difference between them (meaning, e.g. META moves about double GOOG does, whichever way it goes, up or down), or 85% of stocks all go down. SPY, VOO. And in fact the only ones that make a move to speak of are the MAG7. It isn't just that they're the fastest to rise, they're the only ones that beat the market.
Zoom out and you'll see that in recent years you can include even non-stock-market assets in this argument. Housing ... same (of course there I understand), Gold, surprisingly, same.
And that's ignoring the warnings European authorities are issuing these days. It's pretty public information at this point that European authorities expect open ("kinetic" if you will) hostilities between Germany, France and Russia to open somewhere between March 2026 and Jan 2027. That will crash the stock market. That will crash the housing market. That will probably even crash the gold market. Imho, that will crash the value of fucking Trump tower. The places these warnings are coming from are very serious and not known for joking on these matters (like the German chancillary, which if anything is far too conservative, or the French department of health)
Very serious and not joking? Ok go time the market. My point stands market timing is impossible. Historically you have always been best suited by being in the market. Could that change? Sure but I don’t think you can time that or be prepared for it.
The idea that you can build in safety against stock market crashes by investing in treasury funds or the more general stocks vs bonds. They have synchronized and if something goes wrong it will be a total disaster for people and pension funds regardless of the traditional wisdom.
This is true if you're willing to wait forever, but if you have near- and medium-term goals, you should not be investing money in the market if you believe there will be a crash. I have such goals and I'm putting my money into treasuries instead of putting more into what I believe is a very overvalued market.
Many think it will.
Now, granted, personally if I had, say, a lot of Oracle stock, I'd probably be getting rid of that. But unless you conveniently already have a bunch of bubble stock, there's not really a remotely safe way to play.
https://youtu.be/2J_IGuA-IdY?si=uTptx9R-HMhjD9LH&t=1200
Worth listening to the entire podcast but this is a snip where he speaks about AI valuations. Somewhere in that podcast he brings up the fact that Costco is trading at double future earnings to NVIDIA, let that sink in.....
English is not my first language, so let me make sure I understand: with this sentence you are suggesting that NVIDIA is undervalued, correct?
In my opinion NVIDIA has better prospects at future growth than Costco, but the market hasn't priced it that way.