VC

Ajfennewald

If you look at studies of median returns of VC and private equity they don't look particularly impressive (summarized in the book Expected returns). It seems pretty likely the stuff that would be open to the public is below median. So yeah my instinct would be to stay far away.

ssczoxylnlvayiuqjx

That’s why I’m pointing out examples of mature companies that are profitable. Well aware of the startups that just burn VC money and/or invest all income back into growth.

eska089

I also thought about how I can financially profit from this development and I realized the smartest play is to buy the Casino, not the chips. If retail capital is flooding in to be the exit liquidity, the ones making the guaranteed money are the General Partners managing the funds. So instead of buying their semi-liquid products, I'm considering buying the stock of the firms themselves, like Blackstone (BX), KKR, or Apollo. At first I worried that if the AI/tech bubble bursts, these stocks would crash too. But then I looked at the data on "Fee-Related Earnings." Unlike a VC fund that needs a profitable exit to get paid, these firms charge management fees on committed capital. So even if the underlying assets drop 40% and they have to "gate" the retail fund to stop withdrawals, they still collect that 1-2% fee on the locked-in money for years. The casino gets paid even when the players are losing. Plus, their own exposure is totally different from what they sell. While they sell retail investors debt or equity in risky startups, the firms themselves are buying "picks and shovels", like physical data centers and energy infrastructure. That stuff retains value (at least parts of it) even if the AI software market implodes. It’s not risk-free, but it’s the difference between owning the car in the crash versus owning the insurance company. As long as this "democratization" trend continues, you basically become the owner of the house rather than the gambler at the table. But in the end, I still think I’ll sit this one out. It’s still a derivative bet on a bubble, and I’m not chasing profits within a bubble. My strategy is simple: sell into this liquidity, increase my cash position and wait for better valuations or new opportunities. Sometimes the best trade is doing nothing and wait. 😉

greenappletree

Even in the best-case scenario, the way VC works is not how buying public asset work. They swing for home runs. That is, they're willing to take 99 losses but get >100X on a very low, small percentage. In other words, they have very deep pockets and large cash flow that the individuals do not.

flyinillini14

I work in VC and want no part of dealing with retail investors. The LPs we have today are enough of a pain in the ass.

SomewhereOpposite883

1. They have a natural monopoly...with the FC9 that costs 10 times as much as Starship will 2. The actual secret is that it's not SpaceX that will make them money but Starlink, pretty much their entire operating costs is shooting stuff into space so you just have to do some napkin math to model what's possible once they start flying Starship The actual value proposition is that Starlink will outcompete every single ISP on a GLOBAL scale Imagine if tomorrow there is a fastfood chain that doesn't need to open any restaurants, just the click of a button and everyone in a country can now order their burger with instant delivery no matter where they live, not only that but their moat is that literally no one else is even close to achieving that technology while the competition is operating in a separate industry SpaceX is so far ahead all the Starlink competitors are...using their rockets to launch their satellites How is McDonalds supposed to compete? You think AT&T are going to start building rockets? 800 billion for SpaceX makes sense even if you assume they somehow don't sell a single spot on the rockets just based on Starlink alone, the entire global ISP market is worth 2.84 trillion according to AI, that number is probably wrong but it's close enough to a rough ballpark figure The real question is whether Elon can pull it off, considering i didn't believe in their plan for re-usable rockets when it was all based on a dream and now they are straight up already testing Starship i don't see why not My biggest concern is that Musk might try to merge his companies, folding SpaceX into the dumpsterfire that is Tesla, an idea that he has been talking about more and more recently Oh and of course this is a VC-style analysis looking at the (realistic but unlikely) potential, if you're not the person to believe in the Amazons, Googles and Stripes of the world just disregard everything i just said and stick to buying ETFs

Ascorbinium_Romanum

We'll, I'm not sure about that, there is still VC money to throw into it. The mag7 is still not going into any serious debt. This is most likely not the top, but we're getting there.

OddBottle8064

I do think small and mid-caps will continue to underperform because the successful high-growth companies now stay private longer and don't IPO until they are large caps. The days of buying a high-flying startup are over because VC holds onto the good ones. The companies that do IPO as small caps or mid caps are companies that VC doesn't have enough confidence in to hold.

cryptohorn

[don't get involved with cartels ](https://youtube.com/shorts/JYChSN6VfMs?si=7_rjhU5VC4dUDve-)

cuteman

You think random guys 18-40 are investing their college tuition in Tesla? Might want to check out the institutional ownership ledger and see the biggest names in finance, VC, banks, brokerages and pension funds.

prestodigitarium

Not really. AFAICT the main sellers aren’t VC funds. And I wouldn’t call EZ/Forge “sketchy”, they’ve got a good track record now. If the person qualifies, I think you’re doing them a disservice by turning them off of it all.

prestodigitarium

Eh? You missed the main ones - if you’re an accredited investor, buy into a fund that bought interests in cap table VC funds. Or go to EquityZen/Forge and indicate your interest. They email you the next time they have some, and you buy it. The former is a bit Wild West, but the latter’s been good in my experience.

Ok-Parfait-9856

I think it’ll be something like this. I don’t think it’ll be a straightforward ai crash like everyone is predicting (granted that could be part of it). It’s the debt that’s hidden all over the place just like 08. Between ai debt, and the recent approval by the govt that allows PE firms to bundle and sell their strategy in a stock like security. Historically only VC and other large sources of capital could invest in PE, since only 1/20 companies make it at best and now it’s even worse. So for 20 years PE firms have been dumping money into anything and everything, seeing what sticks. Obviously they’ve racked up enormous amounts of debt and the chickens always come home to roost. So now for the first time in history, Joe jerkoff can buy these non-transparent PE strategies, which are most likely junk. There’s not enough regulation around PE to really know what they are. Hence why it was always barred from the public. If 401k brokers start packaging these shitstains into 401k funds, when shit hits the fan, Americans 401k accounts will be paying off all that PE debt. Obviously I don’t know what will really happen, no one does. But the fed is printing money, we’re seeing QE like activity (fed just bought $40B of short term treasury), trumps put us $3T more in debt in 11 months, companies have lots of debt and not much to show besides high stock prices with high PE ratios, and all the other wild shit going on. My personal guess is a hard crash in 2-3 years. Shit moves slow. No one really knows but I just don’t see this as sustainable regardless of ai performance. The veneer is starting to crack but money is flowing. I think the end of trumps term will cause a moderate crash, since no other person would pump the US economy like a shit coin. I’m pretty sure trump got dazzled by crypto and said “let’s do this, but to the economy”, as musk and thiel swallow and wipe their lips.

silicon_replacement

If some one in avgo knows how to beat nvda , and they can pursuade VC, Jensen said what he thought it would work but did not work for SEGA, At this stage, what you think would work does not matter, you need to proof with a product, And it cost .5 billion to tape out Tsmc will help Jensen, to block others The tap out process is an fucking voodoo art, everything works on emulator until you pay that .5$b It is not the problem of design software, Hold nvda untily my daughters lost their virginity

FalseFortune

The V in VC stands for Venture as in startup not Large Cap.

WeissMISFIT

Clearly not a bot, they have no idea what VC firms actually do. They’re just regarded

Empty-King7717

What happens when you take VC money out of the equation?

Empty-King7717

Yeah same What happens when VC stops giving money to AI companies? It will directly decrease these semi conductor companies valuation.

drummer820

Yeah that assessment seems pretty accurate. The demand right now is huge, but it’s coming from unprofitable LLM labs. If they can figure out a way to dramatically reduce burn rate it might all work out, but so far they are dependent on VC capital and debt and seem like they’re in a precarious position financially. If one or more of the model companies goes under, a lot of the demand for compute vaporizes overnight

drummer820

Agreed, OpenAI is clearly one of the weak points in a very interconnected ecosystem. A lot of the RPOs getting everyone jazzed at earnings are basically just IOUs from openAI, and bigger companies are making huge CapEx investments assuming those will be honored through the 2030s. VC capital is indeed drying up, and the small and medium sized labs and neoclouds are turning to private credit debt, while even the hyper scalers are issuing bonds. It’s a house of cards that requires flawless execution or it all collapses

GarfieldLeZanya-

Tldr and missing a lot of nuance:  Historically, the only companies you could invest in are publicly traded companies who have to be SEC-vetted and thoroughly and publicly underwritten by third parties. It has its gaps, but the guardrails exist.  For non-public companies, typically the only people who could were accredited private equity and venture capital firms who raised rounds of capital during raise rounds, which are the things you hear about called Seed Rounds, Series A, B, C, etc. These private investments are **not** regulated by the SEC at all, nor do these companies have to publicly disclose as much to any information to the public. It is a low-transparency, low-liquidity market which, unlike the public market, has a **significant** chance of stocks going to $0 and companies outright failing. Thr usual VC rule of thumb is maybe 1 in 20 of their investments generate any profit.  And this has only gotten worse. The private equity industry has become extremely illiquid and valuations are down across the boar, and these firms are stuck holding the bags   Now, that's changed. Now these firms can freely sell these private positions to you and me, and, worse, they can sell it to you in your 401k. Without any public regulation or vetting. Every dumbshit startup spiraling the drain will be pumped into peoples retirement funds and drive peoples 401k's to $0 while rich VCs get to unload their bags. 

RoyalCities

The “compare launch MSRP vs launch rental rate” lens is useful, but it’s only part of the story. I'm looking at today’s economics. I.e. what people actually paid for H100/A100 hardware vs what they can rent it out for now . See my other comments where I did the math using today's rates. If older GPUs naturally drift cheaper as H200/Blackwell arrive that’s fine ONLY if the owner has largely paid down the original capex. The problem is a lot of this gear was bought in the last 1-3 years at peak pricing during the VC spending spree via these providers. When rental rates get pushed down toward or below full cycle breakeven while the loans are still outstanding, the age doesn’t save you. it just means you’re servicing yesterday’s gear / capex with today’s compressed cash. In that sense falling H100/A100 rental prices are a red flag. They show current supply/demand and ROI pressure on recent purchases, not just a normal generational price. And it’s not like most of this gear was bought for cash. Look at the public disclosures from the AI infra players we CAN see. CoreWeave has raised well over $10B in secured debt facilities for GPUs and data centers, and Oracle AI build‑out is explicitly tied to a debt load north of $100B. That’s before even getting into Nvidia‑linked financing and co‑signed deals. This isn’t a clean, pay as you go upgrade cycle. It's a lot of leverage that only works if rental economics hold up...which right now they don't seem to be at all. It looks more like scalp demand padding Nvidia’s books than durable, self funding infrastructure...and that can only run so long before the financing and ROI math collide and investors get wise to all of this.

moorhound

I don't think a lot of people understand how similar the current Silicon Valley/VC sphere is to pre-collapse Rome/Greece It's a bunch of wealthborn yuppies taking drugs and regurgitating contemporary philosophy at each other at orgy parties and then barking orders down to their employee peons during the business week

Some-Palpitation-314

If anything, we're about to see who's been swimming naked when the energy bill comes due. Data centers don't run on vibes and VC money forever.

Beautiful-Parsley-24

I was a founding engineer at a tech startup that went public. One of the VC firms that invested in our startup's Series A gave us the opportunity to invest with them. A bunch of my former colleagues and I took them up on it. I do think this is one of those cases where the standard r/investing advice against active investing fails - I believe we can vet "AI" startups better than the market. We can advise the GP "Well that's bullshit" or "we should write these folks a check".

jaajaajaa6

The one main difference is that the current companies have far more revenue and deeper pockets. In addition, they all act like VC funds and that allows them to constantly evolve and grow. That said, there will always be opportunities outside of the Mag 7.

Happy_Discussion_536

>bankers and VC firms who all took out billions upon billions of cheap debt leveraged against their own wealth capitol. Do you have a source on #s and how it compares to VC leverage today? >We saw the beginning of the liquidity issues just before Thanksgiving. The only evidence I've seen is some use of the standing repo facility and modest use of the discount window. Very small jumps in SOFR. What I mean by crash is something that would take us into a bonafide recession (due to credit seizing up) without intervention soon had Fed not injected with RPM. Is that what you mean?

orangeyougladiator

Well I didn’t mean you and I getting loans. I meant the bankers and VC firms who all took out billions upon billions of cheap debt leveraged against their own wealth capitol. We saw the beginning of the liquidity issues just before Thanksgiving. If you define that as a crash then yes, it would crash.

Chuckles77459

Insider Transactions (Last 6 Months) Data as of December 2025 This is the most telling signal. While the CEO is buying, the Directors are selling. The Only Notable Buyer: The Captain • Jonah Peretti (CEO): • Action: BOUGHT shares in May 2025. • Amount: ~$147,000 purchase on the open market. • Signal: This is a classic "skin in the game" move. He bought right after securing the new debt deal, likely to signal to the market that he believes bankruptcy is off the table. The Sellers: Everyone Else (Directors & VCs) In the last 3-4 months (specifically Q3 2025), there was a cluster of exits by Board Directors. These do not look like standard "sell to cover taxes" transactions (which are usually small and mechanical); these look like "getting out" sales. • Adam Rothstein (Director): • Action: SOLD ~$300,000 worth of stock in September 2025.  • Note: He dumped a significant portion of his holdings at ~$2.00/share. • Janet Rolle (Director): • Action: SOLD ~$107,000 worth of stock in September 2025. • Angela Acharia (Director): • Action: SOLD multiple times in September 2025, totaling over $200,000. • NEA (Major Shareholder/VC): • Action: Continued to sell blocks of stock in March 2025 and mid-2025. This is typical for a VC firm that needs to eventually close out a fund, but it creates constant selling pressure on the stock price.

moorhound

I mean, markets are still up AH. Big money seems to be leaving retail holding the AI bag and cycling to financials and literally everything else in preparation for the upcoming liquidity flood. As much as I'd love to see the yuppie Y-combinator VC crowd eat shit, this is dirty.

TheoryInttro

We're not. They're just saying that to get the VC's to keep throwing money at them.

RoyalCities

The GPU cloud rental space has been imploding. Their is too much oversupply in the system that H100s can be rented for 1.50 an hour at many places. This is below the breakeven rates not even factoring in the power requirements and points to a lack of demand / oversupply and thim to negative margins. Alot of these companies have exposure here (CoreWeave) so I'd wait until we get some real retracment for the larger AI players than buying any of these. It's sort of a race to the bottom with the business model (especially on a depreciating asset) I honestly think most of these guys will fold or atleast be consolidated because everyone and their mother took VC capital to try to be the next runpod but clearly it's just lead to an overspend.

moorhound

GPUS WIN: Your power bill goes up 40% and your house's water pressure drops like it got a kidney stone so that Silicon Valley VC pricks can make bank and steal your jobs TPUS WIN: Cheap, efficient AI for everybody, America and the whole world wins, GOOGL + POET + LWLG have a baby and everybody's rich NVDA GANG ARE THE VILLAINS. BUY GOOGL

R12Labs

I believe Musk did a lot of coding and was technical. Thiel seems less so. As the video someone posted shows, but behaved more like a VC from the start.

shawman123

Anything is possible in this market. But its going to do 17-18m in revenue this year and most of it is Starlink which has very low margins. Are they even Gross Margin positive overall considering humongous capex required. its easy to get big money through VC/retirement funds etc than going to public where valuation could become a concern. Tesla is valued based on perceived potential of Robotaxi and more important Optimus Robot. What is the thing that will make 1.5 Trillion sensible for SpaceX. May be Space datacenters for all cloud providers. I could see Elon selling that or something crazy like space mining gold or other rare earths. You never know. Either way I watch from sidelines with interest in how it goes.

shawman123

I doubt Spacex will go public. I dont think their financials are screaming for it for sure. Main revenue is from Starlink than launches. Starlink margins are very low. its easier to get big money from VC and keep running the company at very high valuations. I expect SpaceX, OpenAI, Anthropic, DataBricks, Stripe etc to remain private for a while. I would also agree with buying GOOG as indirect exposure rather than going with a Mutual fund for sure. Plus they are not owning 30% of SpaceX for sure. Their total asset value is just 9.5B and SpaceX is just 5.78% of it. [https://markets.ft.com/data/funds/tearsheet/summary?s=BPTRX](https://markets.ft.com/data/funds/tearsheet/summary?s=BPTRX)

ImprovementMain7109

At $1.5T you’re basically paying today for “dominant global infra + Mars story” decades out. On rumored revenue numbers that’s VC-style multiples on a public ticker, with key-man and political risk all concentrated in one guy. If it actually lists anywhere near that, I’d size it like a moonshot, not a core holding.

Haunting-Worker-2301

I’m not really sure why AcreTrader would present an ethical issue unless you are clearly against investors buying farmland. JD Vance was a partner in a VC firm that invested in the company. Just because JD is VP now doesn’t mean he is doing anything with AcreTrader or using it to control anything. AcreTrader very simply buys farms that are for sale, rents them to farmers, and collects the proceeds on rent and sale. You can literally look on their website to see their deals and ask them how they sourced a particular deal. AcreTrader doesn’t own a lot of land in the grand scheme of things, especially compared to other farmland investors. Even if JD Vance wanted to use them for nefarious purposes, I’m not really sure how he would do so taking down 2-5M dollar farms one at a time. If you are against anyone investing in farmland besides farmland operators themselves, I guess that makes sense but then you also shouldn’t invest in the S&P, blackstone, etc since those are all investors that buy things like homes, apartment buildings, etc.

iLikeE

The job market is not fine. Having more job postings does NOT mean that more jobs are available. It would be nice to look at any undoctored and clean jobs reports for the last 2 months. Would be nice to look at true data. On the tech side there are less entry level jobs and stable to less managerial jobs and even less executive positions. Tech salaries are usually highly subsidized by the influx of VC money and option for stock buybacks. This is untenable currently as the huge push over the last 2 years was the resurgence and reawakening of AI which is now being understood even by the most ignorant of VCs that these companies are making sophisticated chat bots and the only way to turn a profit in the next couple of years is to have for for service and/or dilute these chatbots with advertisements. Just my take as someone with close ties to the epicenter of this tech stock market bull rally and the actual reality of the tech job market.

miaminaples

What we have to understand is that today’s asset valuations are paper deep. They aren’t grounded in wages, productivity or real economic output. Rather it’s being inflated by liquidity, elaborate lies told by slick PE and VC types, and accounting conventions that fall apart the moment they’re pressure tested. People confuse market cap with real value, but in actuality a company’s valuation can rise by trillions because a tiny fraction of its shares traded at a higher price. That’s price illusion created at the margin. Those Mag 7 valuations depend on fantasies about perpetual dominance, margin expansion, global growth, and non-disruption. The entire edifice assumes that companies can compound into the tens of trillions without the underlying economy scaling alongside them. If wages don’t rise in tandem with asset prices, then they’re just stacking assumptions on top of liquidity distortion. It isn’t real growth. Real value is what people can earn and spend into the real economy. Paper value is the number you get when you multiply the last trade price by total shares outstanding. Modern markets have grown addicted to the latter, even as the former stagnates. That gap is what’s fueling all the wealth inequality and political distortions we’re seeing. The system keeps compounding on paper while the real economy flatlines. Valuations will keep rising right up until the moment the illusion has to reconcile with real incomes. Then we’ll see what’s actually there and what was just liquidity, narrative, and multiple expansion will be exposed as the illusion that it has always been.

3boobsarenice

we are "just burning VC money" gives me fresh wood every morning

IslandExact429

Still cant believe NVDA doesnt even make the chips Forget being a bull/bear NVDA is the next Intel and Intel is probably the dollar store but reliable chips for the future Theres no point of fancy TPU’s and Nana Banana Pro 2 for consumers unless they’re willing to fork over $100 a month Grok is very expensive and for a reason. Unless consumers pay, which Google is the best example where search is free, we are just burning VC money Also, OpenAI ChatGPT search is still a mess for the foreseeable future

lookamazed

CFPB used to be the place for this… you could still try but all the VC fintech companies are bootlickers.. soo

KeralaBullionaire

I am willing to lend you an ear, because there would be reason for your opinion as such. Would you be willing to share more as to why you feel this way? And true, all new SPACs and new VC led companies entering the indexes are just not making sense, in terms of numbers. Just hyperinflated values of the company without basic and unit economics.

PoopyisSmelly

In typical Chinese fashion, they cant build anything on their own. Company was basically funded with government subsidies and loans and backed by their state owned VC firm in Beijing, even their employees were poached from US companies like NVDA and AMD. I bet their chips are cheap copies of other companies chips. Junk

Boat_of_Charon

This is the answer. I work with private market funds and hedge funds and have really seen small and mid cap begin to underperform. The VC landscape over the last 2 decades and the advent of growth investing really gives fast growing businesses a much longer runway before ipo. I think small and mid cap will now be more of a value hunting ground than rotational outperformer.

prestodigitarium

In a game like investing with power law distributions, that's probably not the winning move. In angel investing/VC, especially, almost all of the returns in aggregate come from a very small fraction of the investments returning >10x.

donedrone707

don't. my last company was owned mainly by the VC firms that funded it to grow and IPO the VC vulture kept diluting, then eventually chapter 11'd, shed all their debt and useless assets and reconsolidated into a smaller, more nimble company that VC douchebag owns 100% of I get nervous when VC firms own too much. insiders owning is good, means they believe in the company

DogNamedFloppy

Vulcan Elements - company backed by Don Jr’s VC firm - secures a $620 million government contract. Draining the swamp so hard. Go murica. 🦅

fkrkz

It might be. As others said, it is really VC money that sustains AI, not revenue. Capex for datacenters Infrastructure costs is sky high and there is no real ROI yet

tragedy_strikes

I hope that S1 scares any delusional retail investors from providing the VC's their exit liquidity. These companies are money burning machines

Domingues_tech

When the VC music stops, Uncle Sam will be the only one left at the table. Why? Because AGI is the new nuke, and we don't let startups own nukes.

tragedy_strikes

VC demand their exit liquidity. Hopefully, retail won't reward them.

SecretAcademic1654

VC wants out so bad. 300 bil for a chatbot is insane.

JoJo_Embiid

yeah but he made that back later and his vision fund is up a lot right now. he's not a buffet style investor but in general he's pretty good. his vision fund raised 100B dollars, his ARM deal alone made 120B profit. wework is a huge rubbish bet but he made those back in other deals that's how VC style investing works

_hiddenscout

Totally lol. Yeah, i mean if you like it, go for it, it's your money. In the short term, there is a lot of trading happening around quantum. I just think when we talk about the AI Bubble, I think of stuff like nuclear and quantum being part of the actual bubble. Same with the all the VC backed dumb apps. I do like Honeywell more than that spin off though. I'm stoked to pick up some of the Aerospace line of business, that's what really interests me.

Ok-Pianist-5562

Thanks for this, its helpful to have your honest views on this and certainly food for thought. It's actually REALLY interesting. So I'm actually from Jersey 🇯🇪 You mentioned it is BVI company HQ in Jersey. Weshop was purchased by a HNW in Jersey from the UK hence mind and management here. It's a BVI company, but many private wealth vehicles (which this was) were historically setup in BVI which is quite common, so not as fishy as it might seem. So not a SPAC, but yes a Special Purpose Vehicle. The financials definitely don't make for good reading and blow ratios like P/E out of the water, but have to be read in the context that this basically a capital hungry VC start up over the past few years whilst trying to IPO. Heavy on marketing (athletes / influencers etc) in the early years for brand awareness and acceptance. I've been watching it for a few years (as I said above I've been USING the app). So I think its unfair to call it an insiders dumping scheme, but I can see why you might say that. The 12 month share maturity time-frame is to stop users making purchases, getting shares, then returning goods / receiving refunds. Which might better explain that aspect. Thanks for looking into it. One thing I dont understand, is who's buying into it? At that price... Surely its the anticipated growth that is priced in there? They are looking to launch in the US, so perhaps that's the thinking?

ChainOfThot

Elon isn't a VC, he doesn't invest in companies he doesn't build

coffeesippingbastard

thing is that nvidia knows the VC and tech community. Elon still walks on water. Tech treats Elon the way that republicans treat Trump. They idolize him and he in turn drives the hype train.

Bostradomous

The same way VC drug companies grew revenues while losing patients: charge more money but collect from less people. On paper the revenues are up, but the business itself is shrinking. It’s essentially an accounting trick that will eventually catch up to them.

RoyalCities

Yeah GPUs don't hold their value long term. I mean they do NOW because VC funded startups have choked the supply but that's more of a scarcity reason than say technical leaps. It also depends on the card. Consumer / GTX cards would depreciate faster than the datacenter ones. The datacenter cards are tested and rated for 24/7 operation. I remember after the 2017 crypto boom a bunch of cards hit the market that were used for mining and the life you get out of them just isn't the same as if they were used for light gaming. Alot more fan death, artifacts - general hardware failure.

RoyalCities

Too much competition and too much supply. There was ALOT of VC capital flooding startups hoping to be the best runpod. These are the companies who created the shortage plus the mag 7 of course. But I mean seeing how low the pricing has gotten and the projections that the cloud rental space will go lower Im inclined to think there was simply too many players piling in at one time. I did cloud training (before I got my own rig) so watched the prices tank basically in real time over the past year and a half. This article is interesting on the subject.

Aggravating-Salad441

I think you're underestimating the impact to the ecosystem. Why wouldn't Google, Amazon, and Microsoft take a hit if OpenAI failed? While everyone says these companies have earnings, it's also true that a lot of their earnings growth is coming from cloud segments. Those cloud segments are growing rapidly by hoovering up VC money from all (mostly unprofitable) AI companies. What happens when the VC money stops pouring into OpenAI and Mistral and ___? That will crush the most important customer segment for cloud earnings growth. Google, Amazon, and Microsoft won't go out of business. Obviously. They'll still be profitable. Obviously. But they very well could see earnings decline for a year or two as the excesses are squeezed out. Multiples investors are willing to pay would decline. There's no way the infrastructure companies skate free when OpenAI stumbles. Don't confuse survival with thriving.

lolkkthxbye

OpenAIs spending is partially responsible for NVDAs earnings. All fueled by debt and VC. I think you’d see a decline in earnings among the AI supply chain (data centers, memory, etc). Good news is all that VC money can be redirected to better investments.

Panda_Pam

Financial advisors, if they are from big firms like JPM, ML, etc., can give you access to alternative investments. I don't mean bitcoin or gold, I mean private equity, exchange funds, VC funds, etc. that you wouldn't be able to get in open market. Imagine if you were a VC invested Anthropic a couple of years ago, you would be banking right now! Alternative investments would be good for diversification, especially if you think AI bubble and recession will lead to a big correction in the market. One caveat is that private equity and exchange funds come with higher fees (I've seen up to 5%, they usually have performance fee on top of admin fees if the investment is doing well) , minimum size requirements (the smallest minimum investment that I've come accross is $50k), and for the most part less liquid. But if you're young, have excess money that you don't need for the next 7 to 10 years, it is not a big issue. With regard to fees, you can negotiate fee reduction as your portfolio grows. I've been able to get my fees reduced from 1% to 0.9%, to 0.7% over 10 years period, and should be able to get it down to 0.6% in the next year based on growth projections. Also, if you're interested in private equity or exchange funds, have your financial advisor waived the placement fee.

blbd

In the abstract, no. If you build a network and start to meet people, yes. But it has to be a subject you are passionate about and interested in so you know what to look for. I have experience doing startup companies, so once I hit accredited status, I put a small amount of money into a VC, where I know everybody that works there.  If you do it randomly just because you can without planning it, that will underperform a Boglehead three fund portfolio. 

SelenaMeyers2024

Yeah this is not the way.... Asst is a play.... So is dfli... So is inhd.... Everyone gets a piece. Play VC where you expect each position to fail and one to 5x or more

kadam_ss

This is a desperate attempt by private investors and VCs to dump openAI bags ok retail. If this AI bubble “pops”, public companies like mag7 would get hurt bad, but smaller private companies will get wiped out. That will wipe out tens/hundreds of billions of private capital, VC money. Last ditch effort to move risk to retail

WelpSigh

The hit would be that they wasted a shitload of money on something that will never make them money, which would be Bad. The business is large enough to withstand it. The issue with "monster demand" is that right now, the AI companies lose money on every query. Inference costs exceed revenue per prompt. That is without factoring in the capex and R&D spend. That isn't likely to change in the near future. Businesses and consumers are not paying the true price of AI by any means, it's subsidized with VC money.

Electronic_Muffin218

Yes, the codebase has to change if folks have hard-coded to CUDA (presumably any of the larger NVIDIA customers do this to maximize ROI, but they are also the most well-positioned to rewrite to TensorFlow or whatever is the new hotness for TPU use in Google Cloud). TensorFlow continues to work on NVIDIA, but I have no idea how optimal it is or not. The general advantage to the TPUs is going to be cost over time - less expensive per unit/work for Google to build, and they design and deploy a new generation roughly every year that delivers better efficiency per unit power. Yes, NVIDIA will continue to produce higher-density chips over time, too - but I don't believe they are as efficient at comparable tasks and the gap will continue to widen - but IANAMLP. I suspect Google will have to discount TPU pricing vs. comparable NVIDIA pricing to attract customers afraid of vendor lock-in to TensorFlow, but their cost of goods to deliver those units of processing has got to be much lower. Presumably some tasks are more suited to CUDA (See [Google docs here](https://docs.cloud.google.com/tpu/docs/intro-to-tpu) for a list of tasks that aren't optimal on TPUs). I have a feeling larger companies will move to multivendor ML/GenAI provider sourcing for all of the same reasons they do so for general cloud compute today - price leverage. Yes, there is pain in having to write to N different APIs. There are some solution providers who abstract that away, but you have to pay a price for those software layers. Here's how adoption goes for the little guys: \- startup founders DIY for a time on rented cloud AI, nudged toward one vendor by their benevolent VC advisers for Kairetsu purposes \- eventually, the company scales so much that they negotiate a deal to get preferred bulk pricing from any one of the big vendors \- eventually, the company gets bent over so badly by that one vendor that they immediately rewrite on some sort of intermediate abstraction layer and pay the price to get access to deployment on the other cloud vendors, so they get some pricing leverage back \- eventually, the company gets big enough to make it worthwhile to rewrite directly to each cloud vendors' APIs and make their own abstraction layer At any point along the way, the little guys may die, get acquired, or stall out at a size where it doesn't make sense to go to the next stage. Here's how adoption goes for the big-sized guys whose primary competency is not computer systems: \- endless RFPs for years handheld by consultants, eventually deal is inked, consultants get paid handsomely to start moving workloads into the cloud \- the solution gets rebuilt a few times over the ensuing years, never quite working as advertised, but well enough to claim some victories for director and VP promptions

OutsideSpirited2198

AWS is losing with startups. Most of their introductions to startups come from VC trying to lock them into AWS contracts with early credits, but startups are waiting before approaching VCs and building on cheaper infra these days. Short term not a problem but long term might be.

Sleepergiant2586

##Everyone knows OpenAI is gonna go IPO and will easily raise billion smaybe even trillions. Raising money from private VC market or via IPO is no big deal. Infact I am betting in 2026 their IPO is gonna come and suddenly shoot up prices of all the companies who they dealt with.

RoyalCities

P/E is one metric but stock concentration is another risk to consider. Cisco alone was around 4% of the s&p during the dot com era and Nvidia is at 7. It's gotten as high as 8 making it the most concentrated stock since record keeping began. The mag 7 accounted for around 40% of the entire s&p. When you have high concentration like that it makes the whole market more fragile. Also all the deals being made are within the 1 sector. 70% of Nvidia's sales are to other mag 7s and the rest is going to VC funded fabs trying to compete with runpod. I train these models and every single day I'm fed new ads from random companies I've never heard of offering h100s for peanuts. I don't think this is sustainable so if it isn't a bubble I atleast expect some closures and consolidation because it's just not sustainable.

Hot-Celebration5855

I listed two companies that invested in them. Now scar that math up for meta, oracle, a dozen other major tech companies investing in these companies. Not to mention the enormous amount of VC money they can tap into. Wake me up when any of these businesses has a down round in their equity raises.

WaveZealousideal2848

I like that it has a small market cap and the weekly chart trend is looking very nice. They also have some contracts that look juicy, any good news will push this thing up. Here's some AI jargon: * **RM 11.6 million (\~US$ 2.6 M) Rooftop Solar Contract** * Contract to build a rooftop solar PV generating facility in Malaysia. * Construction expected to take **2 years**. Then, after construction, FGL signs an O&M (operations & maintenance) agreement (15–21 years). * The company says it expects a *double-digit profit margin* on this deal. * **Multiple Large-scale Solar LOAs Worth \~US$5.5 M** * FGL received several *Letters of Award* (LOAs) for large solar projects. * Their scope in these projects includes full EPCC services, supply & install of dc/ac systems, instrumentation & control, civil work, etc. * **Conditional LOA: \~US$68 M for 100 MW Solar Farm** * A conditional LOA (letter of award) for a 100 MW solar farm in Tanjung Malim, Malaysia. * This project is interesting because it is tied to an **AI data center** in Enstek City, suggesting FGL is aligning with data infrastructure + green power. * **MOU with GCL – USD $220 M Potential Project Value** * Memorandum of Understanding with GCL Systems to jointly develop renewable energy projects (PV + possibly storage) across Malaysia / ASEAN, with a potential project value of up to US$220M. * This could significantly boost FGL’s pipeline if fully realized. * Very aggressive pipeline: The company is targeting up to **RM 17.4 billion** (\~USD 4.1 billion) in EPCC opportunity through 2028. * They are partnering with **GCL Systems Integration Technology Co. Ltd.** on renewable energy projects across Malaysia and the ASEAN region (MOU signed). * They are integrating **AI / drone technology**: working with VC AI Ltd to develop AI-powered drones for solar farm inspections. The idea is to reduce O&M costs and improve efficiency in monitoring solar panels. * Geographical expansion: They’ve expressed interest / activity in Vietnam — e.g., a proposed acquisition of an 80% stake in a Vietnamese solar company (VES 1).

JacquesHome

You seem to be really stuck on the stock buybacks and bad Google leadership. Don't take this wrong way, or do, I don't think you are in any position to judge Sundar / Google as having bad leadership. First, Google has more than enough cash to spend $50B a year on CapEx AND do stock buybacks. Second, Google has trounced the QQQ by 1.5x over the past 5 years and by 2.5x since Sundar became CEO. Google dominates every market it plays in Search, Ads, and Youtube (kills Netflix by a wide margin). They have a portfolio of Deeptech bets that would make any VC jealous.

JacquesHome

Incorrect and horrendously bad take. OpenAI has access to equity financing which everyone knows is the higher cost of capital. Google has access to the debt markets and free cash flow. Google can spend $50B a year for the next 10 years and it will have ZERO impact on their viability as a business. You are seeing the narrative on OpenAI change in real-time, every additional dollar raised for OpenAI is now going to come with higher scrutiny and more onerous terms. I've been in the VC ecosystem for over two decades now, I've seen this story play out too many times. OpenAI isn't going to implode or fail or die, thats stupid, but things are about to get harder for them.

Jedclark

Google's biggest moat is just infinite piles of cash. They can run Gemini at a loss for a very long time to shut the VC-backed companies out. I do wonder if this affects OpenAI/Anthropic's pricing power, they can't "turn on the money machine" the way companies like Meta did with Facebook/Instagram for example because they don't have the monopoly/network effect in this area. Putting prices up is the perfect time for Google to say "Gemini subs are now $5 to new users".

salespunk44

Having been in and around firms funded by VC’s and Private Equity I can tell you they are momentum lemmings. If they see a hot sector they pile in hoping to ride the wave. The secret is they only need 1 in 10 to hit. That is their metric.

therealsilentjohn

> the dilution will erase the yield and then some This is, indeed, a *huge* issue with most networks. When you read that whateverChain has 70% yield for staking, it's usually a VC-backed, centralized, low-usage, high inflation network. Some networks, like Ethereum, have a fee burn mechanism. During high usage time periods more supply is destroyed then created, creating deflation of the supply. During low usage time periods, more supply is created, incentivizing staking. You can see this in realtime on https://ultrasound.money > In other words it's only sustainable with a continuous influx of users. So it's arguably not a Ponzi in the dictionary definition of the word but the dynamics sound awfully similar, there's just an extra step in the middle. You're just describing how *any* market works. Yes, if there's no users for the network, then the coins just inflate away and the coins are worthless. That's also how the stock market works, or Amazon marketplace. Other than buying a house, land, or productive equipment ***all you are ever buying is something that has social value***. The end of that line of reasoning is to stock up on a bunker to survive the apocalypse and become self-sufficient. Most of those "real" things effectively amount to buying your way into another job. Want to buy farmland? Great, how does that improve your life? Are you going to farm it? That's buying your way into a job. Want to buy rental property? Great, are you going to be a property manager? That's buying your way into a job. Stocks are owning nothing just as equally as crypto. Being backed by physical company holdings? By the time a company would go through bankrupcy you are last in line to claim and you aren't seeing a cent. Owning gold? You ever actually buy physical gold? Like, have it shipped to your house? If not, then to you it's as immaterial as crypto. If yes, were the atoms in it really so useful that it's what you bought? Did it's weight and luster improve your life somehow?

Huge-Albatross9284

It's a huge tech focused Japanese VC/asset manager specializing in tech with a whacky nutjob founder. It get's reported on because he does outlandish things all the time.

insightful_pancake

It is an investment firm but not a PE firm like the ones you mentioned. It’s highly relevant today given its large investments in AI companies, notably its ~$30bn investment in OpenAI, and its recent sale of NVDA. The company was, a few months ago briefly, the largest company by market cap in Japan and has been notable for decades, also driving much of the VC wave and tech investment during the 2010s and early 2020s (with a mixed record but I digress). The CEO has also been very vocal with the media for decades so he gets more attention than more less public CEOs (eg at the companies you mentioned).

Distinct_Recipe4798

Remember 2008 happened cause outright lies on the financial side + people bought houses they literally can't afford, and banks lending this money literally could not pay it back when they needed it. For this bubble to implode, what will be needed is a combination like that such as lies about financials + outward pressure to force OpenAi and all these companies to pay back the money they got from VC investors. If firing people to "replace them with AI" doesn't payoff where they literally don't have the money to pay it back then the bubble will blow. Without the pressure the bubble could indefinitely continue.

wazzu_free

Nvidia is still beating expectations is true, but , this revenue is derived almost entirely from infrastructure build-out (CapEx), not yet from sustainable consumer application utility (OpEx). It feels like we are building a massive centralized structure where the revenue is just money circulating from VC/Big Tech into Hardware( AI Hype → Massive CapEx (buying GPUs) → Amazing Revenue for Hardware companies → Validates Hype → More CapEx circle jerk), without enough leaving the system as end-user value yet. When cash becomes desirable (as you noted), companies might tighten that CapEx spending first. If the shovels stop selling because no one is finding enough gold, the correction could be deeper than just a valuation reset.

Inspector330

I disagree. The Dot Com bubble had people investing in worthless fantasies. They were not investing in the internet itself. While it may be true non publicly traded companies may be eating up VC money by adding the AI buzzword to anything they to (in this case it is the dot Com bubble), there are a few major players leading the new tech revolution. This is still the early stages. If you invested in any of the early revolutionary big players during the Dot Com era, you would be tremendously wealthy today. Think 20 years ahead, and spot the obvious leaders in the field. Just like the internet, any company that doesn't properly implement AI in due time will become obsolete or stagnate in growth.  Do you really believe nations around the world are all wrong? This isn't about what AI can do now. This is about growing it into what it can do in the future. 

Ok_Ground9015

You leave him alone. He just has a very high IQ, and no real knowledge or common sense. His speculation was formed on conjecture at best. Usually people with high IQ are just good at seeing patterns. I've taken a couple of IQ test. It gave me a good understanding of what they test for. I'm not even moderately gifted, nor above average. I'm on the tippy top end of average. Though it didn't test for any of my accumulated knowledge whatsoever. I'm fluent in 12 programming languages, fairly good at pattern recognition, excellent at problem solving, certified 6 times from Harvard in computer science, certified in integrated digital imaging and commercial computer graphics from TSTC, certified in networking and databases from VC, and been making websites, producing music, digital art since the 90s. The IQ test is garbage for testing intelligence. I would have likely scored the same on the IQ test without any education after junior high.

_hiddenscout

Volume in general goes down this time of year and we’ll get the tax harvesting moves soon as well.  I find the AI bubble thing interesting, since I think it’s somewhat true. Personally I’m not worried about like hyperscalers or companies with billions of FCF.  I think there is more of a bubble with VC AI backed apps, the nuclear names, quantum, and some of the names financing things. 

_hiddenscout

I do think they are parts of the AI trade in a bubble, but not all of it. Nuance is something that is lost online a lot and sometimes in investing.  Like I’m not worried about the hyperscalers who have billions in FCF, but see the stuff like growth in nuclear names and quantum as more part of the the bubble of the AI trade. Especially the stuff VC is funding of just a bunch of bad apps. 

goldmedalsharter

They'll raise cash if they don't. Greedy VC piggies will pay.

OldPersimmon7704

It's still a great tool and won't go anywhere. It should still be understood that the vast majority of AI implementations aren't profitable, and that's before we reach the point where the AI companies start trying to take profits. Once OpenAI starts profit-taking instead of writing off billions in losses to stoke the hysteria, I'd expect that AI profitability rate to move dangerously close to zero. People in the market are launching money at AI based on a sales pitch while fundamentally not understanding what the technology is and what the limitations are. I have a computer engineering degree and know how this works under the hood. Two things become very obvious when you have a real tech background: (1) This doesn't scale forever and (2) the hallucination issue is very likely unsolveable. Under the extremely likely circumstances that we can't solve hallucinations, do you think a technology that you can *never* fully trust is worth this much? Does it also make sense to pay some multiple of what we're paying now for API tokens once the VC money dries up? I would think not in most cases...

letsgobernie

Exactly. The whole hypothesis has been that there are insignificant/insufficient uses for this tech, net earnings to be made now and in the future to justify the expenses . So the chain goes: precarious LLM based startups cobbling together expensive/useless stuff > OpenAI > large tech companies > Nvidia Nvidia is literally in the end of the queue - able to sell hardware while the ones who are supposed to show utility in this tech and heavy investments come up empty. Whos aid we'll jump straight to hardware sale slowdown? Maybe people here did, but they are not articulating the bear thesis correctly then. Look for the private VC investments to start dropping in valuations, cause they are the weakest, then OpenAI loses a bunch of its API calls and shrinks in revenue, maybe goes through a downround, and now people start asking questions about utility, about pausing data center build outs and pausing Nvidia HW purchases - literally happens towards the end.

Spear_n_Magic_Helmet

there’s only one share of me and my EPS this quarter was better than 1.30 so. Accepting VC money.

981flacht6

Most of the bers don't really know what they're talking about. I've been invested in Nvidia since 2017, and researching their work since 2015 in their non-gaming work. I've been a customer of Nvidia since 2000. Bers get hyperfocused on short thesis opinions, amplifying the same claims without realizing how much of the market itself has changed over the past 5-10 years. We have far greater market participants, we have more developed countries, we have larger market access in it of itself. We have the correct tailwind alignment for this to all grow at a hyper-accelerated growth. Are there bubbles in here? Yeah sure, some places yes. I see it more in Private Equity / VC space with crazy valuations all over again that parallels with the tech bubble 10 years ago. Funny enough, you can google "Sam Altman" and "tech bubble" and find an article where he talks about bubbles 10 years ago, and you can read it for yourself and ask Grok/Perplexity/ChatGPT to steelman both sides and see what you see. But ask more questions and you might see what I see. I think, there is too much attention on hyperscalers, but there's so much to come with robotics, healthcare, sovereign AI etc.

gamjatang111

i just foresee more Mamdanis emerging. No way for younger generation to fight back, now they just yolo into sports betting and robinhood. Before they could yolo into Defi but now that space is all VC backed grifters

Ghould72

It reminds me of pre-2008. Back then, everyone was into trading - you’d get stock tips from random people. The market feels like a giant roulette game where everyone’s following the guy they think is on a hot streak. The problem is compounded by leverage stacked on top of leverage, and people have normalised this. Meanwhile, the debt locusts are running out of crops. VC is picked over, PE is picked over, real estate, etc. - now all that’s left is barren brown scrubland: subprime borrowers. Hardly enough to sustain them, but they’ll devour it anyway. Or perhaps it’s closer to 1929 than we’d like to admit?

Apprehensive_Two1528

A latecomer doesn’t void their VC status. it doesn’t mean it didn’t mature the investment.. what’s your entry time to do with softbank’s VC status?

AALen

Peter thiel is a fine VC but a horrible fund manager. He's lost so much money. Burry shorts everything. He's trying to relive his subprime glory days. He recently shut down Scion after finally realizing how out of sync he is with the markets. SoftBank sold NVDA to buy OpenAI, NVDA’s customer. 😂

fallingdowndizzyvr

Softbank wasn't a "VC" when it came to that Nvidia position. They didn't establish that position until 2020. They were a latecomer. I bought Nvidia in 2008. And I'm just a retail schmuck.

PTRBoyz

Anthropic looks like a great investment. OpenAI looks like VC bukkake. 

Reddit_Wombat

I think it's because there needs to be a trigger for the bubble to pop. At the end of the day, the bubble is far more than just inflated AI stocks; it's really more of a bet from big tech corporations, VC/PE, and AI startups that they/their investments can stay solvent long enough to become profitable (as others have said). This shouldn't be much of a problem for big tech (Google, Microsoft, Amazon, Meta, etc.) alone, but startups like OpenAI are making huge bets that they are forcing everyone to match. If OpenAI, Anthropic, etc. reach a point where they can't continue to raise money to fulfill their obligations, then the bubble pops - however, their investors are incentivised to keep the bubble from popping, so they keep investing. Kind of a chicken or the egg situation. This fascinates me, so I made a video about my take on it: [https://youtu.be/c2o0fUfsWWU?si=KmkyEIUdG8RsWxZC](https://youtu.be/c2o0fUfsWWU?si=KmkyEIUdG8RsWxZC)