I've been told the following (obviously negative) narrative. Can someone verify/refute some of these? I've put (?) next to questionable claims.
1. Twitter is purchased with debt
2. Debt is transferred to xAI via acquisition of X/Twitter
3. Debt is further transferred to SpaceX via acquisition of xAI
4. SpaceX IPO offered at extreme valuation
5. Index fund inclusion rules waived for SpaceX IPO: profitability requirement, inclusion period cut from 90 to 5 days
6. Index funds are largely held by passive investors such as pension funds.
7. Index fund managers are not incentivized to exclude a SpaceX from their indexes. (?)
8. Holders of original X/Twitter debt (banks) incentivized to support the rule waiver since post IPO, SpaceX will have liquidity to service/pay the debt.
9. Passive investors are unable to rapidly respond to these types of changes because liquidating portfolios will incur capital gains taxes. (?)
10. SpaceX is in Texas jurisdiction, where shareholder lawsuits are not possible and must instead go for arbitration. (?)
The twitter debt is a negligible portion of the money at stake here. It’s a footnote compared to the trillions of dollars in wealth that are moving around. We are only talking about it because the internet commentariat has special interest in twitter. Not worth wasting time thinking about it if you are deciding how to allocate your portfolio.
Nevertheless it is part of a pattern of weird deals in Elon’s companies. He’ll do anything to move the goalposts and turn his failures into successes. There is no norm he won’t violate, no boundary he won’t cross.
As of January, TSLA was somewhere around 2.3% of the S&P [1]. Because SpaceX will have so little float available, it would be somewhere around 0.7% if included.
There are many valid complaints about public markets undervaluing businesses in comparison to private markets, now that everyone is putting their money on the line we start to see a different view being taken
which is exactly why public markets have always been a superior price discovery mechanism in comparison to private markets
i read it as most likely people will lose their retirements if the companies goes bust. is that correct? in my country now they move to new pension model which will allow more aggressive investments with them. i am worried it will just get sent to these bros and i'll work until i die.
Amazon is worth $2.81T right now and only represents 4.03% of the S&P500.
So a $1T share would represent less than 2% of the S&P500. This is significant for a single company, and 6% for 3 shit-tier companies (SpaceX, OpenAI and Anthropic) is even more significant, but we're far from "losing retirement if they go bust"-levels.
The reason they're doing that is because traditional European ponzi scheme pension systems don't work with shrinking populations, so actually we're working till we die in either case unless automation taxes pay for it.
Why? An index fund represents the market (usually top 100 or 500 companies), and SpaceX will certainly be in the top few companies. I would argue it's a lot riskier to buy it after the IPO price (if you're buying it secondary it would be easier to spike prices by accident), plus then it's not representative of the actual market until you've purchased the stock.
Unless I'm misunderstanding this, buying at the sale price is the least risky way of purchasing the stock, which is what index funds should do. They should pursue the least risky way of indexing the market
Because nothing about the IPO price has any resemblance to a fair market valuation, and if it's being propped up by this forced inclusion, even less so? The rules existed to fundamentally protect against a Potemkin village situation where an underwriter and some early round investors whip the valuation into a froth and raise against a rabid corps of retail investors who don't necessarily care about a PE ratio of 1,000+ because they're buying the hype.
More importantly, it allowed organic price discovery to occur. This eschews that process because the indexes are _forced_ to participate essentially at _any_ price, so rather than the market writ large having the opportunity to reward or punish the underwriter pricing of the IPO and determine any true idea of price, they're forced to buy the banker's narrative, which will intrinsically prop up the stock to some degree, but at what cost, and based on what underlying?
Counter from me: it has the value is not the company or the product it's the dream. And it will work. It's similar to Tesla or star citizen. People keep putting money in to it
People can dream with lottery tickets, that doesn't make them wise pension plans.
While I like the dreams Musk sells of self-driving cars so good they don't need steering wheels, of space colonisation and useful robot workers cheap enough that I could personally afford the, at this point I don't trust him to actually deliver any of those things.
Index funds are largely synonymous with passive, long term, buy-and-hold investors. That kind of investors are best served by slower changes to the index, especially since index funds are intended to piggy back on the price discovery that happens in public trading. An IPO price, which is the result of a private negotiation, is exactly what you don't want to buy stocks at if you're a passive, long term investor.
And when it happens, I suspect we'll end up having to eat austerity to avoid inflation again. Under new leadership from the Responsible Party, whoever that is where we live.
>Why does SpaceX warrant a change of existing trading rules?
They don't, while timing certainly benefits, and potentially was triggered by them and OpenAI and Anthropic IPOs, these rules are not specific to only apply to SpaceX.
FTSE Russell (Russell 1000/2000 etc.) Adopted "fast entry" for large IPOs. Eligible companies (investable market cap above Russell Top 500 cutoff) can join after 5 trading days (previously quarterly rebalances). Also eased float rules with carve-outs.
Nasdaq (Nasdaq-100): Effective May 1, 2026, top ~40 market-cap companies can enter after 15 trading days (previously 3+ months). Adjusted low-float handling.
S&P Dow Jones (S&P 500): Reducing seasoning from 12 months to 6 months for megacaps and waiving the 4-quarter GAAP profitability requirement for large issuers.
The answer remains, these rules do not specifically target SpaceX, they apply to a range of companies that fit specific profiles. Timing happens to favor SpaceX, but will equally favor OpenAI, Anthropic and others within the same qualifiers.
The links above provide specifics as to the what's and the why.
We all know they get paid by musk to load up on overvalued stocks so musk can get some cash from pension funds, the pay off a bit Russell’s for bending the rules. No one in their right mind would change rules to buy space x. What profit must have to compensate the valuation?
Stop downvoting the only person that talks reason. We have reached a point where Musk and its tech pals must be stopped with all means possible, because government oversight, democratic processes, and the judicial process clearly do not apply to them anymore.
Sadly that's what happens when people have a "high" technological culture with absolutely zero political nor ethical education. They see all the cool gadgets while being completely blind to the political and social side effects
This is a good point. It's like a strange form of selective magical thinking, or maybe it's really just a global psychosis.
Tech people without a background in humanities (not academic, even just because of personal interest) are the most prone to this in my experience.
Because 5 days is not enough for the market to discover the price of SpaceX.
And the rules were changed so the float is weighted as if it was much much larger than it is.
SpaceX financials are a mess outside of the actual SpaceX part. xAI is losing money hand over fist, other random bits in there are doing the same. The valuation makes no sense.
It's basically a money transfer from the average person to the poor richest person on the planet.
The true Great Filter is mental illness, apparently.
Moreover their filings on the matter basically correctly weight their space launch business and then go "and xAI will obviously be worth a bajilion dollars more".
You shouldn't be downvoted because your point is completely valid. Matt Levine made the same point in the last Money Stuff podcast. These indexes are supposed to contain the largest, most significant, and in some cases all companies so people shouldn't be mad at the indexes for pulling in a company that's going to have a 1.5T market cap at IPO. Given the market cap, it would actually be weird to not have it in an index like the S&P500 or QQQ.
Instead blame the bankers and market who are putting buying in at 1.5T valuation.
If people really don't want SpaceX in their S&P 500 tracking ETF, we should see a S&P-ex SpaceX in short order.
Ask yourself this question: Why were the rules there in the first place? SpaceX being big doesn't make this okay, it actually makes it more dangerous since more and significant money could be funneled.
The money still comes from somewhere. In this case, those index funds will be forced to trim holdings of other companies. So it's cannibalizing other parts of the stock market.
which, if true, would make an arbitrage opportunity for a fund that explicitly excludes these high valuation targets but buys those trimmed companies (because for trimming to have happened, they must've been sold unwillingly and thus must be under-priced).
Which, again, benefits the wealthy and well-informed and well-connected.
The suckers who have their retirement savings in some kind of index fund because all the experts have been saying, "Buy index ETFs and forget about it" for decades are gonna get fleeced, and the wealthiest get wealthier.
I suppose everyone reading this thread counts as "well-informed" then, right? All I have to do is move my 401k into the bond-heavy fund right now and then back into the stock-heavy one when everything craters is what I'm hearing. It's what you're doing, right?
> This forces over $30 trillion in passive 401k and retirement money to buy SpaceX at IPO valuations.
And more importantly forces them to sell the rest of the market.
Who will be on the other side of these trades? I suspect the stock market is not sufficiently liquid for all of that to happen in a single day without the rest of the market seeing a significantly depressed price, and index holders effectively gifting value to everyone else by effectively pre-announcing their large trades.
I don't understand what you wrote. It sounds like you are saying this is a zero-sum game of winners and losers -- SpaceX "wins" and the tracking funds "lose". The ETFs and mutual funds that track these indices don't care what stocks are added or removed. They have one job: To track the index as closely as possible with the lowest cost.
> they’ll adopt some of these proposals that are in the benefit of these companies IPOing at the expense of large funds?
Yes. And I see the argument for it. It’s hard to claim you represent the market if trillions of dollars are outside it for no reason other than newness or capital-structure weirdness. (I agree with excluding unprofitable companies.)
Moving the goalposts of an index fund for one or 3 IPOs puts the reputation of S&P and Nasdaq in question. The comments in this thread make that clear.
> Moving the goalposts of an index fund for one or 3 IPOs puts the reputation of S&P and Nasdaq in question. The comments in this thread make that clear
These indices have lots of competition. NASDAQ 100 lost basically zero money when they made these changes. If S&P makes them, I'm doubtful anyone will react either.
When S&P was still taking public comment, I put the link on HN. It got like two upvotes. This isn't something materially care about as much as like to get angry about on the internet.
Not particularly. When I posted the request for comment to HN it got crickets [1].
Not enough people care about this. And the "safe" option has kind of shifted with the other index providers having moved first. That said, there were a lot of proposals and I'm not expecting all of them to be adopted.
90 days or 5 days, it doesn't really matter because the float will be tiny due to the 6 month lockup. What kind of price discovery are we expecting that would happen in the other 85 days?
Well, they changed that rule as well. If the float is less than a set percentage, then it is weighted as a much higher percentage. Something like the minimum for weighting is 12% where SpaceX's float will be below 5% (those are the numbers I recall, but I don't have a lot of confidence in them.) That means they will be weighted as if the float was 12%.
No, the parent was saying the other rule change is arbitrary.
The tiny float and just a few days before the index funds buy means they have to buy without any more revenue / earnings info than was already published pre-IPO. 90 days is a quarter, so there WILL be more price discovery before a 0 day index fund seasoning period.
SpaceX is slowly and steadily increasing the float over the first 6 months by having a rolling end to the lockup. The only major cliff will be Elons shares
There is a world of difference between 5 and 90 days, even if you aggressively stick to the “time in the market over timing the market” strategy. If it wasn’t of consequence, then they wouldn’t be attempting to change the rules. And if SpaceX is such a great long-term investment, then they shouldn’t need the advantages this provide. Join the index funds like any other company. Let the market sort itself out.
You protect yourself by understanding that this is one infinitesimally small cost (expressed as a fraction of your portfolio returns) that doesn't overcome the benefits of maximum diversification and the ultra-low fees of broad-based ETFs.
Buy MSCI World, enjoy the 0.04% p.a. fees and minimal idiosyncratic risk, and relax.
Index rebalance traders will reduce your annual returns by less (probably much less) than 0.1%, but there is no better alternative for you at this moment in time.
If you intend to remain a passive investor, keep doing what you’re doing. If you have conviction that AI boom will bust and you want to become an active investor, follow the advice from other comments on how to prevent these companies from being part of your portfolio. If you're going to become an active trader, I suggest thinking about both upside and downside risks and look beyond the local echo chamber.
Not buy these index funds. If you don’t want to own the entire market, don’t buy funds that seek to own the entire market. Funds like ESGV which exclude companies with poor governance have existed for a very long time - I can’t find a clear answer as to whether or not it will buy SpaceX, but I’m sure you can find funds that cater to your desires.
That ignores the actual issue here, which is the change in rules. Index funds already seek to own the entire market, and when most people chose these index funds there were rules about when newly listed stocks get purchased by the funds. And now those rules are being changed.
The problem is I'm already in a S&P500-tracking ETF, for a decently large amount of money. Selling it off would be a big taxable event for me, something I don't want to do.
Yes, because when you sell it, you get cash and profit. Profit is taxable, in Germany they tax it with 25% + Solidarity Tax + Church Tax (if you are a member of a church).
After, you can go ahead and buy another fund, but in between you "shed" a significant amount of money.
However they are literally changing the rules of what "the entire market" means to include those companies sooner that they would have been when people bought those indices.
Here are some factors I would expect to rule out the frothiest stocks:
"Quality Factor ETFs are made up of securities deemed to exhibit strong fundamental characteristics. These ETFs screen for stocks that have healthy balance sheets, encouraging growth prospects, and consistent improvements in their earnings."
"Value-centric ETFs invest in securities deemed to possess value characteristics, including those operating in stable industries with relatively low price-to-earnings ratios."
"Low Volatility ETFs invest in securities with low volatility characteristics. These funds tend to have relatively stable share prices, and higher than average yields."
Be sure to check the expense ratios on smart beta ETFs. Generally, the more sophisticated the stock screening, the more they will charge you in management fees.
Personally, I keep my portfolio extremely conservative. My bet is that if the singularity arrives, we will all either die, or get UBI. I don't particularly care about having more moons than the other guy: https://www.astralcodexten.com/p/you-have-only-x-years-to-es...
That’ll do precisely zero to protect against the effect described. In fact the opposite - the dividend paying stocks will by mathematically necessity be among those ETFs sell down to buy these IPOs
I believe you may have gotten discussion threads mixed up, but in any case: I expect that as SpaceX investors sell their SpaceX stock, they will buy ordinary equities to diversify.
This is going to be very... "interesting". SpaceX will IPO with minimal float, while at the same time forcing every index fund to buy a fixed percentage. A long squeeze, so to speak.
I can't picture any scenario where this ends well.
It's honestly blown out of proportion. S&P 500 allocation is float adjusted, i.e. the allocation is based on the market cap of the floated shares, not the total market cap. SpaceX float is ~4% at IPO, and at a $1.75T valuation that's $70B in floated shares.
SpaceX will be ~0.125% of the index. The actual amount of buying is in the low tens of billions, and given these are $30 trillion+ markets, this is hardly anything to fret about.
> Although Nasdaq has already shortened the “seasoning” period before index inclusion to 15 trading days and FTSE Russell has slashed its waiting time to five days (and S&P Dow Jones is reportedly considering something similar), most share indices weight firms in proportion to the value only of shares they have released for public trading (the “free float”). For SpaceX, this means just the $75bn or so of stock it intends to issue in June—so its initial weight in the S&P 500 will be around 0.1%. The NASDAQ 100 is an exception, and has changed its rules to weight companies at up to three times their free float, in an apparent effort to woo Mr Musk. Even so, SpaceX’s probable initial weight in this $40trn index will still only be around 0.5%.
So people who hold ETFs that track the S&P 500 probably don't have too much to worry about. People invested in the NASDAQ 100 probably have more to be outraged about - but then again I suppose if you're invested in the NASDAQ 100, you may be consider more exposure to SpaceX to be a good thing.
This needs to be higher for more visibility, because the weighting and the float's proportions are an important aspect that most news sources or comments fail to mention.
You forgot the part where NASDAQ already enacted a rule change that normally prohibits small floats from index inclusion (and thus forced purchase by index funds), which was normally 10% [1]. SpaceX is only floating ~4.3% of their stock and they're triple-weighting it.
Also worth asking what SpaceXLAI's plan is to make money. $22.7T of their $28.5T Total Addressable Market is... Drumroll... Enterprise AI! That's the plan, that's what we are investing in: spacex and Tesla and Twitter are all side shows, to sell AI. That's what everyone's absurdly overpriced forced passive investment is going to.
https://bsky.app/profile/segyges.bsky.social/post/3mnan7hr2j...
There is nowhere near enough burning rage for this absurd fleecing of the public.
The problem is the stock market is more divorced from reality than we have ever seen. For instance, why does Tesla stock still sit where it is? How could it possibly not be going down at this point? So many undelivered promises, major setbacks in sales, massive decreases to their sales forecasts… literally nothing has gone well for them in years and yet the price is still outrageous. It really feels like I’m just out of the loop on something.
Jack Barker’s rather blunt monologue in SV about how the stock is the product is more true than ever. It felt very heavy handed at the time but it’s only proven to be more the case than I thought.
This probably illustrates my disconnect from reality, but I’ve never understood why a company would care about share price once they’ve left the door. I get that the co still owns its own shares and can conjure new ones for sale, but why would those very infrequent events interfere with the day-to-day operations. In my (wrong) eyes, it’s like pro-baseball players trying to increase the value of their trading cards via their participation in the game. The team doesn’t matter any more, it’s al about what the card owner wants.
Company itself really shouldn't. Everyone involved in management from board to executives do. Board operates behest of stock owners, executives operate behest of board. Such to keep their job they have to do what stock owners want. And stock owners either want dividends or growth in some term.
> Board operates behest of stock owners, executives operate behest of board
These are often both weak signals, though. They'll govern very high level decisions, but all the day to day is inside the company. Just as I want a return on the money in my bank account (as I was promised) investors want a return on their money too, and as you say, the executives and board should care about making sure the people who put money into the company are getting a decent deal out of the arrangement.
It is not easy to radiate heat in space. You need a significant extra mass budget to radiate heat from hardware that is easily cooled in less volume on the surface. These will also be too large of a capital investment to operate as disposable satellites at the bottom of LEO. They will necessarily be higher up.
Well, unfortunately, it's not such common knowledge that it would be considered sarcastic by default. I have learned to be explicit by appending "/s" or "/j" so it's clearer.
To quote a message I wrote on a finance channel on telegram:
The TAM for "enterprise applications" at 28 T sounds both too much and too little: by the time the tech (and/or overall economy) allows it to reach that number, that number itself will look unimpressive, and this kind of scale seems to be reachable with ground-based more easily than with space based (at current energy prices, even that TAM is only about 2% of being Kardeshev 1).
Feels like Musk did vibe-economics for "how big is the global digital economy?", much like the claims about factories on the moon making data center satellites looks like he prompted grok with "if I tile the moon with solar powered factories and mass drivers to launch them, how many TW can it launch per year?"
So the obvious thing to do, for someone that's got ~$3mm to play with, is to setup an ETF that is SP500 but with the old rules. If you can convince $40mm of other people's money to go into your not-specifically-Musk-less-but-just-happens-to-be ETF, they'd come out ahead.
One presumes it's because a huge amount of its revenue comes from defense contracts, which are haram. Here is n excerpt from the fund's exclusion criteria:
> S&P 500 Shariah Industry Exclusions. The index universe consists of all the constituents in the S&P
500 Shariah, excluding companies classified as part of GICS sub-industries 20101010 (Aerospace &
Defense), 40203040 (Financial Exchanges & Data), 40201060 (Transaction & Payment Processing
Services).
That is wild. Saudi Arabia which is governed by sharia law spends about 7% of its GDP per year on its military. I had no idea that ownership of defense contractors is considered haraam.
Not really. Social security is a defined benefit plan that requires new payors to fund todays expenses. 401ks are a defined contribution plan. Very different.
The opposition you're talking of will hold no significant power in 2029. They currently hold a minuscule amount of power and this isn't going to skyrocket within 4 years. A meteor causing an extinction event is more likely and I don't think you're expecting that.
And significant part of those in opposition will jump the ship if they gain power. I think there is little hope for system to change unless there is total collapse and replacement.
Think about it: you have hundreds of thousands of pages of evidence that the hyper-wealthy may have trafficked minors across state and international borders. Only one person is in prison over it, and her cell gets upgrades.
35 years ago this would have been a slam dunk for the opposition party of any republic. Instead of standing ten toes down on it, opposition leaders are doing... what exactly? Going on with business-as-usual, for the most part. They should be attempting to add language to every single bill that comes across the floor to see more done. They aren't.
I think stock trading shenanigans are far lower on the list of moral outrages, particularly given Congress' predilection for insider trading.
Oh, SpaceX already has that covered: thanks to the TX legislature, SpaceX shareholders cannot file shareholder lawsuits, you can only complain to the "Texas Business Court" or get binding arbitration [0].
Indeed. Everyone should be moving their funds out of target date funds right now and into medium and small cap stock funds.
It's quite sad that the pillar of American life that is the 401k is given to shady fund managers. The law should be that if you manage a 401k you must be a fiduciary. If that were the case then no one would be bag holding these fake valuations because they'd be liable for negligence. Right now they're just in on the scam.
If it's actually your 401k, sure you can. Just today I rebalanced my retirement funds away from large cap stocks to avoid this steaming turd that Elon is dumping on the public.
For what it's worth, I think anything selling energy or fertilizer which is not sourced from the Middle East is a pretty good bet right now. Depends on how the US/Iran conflict plays out, of course, but I'm not optimistic.
If you're truly convinced there's nefarious reasons for including megacap IPOs in passive index, you can always short the stock (or use derivatives) by the same amount.
I'm not sure you'll come out ahead. (Personally I don't get the outcry, except for nasdaq which has fairly stupid rules, delaying the inclusion of megacaps won't make the problem go away, but probably increase since the float will be massively larger). It's inherent to being a passive index.
Regular people want to invest so they can make money and companies want people to invest so that they can raise money. So pretty much everybody wants the 401k money to be invested in the stock market.
But the issue is that investing in the stock market is very technical, so some smart asses invented the index funds to make it easy for daddy and mummy to put their retirement accounts to work.
The index has safeguards in place to try and reduce its volatilty. So people are happy, cause they are investing in stock without having to look closely at what it is they bought.
But if suddenly some people change the safeguard rule, so that their buddy can dump their overvalued stock over people who think they are investing relatively safely, then it can be argued that there is foul play.
People are not finance specialists and they are heavily incentivized to buy index funds, so they need to trust that the people who are telling them to invest are not hiding things from them. If that trust is broken, lawsuits will follow.
It’s like: imagine you own a Toyota and have a maintenance contract with Toyota, and one day you have your car serviced and they tell you they changed the brakes. They tell you the brand of the new brakes and they tell you it’s fine while in fact, they put some cheap garbage that fail after 100 km of driving.
When the brakes fail and your car falls off a cliff, you go and see them and they tell you: “yeah those brakes were bad, but we told you we put them in, you could have looked up that these were bad, it’s all over the internet, so that’s on you”.
> People are not finance specialists and they are heavily incentivized to buy index funds, so they need to trust that the people who are telling them to invest are not hiding things from them. If that trust is broken, lawsuits will follow.
A "lawsuit" isn't a concern for the likes of Musk.
He's got the money to pay lawyers, politicians, and influencers. He's spread this risk around to the right people; if he goes down, they're going down with him, too.
At a certain point you have to start jailing people for long periods of time. I don't mean the Milken, Belfort, or Skilling treatment. I mean being placed away for 30+ years in medium-security facilities at the least.
> At a certain point you have to start jailing people for long periods of time. I don't mean the Milken, Belfort, or Skilling treatment. I mean being placed away for 30+ years in medium-security facilities at the least.
Bernie Madoff was sentenced to 150 years in prison, if that counts. But then he had committed a crime, which is the usual "certain point" we wait for.
> * Valuation of the sp500, the hyperscalers and Nvidia is (mostly) reasonable based on earnings
That is a hell of a statement to make (their earnings are mostly negative, after all, except nvidia). Would require exceptional evidence, which doesn't seem to be there.
> * Build out of infrastructure is demand-driven, hyperscalers are not building just for future demand that would not materialize
> * OpenAI, anthropic & co can be overvalued but that does not mean there's a systemic bubble
OK? It could also mean there is.
> I think this underestimates contagion effects and the fact that demand appears to be subsidized and may disappear quickly, but it's just MHO.
Even with subsidized demand Microsoft still ended up cancelling over a gigawatt(!) of planned datacenters already back in 2024. But yeah, their arguments are missing a lot.
You mean "Listen to [someone who started on Wall Street at Lehman Brothers, joined PayPal in its earliest days and worked alongside Peter Thiel and Elon Musk, and eventually became a venture capitalist in Silicon Valley] argue why AI probably isn't a bubble".
Funny how this different framing of the exact same person provides a completely opposite expectation of their incentives behind commenting on whether AI valuations are a bubble.
We don't let bubbles pop anymore. We print money and borrow from the future so that no one loses money on their homes and retirement accounts. The GFC changed the rules.
It looks less like capitalism and more like socialism for the rich, marketed as free markets.
Print money. Push most of it into cheap credit for giant corporations and asset owners. Let a little trickle into the real economy so ordinary people feel temporary relief. Then let inflation quietly do the dirty work.
The public pays through higher prices, weaker savings, and future debt.
The powerful collect the upside.
That is the game: privatize the profits, socialize the losses, and call it capitalism.
And all of this is legal under the disguise of "protecting the economy for regular folks", and they can keep doing it repeatedly.
It worked. The only people upset about it are young people who don't vote. If young people don't want a continual wealth transfer from them to the old, they need to start voting. That's been the case since 2008, and here we are a generation later.
Old people will be the majority for the foreseeable future, though. To be honest, the only strategy that I currently see for young people is waiting and growing old, unfortunately..
Irrational exuberance rarely transitions to a rational drawn down. The minute the first selfish-actor flood-liquidates, everyone else will too. That's now runs work.
> "Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head."
While this is factual, the world (and humans) haven't functioned this way since ... ever? It doesn't matter what you think logic is, if the people who are providing the services (teacher, worker, doctor, etc..) are illogical and you need these services from these people.
Because traditionally the pop is delayed while those who realized most of the gains attempt to offload the risk to other parties. Whether this works or not at some point it becomes an inevitable and self reenforcing feedback loop.
Just investing less in risky things on the run up means you personally perform worse so even in known bubbles you don't see reasonable slow downs instead of disastrous pops.
> traditionally the pop is delayed while those who realized most of the gains attempt to offload the risk to other parties
What? Source? Plenty of investment bubbles pop before the bag is passed.
This thread involves a lot of people looking at something they don't like and presuming karmic forces will give them what they deserve. There is no reason these companies, even if massively overvalued, have to "pop."
That's fundamentally different from e.g. the financial crisis, or the 2023 bank collapses, or even the dot-com bubble. Those did not have the ability to self correct. There was no slow deflation other than through a bailout.
I'm genuinely curious why you say this is different from the dot-com bubble?
As I see it, this is the exact same situation - wildly overvalued companies based on investor exuberance, the underlying business is not capable of supporting this kind of valuation. IPO tends to be the crunch point at which this overvaluation is exposed. Once exposed, the valuation correction spreads to other similar businesses quickly and the bubble pops.
What's the self-correction ability that AI companies have?
> genuinely curious why you say this is different from the dot-com bubble?
A lot more revenue. Dot coms were going public pre revenue. And Anthropic is profitable. Both it and SpaceX wouldn’t be dependent on further stock sales to stay alive—that lets them weather a downturn.
As I understand the situation, Anthropic is revenue-positive but not profitable. As usual, Ed Zitron covers this well [0].
As with the dot-com bubble, there is a lot of voodoo accountancy (and flat-out lies) about the actual situation here.
As I understand it, the basic problem is that the big three can't charge enough per token to cover costs because they're in competition with each other (and one of those is Google that can afford to buy market share using its other operating revenues), and the OSS/cheap Chinese models.
And this situation is unlikely to get better in the short term because building cheaper per-token capacity is very expensive and time-consuming.
> this situation is unlikely to get better in the short term because building cheaper per-token capacity is very expensive and time-consuming
They don’t need to fix it in the short term.
Look, this could be total nonsense. But what won’t happen is Anthropic or SpaceX disappearing inside a year. That was true in the 90s because the only cash flow going into those companies came from investors.
Agree, some of these are valid businesses. But they are also massively overvalued on that underlying valid business, because of investor enthusiasm. When the bubble pops they are going to have real problems because of that overvaluation. Hopefully they survive, as a lot of the dotcom businesses did.
I think the real bloodbath will be the second-tier businesses that are mostly reselling cheap tokens to a market niche with custom prompts, and also massively overvalued as "AI businesses". And that kinda mirrors what happened in the dotcom bust - all the overvalued "webscale" businesses that hadn't really worked out a solid model yet went to the wall immediately
OpenAI seems to have made debt-like commitments to spending on infrastructure. If those are indeed binding, they may have less flexibility than the others. (If Anthropic’s revenue growth stalls and its valuation halves, it should still be a going concern.)
> This is a wild thing say without any qualification
It’s really not. Bubbles are notable because most elevated asset prices slowly go down. And they have common characteristics that force the reckoning. Usually debt. Sometimes operational leverage.
I said attempt to offload see mortgage backed securities for one such attempt.
The point is that nobody wants to be the first out of a hot market nor the last so that bubbles everyone knows are bubbles first hang on despite it being broadly believed to be so and then crash as people head for the exits.
Broadly people are taking on debt to realize profits that may not exist. Retrospectively widely acknowledged bubbles like every crash in the last century all popped im not aware of any big enough to cause a recession that petered out slowly. Since we don't need to look up 100 years of crashes together can you name some similarly large issues that were resolved slowly over time?
Once the liquidity is transferred, that's it? There is nothing there (datacenter in space, that dude is really smoking some serious stuff), so the money will be spent/transferred and then there is no revenue/new sources of money.
It's the same scenario of a ponzi scheme. Everything looks fresh and fine until everyone realizes there is nothing in there.
Not related - many robber barons went bankrupt in the severe economic crashes of the time, such as the Panics of 1873 and 1893. The Gilded Age continued despite bubbles popping.
Is there any definition of bubble that doesn't involve popping? That's literally the metaphor.
> We have no fundamental reason current valuations have to collapse suddenly.
I would agree, but i think that is just saying that the current situation is potentially not a bubble. Which may be true. We will only find out after the fact.
One thing I have come to realize, is that worrying about bubbles will keep you poor.
If everyone is in the bubble and it pops, everyone is in the same boat, so you’re not really going to be poorer than your peers by comparison.
If it’s not a bubble and you are wrong, you will fall way behind everyone else and just watch people get richer and richer doing the exact same thing you should have done.
Also, just because something is a bubble doesn’t mean it has to end in a devastating pop. Sometimes bubbles expand and then just get diffused. The exponential rise stops and prices plateau, but it just becomes a new normal and things stagnate for a while before resuming normal upward growth.
Ask Warren Buffet how concerned he was of "missing" on bubbles... He got richer than pretty much everybody else by just avoiding bubbles and then buying assets at fire sale prices when they inevitably popped.
> If everyone is in the bubble and it pops, everyone is in the same boat, so you’re not really going to be poorer than your peers by comparison.
> If it’s not a bubble and you are wrong, you will fall way behind everyone else and just watch people get richer and richer doing the exact same thing you should have done.
I don't get? First scenario, you get richer vs. the average and in the second you gt poorer. So in total you average out? I don't see how not participating makes you poorer in average.
> Sometimes bubbles expand and then just get diffused.
That's not what a bubble is. A financial bubble is defined by the "burst" at the end.
There is literally nothing creative about circumventing existing regulations. By definition of there already being rules in place to prevent them, the pump methods being used are already a known quantity. That those safeguards are being bypassed is just boring old corruption.
The wrong lessons were were learnt in 2008 after no individual suffered any negative consequences for their part in causing horrible losses for a lot of people.
SpaceX used its massive IPO and listing fees (and the prestige of being the largest IPO ever) as leverage. Index providers and exchanges saw financial incentives: listing fees, trading volume, data sales, and long-term revenue from asset managers. Reuters reported that SpaceX advisers contacted major index providers (including Nasdaq) to discuss early index entry, and that SpaceX was leaning toward listing on Nasdaq only if it got early inclusion in the Nasdaq 100.
The rules built to protect passive investors were waived:
> the illusion S&P is second guessing or reconsidering its plans?
There is no second guessing because no decision has been made. A consultation was put out. I’m expecting it will be adopted in parts. Like, the market hasn’t priced in a full rebalancing.
All these things are apparently valued at trillions of dollars these days. Where's the trillions, or hundreds of billions worth in improved quality of life? What has gotten better other than the ability to produce more crap?
In terms of SpaceX (the space portion of it) they've produced the cheapest way to get any payload into space. If you pay anybody else, you will overpay drastically depending on who you want to take your payload into space.
In terms of AI, we've seen even here on HN everything from mathematical problems that remaind unsolved, being solved, mathematical proofs being used to disprove theories, heck we even learned more about alzheimers, new antibiotics, precision targeting in oncology, using AI to flag healthcare anomalies in imaging. The benefits are easy to miss, but they're snowballing into place, there's definitely an explosion of useless crap, but you have to look for the real things and you will come to find, that AI is giving us things we otherwise either might not have discovered or wouldn't have within our lifetimes.
I have yet to see an application outside of harnesses and LLMs itself where adaptation has happened on a larger scale. Devs are fine with babysitting their LLMs. People like to use LLMs to improve their mails and so on. But outside of that, the adaptation is not there yet.
Don't get me wrong. I love LLMs and use them myself. But the biggest gain for me is easier context switch and text manipulation. It's not the: replace X with a bunch of LLMs every CEO is dreaming of. So yes, you have higher productivity, but is the eval of those companies legit? x doubt.
What is a larger scaler for you? What is "outside harness an LLM"?
What is _the proof_ if all the proofs are not _proofs_?
I don't babysit my LLM based services which are used by coaches and clients around the world. One of my LLM based solution get 30-4k daily hits and I have users coming back on the regular to use it. without babysitting, doing things that would take them hours of manual work and research.
I don't babysit the developers I work with and our clients, which both use LLM's themselves and at scale with their clients, serving all kinds of LLM powered services to millions of users worldwide.
You are not "seeing" the large adoption because:
- The technology is "a few years old" in its usable state
- The corporate adoption cycle is slow
- You have to understand the technology to use it in a good way, which most corporate devs and PM's do not
So it will take a bit for the "obvious" adaptation on large scale.
But you won't "know" when the large adoption happens.
Silent inference is growing every day, and that is what real adoption looks like - not an LLM being in your face chatbox, but running in the background, sorting, finding, fixing things, aligning data, figuring out analytics, tuning the ads, cleaning the datasets.
My understanding is that it’s better than doctors themselves. But it’s probably the same as with autonomous driving: the bar isn’t just “be as good as humans”, it’s “be flawless”.
It’s actually quite a lot worse than even doctors in training except for highly constrained experimental settings and a few very nice applications that are mostly too tedious/impractical for a human to do or are very basic detection tasks.
I am a radiologist and researcher predominately focused on AI.
I work with pathologists and radiology is way ahead of us with AI use in clinical setting (but still not very far). Only things that get serious use are lab-developed (ie not commercial) image analysis algorithms for very limited (tedious, error-prone and ultimately not that often used) biomarkers. Don't believe the hype.
You could also look at the market, one of the biggest players, Paige, was acquired for about 30% of the money they raised.
A friend of mine, a dermatologist, told me that LLMs are quite performant for melanoma analysis. Based on their own statistics, LLMs are able to beat humans with ~10 years of experience in the field.
They will never beat the human instinct tho, but they can be great tools sometimes. Unfortunately, LLMs mostly produce garbage.
Whenever it comes to medical diagnosis I would caution anyone to be careful with what “beat humans” really means.
In real life pathology is a spectrum not a binary and physicians are not trained to be 100% accurate instead optimizing sensitivity and specificity considering pretest probability as well as the harms of overdiagnosis and under diagnosis for a given scenario.
For something like melanoma which is relatively easy to diagnose with a superficial, extremely low risk skin biopsy and where early staging dramatically improves outcomes you would want to design around overcalling (high sensitivity) rather than maximize accuracy given the significant harms with false negatives and minimal harms with false positives.
An AI may be more accurate at classifying melanoma/not melanoma but if it does not meaningfully improve on the clinical threshold of biopsy/no biopsy or result in less biopsies that accuracy is wasted and may even be detrimental.
Note: I am just using this as an example to illustrate the considerations.
I don’t think so, not beyond the current trend in medicine which is going up anyway.
For some things, like 3D volume segmentation of structure or disease (e.g. CVA/stroke volume, cardiac muscle mass, iron quantification) the bottleneck is the time it takes so we currently use approximations like single longest dimension, circular regions of interest, etc. AI will dramatically increase accuracy allowing for more accurate treatment and easier large scale research with quantitative endpoints.
Other things people think of like detection of aneurysms, fracture, lung nodules are not “hard” but AI has already added and will continue to add the second-reader benefit which will reduce detection errors. For this category the clinical benefit is as of yet unclear and we know that increased detection does not necessarily translate into improved patient outcomes and can in fact make them worse from over-diagnosis which means investigation related harms and over-treatment.
We were already in a phase of “over detection” in much of radiology with advances in imaging technology so the incremental benefit of current AI remains to be seen and I personally think is going to be much more limited. I had a case recently where a 2 mm brain aneurysm was missed on 3 CT scans over 10 years but was picked up by AI so now is being followed annually. This is too small to treat considering the risks and a serious argument could be made that 10 years of stability is proof enough that this is almost certainly clinically irrelevant for this patient.
Far more interesting areas of AI in imaging are in acquisition of acceleration (i.e. the medical equivalent of upscaling) which can dramatically decrease costs and increase accessibility as well as analyzing imperceptible features.
It may not be a popular take here but in my opinion the future of radiology is like what we see in software engineering today - a skilled human equipped with AI will outperform humans without AI and AI without humans, the latter of which we are still several years away from prototyping due to various technical hurdles.
> in my opinion the future of radiology is like what we see in software engineering today - a skilled human equipped with AI will outperform humans without AI and AI without humans
I suspect this will be the case across the board. It's a useful tool, but it's just a tool. It's not a replacement.
With these kinds of things, I want to see comparisons to trained, alert humans. Cut out all the distracted, stressed, tired, incompetent, intoxicated cases from the baseline. That includes rushed doctors at the end of a long shift.
A self driving car doing better than a drunk on the freeway doesn't reassure me that it'll do better than sober me in a snowstorm.
Non sequitur.
The core idea is that if you have just self-driving cars you won't be trained enough to drive properly next time you're caught in a blizzard, because you never drove for the last 5 years.
I also question if the kind of person who actually drives while drunk - knowing perfectly by thousand of society inputs and peer pressure that it is wrong - will care enough to buy a self-driving car.
> In terms of AI, we've seen even here on HN everything from mathematical problems that remaind unsolved, being solved, mathematical proofs being used to disprove theories, heck we even learned more about alzheimers
Sure but SpaceX can get you into orbit for $1400 per kilogram, and future projection and goal is $100 per kilogram. The competition is at $15,000 per kilogram. I think it's a no-brainer for anybody trying to get anything into orbit. Unless someone figures out superior tech that surpasses SpaceX, I'm just not seeing why anyone would spend more for less capable and costly rockets.
At the rates you quote, $1 T (the size of the market) is 714,285 tons of stuff in the space each year. I don’t think there is enough space in space for that much cargo.
Although realistically this will be built from lunar materials, you still need to lift a lot of mass to build the necessary industrial processing and mass drivers to launch it from the Moon to some Lagrange point.
And there are many other useful space megastructures that can be built in space from common materials, like giant solar arrays beaming power down via microwaves: https://en.wikipedia.org/wiki/Space-based_solar_power
On one order, correct, but it's still on the order of hundreds of millions to billions.
Also, keep in mind that a stock price discounts expected future cash flows. Is it likely that SpaceX will have a near-peer competitor within a few years? No, it's not, and that market share is being priced-in.
Is it likely that SpaceX will have actual reasonable demand? Their major customer is Starlink. How legitimately confident are we in the numbers with regard to price reduction vs creative accounting to offload costs to Starlink and subsidize the launches to appear to offer huge cost reductions?
If there exists sufficient demand for the product of space launches then it's probably reasonable to expect their to be a near-peer competitor soon, but that's only if SpaceX were to be profitable, which it isn't, even with the subsidization by Starlink on the order of many billions.
> If there exists sufficient demand for the product of space launches then it's probably reasonable to expect their to be a near-peer competitor soon
Space is not that easy. Even with unlimited money, it'll probably take 10 years to build a rocket like starship. Going from nothing to orbit needs a lot of money but more money doesn't make that faster.
There is about 3 chinese orbitallaunchers with some reusability support flying & about as much scheduled to debut this year.
But other than that, yeah - outside of China, progress has been horrendously slow & Blue Origin, the only other US company that demonstrated a partially reusable rocket just had a devastating pad explosion, destroying one of their 2 rockets and their only launchpad.
Were we struggling to do this before? Was the overall percentage reduction in costs? Was some other achievement held back because we couldn't accomplish this? What is now enabled?
> to get any payload into space.
A limited set of payloads into space. No vehicle can get "any payload" to space at a fixed price.
> The benefits are easy to miss,
You've listed a bunch of reasons to publish papers. What is the actual ground level change that's occurred? Are those antibiotics produced? Do they actually work just as predicted? Why is that first world problems are exclusively listed but basic problems like world hunger are never even approached?
Granted, I only skimmed some high-line numbers, but isn't their only profitable project Starlink? SpaceX is functionally a satellite internet company that happens to make rockets.
> What has actually gotten better in practical terms for the average American?
Starlink has made connectivity cheaper and more available. Earth imaging has made various food production processes more efficient. Weather forecasts have become more accurate.
If you’ve genuinely missed the massive economy that LEO has become, it will be a fun thing to catch up on.
> Earth imaging has made various food production processes more efficient.
I'm not even going to bother sourcing the fact that food prices have only massively gone up negating any gains in productivity. The average American struggling to buy basics like eggs and meat aren't feasting on more efficient food production.
> Weather forecasts have become more accurate.
I'm sure the growing homeless population is happy to know they can better predict the weather they'll be sleeping in.
This is all totally worth supporting a nazi billionaire
weather forecasts is really good right now (in my experience forecast for rain/cloud cover/wind speed at hour granularity is amazingly good) and earth imaging for food production has been done for decades. I do not think SpaceX has improved nor will improve on these.
SpaceX’s main customer is Starlink. With that in mind: if Starlink takes over all the ISPs in the world its market value should be comparable to Comcast - $89 Billion.
Do we apply a bar this high for any other company/job/business? Saving gov/tax money aka "billing NASA 1/20th what SLS does" doesn't count as worth it to you?
Reusing rockets reliably rather than "throwing them away" is a great achievement and I'm surprised people have to justify it on HN
Stock prices indicate the present value of all future dividends, so it's not about what has happened but about the risk-adjusted expected value of all which is to come.
What probability you assign to arrive at that expected value and how you adjust for risk is on you.
Comments like these make me feel like we're living in different worlds. I use LLMs multiple times a day and they've significantly improved my quality of life. They are also steadily becoming more useful over time (e.g. now solving math problems).
I haven't found anything out of LLM's that has improved my life. It was a fun little toy but could never find a use case. But clearly, your mileage varies greatly from mine. That's cool.
I just personally don't the use in more when what I think many need is less. But that comes from essentially this point of view - “Better than a thousand hollow words is one word that brings peace.” ― Buddha
I use LLMs daily, both as chat applications and "vibe coding".
I wouldn't say it "significantly improved my life" however. Everything AI has done for me right now is a "Nice to have" but it doesn't fulfill my needs.
It’s because people value different things. I could not care less if LLMs make me push code faster to prod. Couldn’t care less if they improve my emails grammar. Couldn’t care less if they crack one unsolved math problem.
Enterprises are paying API prices, which are ~9x the price of the plan for the same usage. A lot of people on the plans are not maxing them out either.
From experience, whenever someone asks in that particular tone and is actually provided with examples, they proceed to bend over backwards to "prove" that it's secretly not much of an improvement at all/AI psychosis/a mirage/actually harmful/<insert other substitute for "I don't like it therefore you must be wrong" reason here>.
- Significantly increased my productivity as a software engineer.
- Using it daily for Chinese-English translation. Significantly better than pre-LLM translation software. Also, great at teaching grammar, nuances, etc.
- General Q&A. Like "Googling" but much faster. This is probably the most common use case for me.
> - Significantly increased my productivity as a software engineer.
This is exactly the point that keeps coming up that folks are struggling to grasp, myself included. How are you measuring this? It certainly makes me feel productive, but I'm not sure I can confidently say it has actually made me more productive. It's made the easy stuff a no-brainer (e.g. boilerplate, simple logic) and the moderate stuff really hard. Never mind the hard stuff. Vetting the code has become a whole other job on its own. The only folks I've found who confidently claim it increases productivity appear to be online (and without evidence), because no one in person is willing to claim that and show it.
I can agree with the skeptics that LLM generated code is usually crap. I rarely accept its output without significant edits unless it's truly boilerplate, and I want to avoid the need for that kind of code in the first place.
For me, the killer use case is debugging. I hate wasting time debugging something that should work except for mistakes, and now I do that probably 75% less than I used to because AI does it for me.
I don't know if it makes me that much more productive, but I certainly enjoy my work more not having to do as much tedious debugging, and it feels like I waste a lot less time doing it.
I've never been a developer. Dabbled in frontend web for a bit (HTML/CSS/JS, no large frameworks) and felt like if I really dedicated some time to learning how to code, I'd be pretty decent at it. It's always intrigued me, and I've always had an itch to build things, but just never found the time. I'm in marketing now - I own an agency.
Over the last 6 months since the coding models really began to step up and get good, I've built several dedicated apps to support my business:
-Profitability optimizer and forecaster based on unit economics and current ad efficiency.
-Creative strategy tool that ingests brand and product data and helps explore primary and secondary personas and emotional motivators.
-Reporting tool that processes natural language queries and connects to multiple data sources to fetch results. Can schedule reports to post directly to Slack or email.
All robust and hosted on Railway. Team members can use them. Clients can use them. OAuth via Google.
Would any of this have been possible for me before the rise of frontier LLMs? Absolutely not. Learning the frameworks alone would have taken me longer than it's taken to just... build. Rapidly build and deploy. Total game changer for me.
Oh - and I'm building a game on the side. LLMs know Godot.
> Significantly increased my productivity as a software engineer.
You’re going to have to define productivity as it applies to software engineering. With LLMs we’ve primarily seen the number of PRs over time being discussed as a proxy for LoC, as well as the speed of bootstrapping a small project. None of these have a known correlation with economic output. They just feel good, to the programmer, their manager, or both.
> Using it daily for Chinese-English translation. Significantly better than pre-LLM translation software. Also, great at teaching grammar, nuances, etc.
Yes dealing with language is the one area LLMs are actually designed for. But what’s the TAM for machine translation?
> General Q&A. Like "Googling" but much faster. This is probably the most common use case for me.
And now you’re missing any kind of traceability for the information that you “learn,” since it all gets spaghettified and then recombined into a pile of plausible slop with no attribution. Where before you had to do slightly more work to find the information you needed, now it’s available faster but you’re at complete mercy of literally 3 American companies plus the CCP for the accuracy of that information. Most people somehow seem happy with this arrangement.
> You’re going to have to define productivity as it applies to software engineering.
I meant it in a colloquial way. I just get more done, faster.
> And now you’re missing any kind of traceability for the information
Modern LLM assistants provide sources and references. While it can sometimes be just "slightly faster", it can genuinely save hours of research on complex ones. Also the "slightly faster" can add up to hours saved with frequent use.
We have some exotic chicks the kids picked out, and 4 were going to die of brooder pneumonia.
An LLM correctly diagnosed it, and figure out that we could treat them with Nutri-drench Sheep Supplement, since Tractor Supply was sold out of the chicken version, and they are very similar.
Of course it then immediately recommended we use hemp bedding that would kill them a different way, but the saleswoman sanity checked all of the above,
100% survival rate.
Everyone’s thriving. Chickens would follow the medical advice again, I guess.
My wife was diagnosed with several chronic conditions in the last year. AI tools both diagnosed her before a doctor did (which helped us find the right docs to care for her by figuring out what to look for). One of her conditions (Mast Cell Activation Syndrome) comes with a ton of dietary restrictions. Its helped us immensely in planning meals and identifing food triggers. All of this would have possible with out AI as a tool but would have led to much more pain and suffering and likely taken much longer to figure it out. It's easy to dismiss (especially given the hallucinations) but it's been legitimatly life changing over the last year
> - Significantly increased my productivity as a software engineer
I don't understand this. It increased productivity of every developer in the western world, so it didn't really give you an advantage. Your output is more valuable, but your colleagues' output is more valuable too, and your competitors' output too, and so on. So you're doing more things at the same salary and it's not like your company or your employer is making more money than usual or awarding you more eoy bonus. If your "life-change" is "I'm writing more code" without any other advantage (and with the possible disadvantage of your role changing, or being at risk), why is it desirable?
Some guy vibe coded a tasks app client that I really like. Not life changing but I couldn't find one that suited my needs since de-iPhoning before this one.
Immediate medical and childcare advice from LLM are pretty life changing.
Interpreting reports, avoiding drug interactions, or knowing when to seek medical care. And before people object- I can literally use the same LLM my doctor does to check these things, without waiting 2 weeks for an appointment.
I helped my parents work through bacterial culture results when my dad was hospitalized with sepsis, and had them ask their doctor for specific follow up tests.
I rebuilt my gas furnace and fixed my dishwasher with AI as an assistant.
Those aren't the fun parts tho. My favorite is touring art museums ancient historical sites with an LLM guide. It can give me a short academic essay about every artist, painting, or artifact. It can pull out details quirky stories about the history that I specifically would find interesting.
I cant recommend this enough. Its like visiting with a 10 PhD docents in art history.
How do you trust a book, blog, tour guide, or art history teacher?
How do you trust the placards under a piece of art?
The short answer is you accept that it isn't perfect and move on with life. I have found multiple errors in all of those things. Human tour guides are especially the worst at making things up.
Part of navigating life is dealing with imperfect information and uncertainty.
Just like with a friend, coworker, or spouse, you use your judgment and track records to decide when to trust what is being said based on subject matter and stakes.
Domain matters. I have found it good at history, but less trustworthy in others. For examle, the llm gave me a bunch of bogus advice as I repaired my dishwasher based on weather models that weren't accurate. There is also a lot of bad information on Reddit and Appliance blogs. Repairman are almost as bad as the tour guides, willing to lie straight to your face. I deal with it the same way.
I think it is a typical example of where N% (N tends to zero) of the population GREATLY benefits AI models, while the next bracket (casual users) enjoy some benefit, but the vast majority would not feel any difference if they lost the tech tomorrow.
Let me rephrase that to you: The vast, vast majority of people, even in the western world, even the white-collar part of the population, are not whales or power users of AI models.
I use ChatGPT daily. And I never spend more than $25/month. If I lost it, it would suck, but it would not affect my life significantly. I then see people spending $100 / day on Claude Code tokens, programmers in startups / tech companies rack up thousands a month in bills. These people are literally spending 100x more than me, a casual user.
Yeah, I suspect they follow some sort of whale economics - where a relatively small userbase (in the big picture) and providing them with a huge chunk of their revenue.
But still these companies are being valued as if they're some omnipresent companies which humanity simply can't live without.
So, let's see. LLMs made my overall coding output significantly faster, even factoring in review time and tech debt. My employer should technically benefit from this, but it doesn't really, because all its competitors use the same AIs and all their engineers increased their throughput in a similar way. So I'm not sure that I, my colleagues or the whole segment I work in really benefited from AI in any measurable way.
The Grok app had over 100 million downloads in 2025, over 60 million active users, and generated $350 million in revenue. That’s a lot of people being forced to use it.
Even if they are, it still doesn't justify the ridiculous levels of overvaluation. They are not essentials and their consumer demand is extremely elastic.
Starlink a generational leap in Internet connectivity. The Starlink satellite constellation is over 10,000 satellites. It is hard to comprehend. Also, they will soon add mobile phone service. That will be yet another generational leap. I watched a (sadly) short YouTube video about the SpaceX factory in Seattle (area) that produces one Starlink satellite per day. That is incredibly fast. That alone sounds like a generational leap in satellite manufacturing. (Oh yeah, and they have a somewhat less technically impressive factory in Texas that produces millions of Starlink antennas per year.)
Final sad note about Starlink: It is helping Ukraine to win the war. It makes their mid- and long-range drones almost impossible to jam. (Most short-range drones use fibre optics these days to avoid jamming.)
Id be more enthusiastic if I could buy starlink at a valuation based on starlink. Instead we’re getting a shitsandwich of a combo stock with a pile of regulatory manipulation on top
Try to keep perspective, these valuations are just functions of the stock market the end result of some spreadsheet. They have nothing to do with quality of life. Why would you relate those two things in the first place?
They are fundamentally different, but people desire they be aligned. The public expects the economy to producing higher quality of life for us, otherwise what is it doing? And for whom? But whether it actually does so is a function of other things. That gap seems bigger than usual right now with AI and tech eating the whole economy.
Isn't that the market cap of the company? That doesn't mean the company creates trillions of dollars of value. It just means the number of shares times the last per share trading price is trillions of dollars.
One would assume that the "market cap" of the company is equivalent to it's *worth*. Asking how Anthropic is worth $1tn+ is a valid question when it doesn't do much, apart from the promise of making a large fraction of the world unemployed and the rest under the thumb of unethical American tech supremacy. It's arguably built on the largest intellectual property theft in the history of mankind. That's generally what people worry about. Whether that's "true" or not I guess is how you frame your world view.
It would be very nice if we had a system where the money was backed by some kind of consensus about quality of life. But what we have has more to do with compulsion.
The more dollars there are, the more deeply in debt we are. If these were interpersonal debts where we all owe the dollars to each other such that they go away when whatever promise is eventually kept, that would be a tight knit society. But instead we're all indebted to the banks, so instead we have a lot of collateral at risk, and a lot of uncertainty about whether it's a stable arrangement.
If there isn't enough money to satisfy the asking prices set by the owners of these abstractions, then we can always go deeper into debt until there is. Or we could have a debt jubilee and let the prices re-settle to something more in tune with reality.
1. Valuation is based on the estimate of future profits. It has absolutely nothing to do with what have already been delivered. It's not a prize, it's an estimate.
2. There's a potential to optimize a lot of economic activity in there.
High valuations and other people's wealth doesn't need to improve _your_ individual quality of life - just the quality of life of someone who's willing to pay and the participants of that system.
I think this is the story of tech in general. In my life, I've seen 3 really big steps down for the middle class: 2001, 2008 and then covid. Basic necessities are expensive today - people point to high GDP but what I see is high prices and poverty. And Tech, we've built a dystopian surveillance state.
A shitshow for whom? I see it as extremely unlikely for the United States of America to not allow individuals to purchase things for whatever money they can pull together.
The only answer is to make it unacceptable socially, more costly economically (taxes, etc), or the third option which involves pitchforks (perhaps that also falls under "unacceptable socially") that I hope we can avoid at all costs. (is this the show you mention?)
Feels like folks used to understand the balance a bit better - but I think I made that up. This next governance cycle is going to be a trust-busting, wealth-confiscating one I think.
I think there will be a tremendous political opportunity in the next 6 months to capitalize on rage in cities against new tech wealth driving up housing costs.
Housing prices aren't going up. They peaked in late 2022. Boomers are a huge generation, with homes millennials and Gen Z can't afford to buy. And they are smaller generations.
Not for apartments / condos in Seattle. I looked today on Zillow and lots of apartment rentals advertised 2 weeks or 1 month free rent. Lets see what happens.
Raven, Raven.. that's for those who can borrow against that to know and you to likely never find out.
What you thought your life would improve? Didn't you hear, wages are only increasing, why don't you invest some of that sweet cash into @JumpCrissCross' fund, it'll be alright. What were you going to do with healthcare anyway?
My own lived experience tells me they deserve more.
The vast majority of people I've known who have worked for minimum wage were much harder workers and frankly just much better humans (who happened to have less privileged starts in life) than the vast majority of people I've known who are financially secure.
But even if you don't believe they deserve more inherently, it would still be dumb for us to continue to let income inequality grow at the ridiculous rates it has been over the last 40 years. This pattern never turns out well for society.
> Where's the trillions, or hundreds of billions worth in improved quality of life?
I think these IPOs are going to mint tens of thousands of new millionaires or something. That, in turn, will generate massive tax windfalls for all levels of government.
> other than the ability to produce more crap?
This is a big "other than." (And to be clear, the jury is still out on whether AI will let us produce more in the long run.)
If jury is still out on positivity, long term, of AI, I'd really like to see arguments for that. Historically all - almost? - technical improvements were net positive; even some blunders had upside. AI is dangerous, yes, but e.g. fission was developed for the bomb, and now powers significant numbers of households worldwide - the tech less than 90 years old.
Quality of life doesnt matter. What matters is the choices people make to spend their money on. This is what drives profits.
If you are upset about people spending their extra productivity and labor hours on poision and mental laxitives, i would mostly agree. This is a failure of culture to adapt to distratcions and shiny objects
The stock market is just a game that rich people use to manipulate money. It is not a reflection of the real world. Consider for example Google, one of the companies with highest valuation in the market. If Google stops working now, the only problem we'll have is getting a few minutes back of our time. Nobody will have big issues in life because one cannot find a web page, view more ads, and watch silly videos! However they will swear that Google is the most important company in the world to justify the money people throw at it. I won't even go to Meta, which is like celebrating that people are using crack cocaine...
you can replace “google” with every company that exists or has ever existed so no sure what the purpose of your comment is unless you are pitching abolishing the stock market. google is what they are because they make shitton of money and will continue to do so (more and more) into foreseeable future. that is stock market, always has been, always will be
this sounds like a reddit comment too much. why would trillions of dollars improve your quality of life. a bunch of companies get investments from a bunch of VCs who took out loans... and that means your quality of life should improve?
And what's more crap exactly? it feels like your grasping at straws to take one set of things and associate them with others. yeah, lots of terrible products out there, lots of enshittification, lots of topics of discussion there. But AI and GPUs are being used in such a diverse way it is impossible to have one opinion on it all like how you're trying to.
I'm not even disagreeing (or agreeing with you), I'm just saying that's a lazy comment to make. if these companies making profits without paying taxes, that's a voter problem (not even politics, just people being shitty voters, self not excluded).
For everyone else who might think they have a better formed opinion on this topic, I only ask that you apply the same level of passion to how the US national debt is now 120% of the GDP. The government is fighting wars and printing money, devaluing your wealth, and indebting your country to previously unseen levels. At least the banks and VCs are using their money (unless they get a bail out again), not your actual tax money, and the tax money and wealth of generations of Americans. You have a president literally stealing billions of dollars in broad day light from literally you.
Nominal global financial wealth is about $350 trillion. If you include real estate global nominal wealth is about $600 trillion.
A good portion of that[1] is what alot of people might call fake money--valuation inflation, etc. And global wealth, even just financial wealth, isn't quite as mobile across borders as one might assume. So marshalling a trillion dollars stateside is gonna make at least some moderate waves. Still, in the grand, global scheme of things a trillion dollars is a rounding error. A trillion isn't what it used to be, and there's trillions to be had even without any realized productivity gains from AI.
[1] I'm no financial analyst, but judging by the last few recessions and the overall trajectory over the past 30 years, I'd ballpark at most about 1/3 of that to go up in smoke if we had a severe downturn tomorrow. It's not all fake money. The whole world has industrialized over the past 30 years on a scale that is still unfathomable for most people today.
Maybe to counter some of the apparently widely expected doom and gloom:
- bubbles are notoriously unpredictable and generally don't happen when they are loudly and widely proclaimed to happen any minute now.
- large scale infrastructure spending tends to be really good for economies. These three companies are creating lots of jobs that are mostly related to construction, energy infrastructure, hardware spending, etc. That's a lot of money flowing to suppliers and regions where that spending happens.
- While overly pessimistic sentiments about AI and space companies are widespread they aren't much more rational than the overly optimistic ones. The realist scenario could actually be that, AI and especially Agentic AI is already quite useful and the total addressable market for that is obviously larger than it is today. The question is how large. Likewise, dropping the cost of launching stuff into orbit by one or two orders of magnitude, should create a much larger market for launching stuff there. Including possibly some AI relevant compute.
The valuations of these companies are probably on the high side and I'd expect post IPO share values to drop quite a bit and would not personally consider buying anything until after that happens. But that won't necessarily trigger a stock market crisis or a collapse of these well financed companies. All the spending these companies are doing is very real and the profits of their suppliers are going to be equally real. So some of those share value losses might be offset by gains for other stocks and economic growth. The stock market and economy aren't zero sum games.
However, there are worrying macroeconomic trends happening at the same time (Iran conflict, Ukraine war) that are disrupting global markets already. But you could argue that dumping tens or hundreds of billions into e.g. energy infrastructure and data centers isn't the worst way to counter those for a country like the US. The big picture might actually be pretty positive. Especially if we can dodge global economic misery via a prolonged Gulf conflict that at this point seems to serve no point whatsoever for anyone except perhaps Israel.
Anthropic at $1t for an IPO vs Google at $23b in 2004 sounds insane but Google's revenue at the time was $2.7b while Anthropic's already at $47b, so a valuation at about 20x vs 10x revenue. Anthropic also has very high revenue growth (50x since 2024), it doesn't seems quite as insane as it could be.
If you are growing revenue at a high rate then taking profit is a misallocation of resources. That is short-term thinking. It is much better to reinvest in revenue growth.
You can take small profit now or much larger profit later. Insisting that companies need to be profitable even when growing revenue rapidly is failing the marshmallow test.
But we don't have visibility on the COGS until they IPO and file, right? So where is all this premature judgement coming from about their unit economics?
(not pointing the finger only at you, at least you identified that gross margins is the correct thing to look at rather than net profit!)
I think a lot of us are calling it out because it's a contrast to SaaS/ads businesses where incremental goods sold are practically free compared to R&D, so spending can be looked at as one-time investments. There's very little additional COGS per additional customer in those businesses, so the default assumption to treat AI like other tech businesses has a blind spot.
Inference has dropped by like 75% from a year ago. While anthropic does offer more tokens now for the same money, the value of the business is based on an expectation of future profits. There are dozens, if not hundreds of examples of companies being valued this way.
You could be right but the unit economics matter to this business in a way they don't for a SaaS or ads business, they're not free and you can't just point at revenue.
I don't know if it is a chess move but Elon certainly will take every possible opportunity to fk over Sam. Have to admit watching these two sociopaths duking it out is somewhat entertaining.
What’s defensible about Anthropic’s revenue? It seems like OpenAI and others are equivalent. Open weight models are catching up. Google has ads networks, video platforms, and so much more.
I am skeptical that Anthropic and OpenAI can defend their dominance for long enough to make meaningful gaap accounted profits
Anthropic seems to have clawed its way to being the best AI and charging for itself. Microsoft had to slash the Anthropic budget… which it exceeded while being the exclusive host of OpenAI.
Google seems to have a good B2B and internal leveraging AI to make $. OpenAI/Microsoft seems to have squandered an early product lead.
And then you have the Muskiverse, where we have an rocket ship company that buys surplus cyber trucks, operates a space ISP, an AI company that produces virtual fetish porn and makes money renting GPUs to Anthropic, a rando dying social network and a tunnel company to cock-block public transit.
I may be underestimating the market for AI anime porn, but I think Anthropic is probably the best in class product right now. Google and AWS are probably the best positioned sellers of AI. SpaceXAI is the dark horse because they are likely enriching the dear leader more. OpenAI is fucked.
> an AI company that produces virtual fetish porn and makes money renting GPUs to Anthropic
Whatever Anthropic is paying is too much, since it means xAI will get to observe Anthropic's software, weights and operations in detail. It's probably contractually prohibited from doing so, but I doubt that would stop Musk, given what's at stake.
Anthropic is profitable unlike OpenAI though. Sure they'll owe a lot of money for probably decades, but if they remain profitable moving forward, it will be worthwhile.
That profit figure is a pre IPO marketing claim, not an audited and GAAP accounted number. And there is already a lot written about how Anthropic exaggerated revenue compared to OpenAI.
This seems like it's because openAI actually partnered with Microsoft and has to give them 20% of their revenue. Anthropic isn't partnering with their cloud providers so it makes sense to me they count top line revenue and then give Amazon payment as an expense. Also the numbers seem pretty minor compared to anthropic $49B run rate. The article mentioned an openAI payment of around $500M.
The question still remains whether they will be defensively profitable when things settle down.
I don't think open weight models are likely to overtake or match frontier models in the next year or so when it comes to doing the most difficult tasks, but I do expect a lot of people who are currently funneling wheelbarrows of money to Anthropic to realize that they can achieve the vast majority of things they are doing with LLMs just as well with much cheaper open weight models.
They will defend it the way any good monopoly always does: buying the competition. Case in point is Facebook: it is just a social network, the way they really stay on top is buying other companies and paying for people to spend even more time on their properties.
They bought insta and WhatsApp but at the time neither were really social networks. Insta was a popular filtering app. WhatsApp is just recently turning into a social network with their status updates.
So they're not just racing to gain dominance in AI, they're also racing to IPO before the music stops?
IPOing and getting a bunch of cash, even if your stock subsequently suffers in the crash, is a lot better than being unable to get that capital infusion before the house of cards collapses.
I don't think OpenAI or Anthropic are predicting that the AI market is going to collapse. In fact, I think both are bullish that the public still isn't pricing in exponential growth.
I think what is happening is that OpenAI is racing to IPO before Anthropic because their growth isn't as impressive. If you are the weaker company, you should IPO first to lock up the cash.
I can’t imagine them actually being bullish about exponential growth, when both seem instead to be stagnating. I’m more inclined to believe they’re just maintaining a level of hype in public because that’s what you do.
They’ve claimed a big revenue run rate for this quarter. But it’s non-GAAP, so you kind of have to assume shenanigans. Earlier this year they were telling a court their revenue was like 1/4 of what they had told the public. I consider the number they came up with when they had to worry about committing perjury to be more trustworthy (because I’m a pill), so that would also indicate shenanigans. My guess is they are inflating that revenue run rate figure by booking token pre-payments from enterprise contracts now instead of spreading it over time as GAAP would mandate. And at the same time their big enterprise clients are talking about scaling back their usage.
So we’ve got a combination of signs that they’ve been inflating their revenue growth, and signs that their customers are losing their appetite for contributing to that revenue growth. I suppose it’s not a slam dunk, but it feels to me like as strong an indicator as one could hope for a private blitzscaler startup like this.
"Although the company has generated substantial revenue since entering the commercial market—exceeding $5 billion to date—it has nonetheless had to raise more than $60 billion in outside capital to fund its operations".
Oh, to be clear, I'm not saying there is evidence they're all a-okay. I just hadn't seen any evidence that they were stalling out. (I have for OpenAI.)
The AI market might not collapse but the stock market could! Even if the AI companies only need to downgrade their investments and a healthy correction is underway, a fire sale of AI-related stocks will bring the stock market to its knees.
I don't really see this happening in the way that most people are envisioning. It's clear that Anthropic and OpenAI have found product market fit. They've gotten companies hooked and personally I cannot go back to the old way of coding.
However, I do see a bit of reduced demand for hardware and datacenters which could reprice these companies to more sane multiples. There will be winners and losers.
Short term, nations with a high rate of white collar employment and fewer social services will suffer greatly.
Eventually, and likely in the lifetimes of most people living today, we would have to see something akin to universal basic income (UBI) that covers the necessities in order to stave off massive civil unrest.
If the white collar labor of human beings can’t compete with the output of AI, we either all become blue collar workers or we re-invent the concepts of work and play.
I’m not aware of any existing or proposed economy framework that adequately accounts for the automation that is nearly here at scale. We are not just automating away jobs - we are automating away the value that human beings have within a productive community. Before the mass starvation will come the mass suicide. Our culture teaches us that a feeling of self worth is derived from our perceived productivity. If we cannot feel successful, we may lose our wills to live.
> Perhaps they’re afraid announcement would trigger divestment
S&P don't get a choice around whether they announce their methodology or not.
That said, the rule change at the NASDAQ 100 doesn't seem to have impacted pricing or allocation. I can't imagine that many people are that concerned about this. (I posted the public-comment request from S&P to HN [1]. The response was crickets.)
It's worse for the new investors. (If it crashes.) It's great for the old investors. They got an opportunity to sell if they wanted. If they didn't, they still own their shares, except in a company that has that IPO cash sitting in its account.
I'm not sure how long we can continue being negative about these AI companies. This idea that there will be a crash has often burned the bears in a way that has become an Internet meme.
In reality, corporations as a whole are seeing record profits continuing through 2026. Whether or not the average person is doing well is pretty irrelevant to the stock market: if companies are increasingly profitable, stocks go up.
Everything I hear about Anthropic points to a company that is actually closer to profitability and possibly already profitable, unlike many of its other peers.
We don't really look at YouTube as a failure and that product was unprofitable for many years. Nobody thinks the Uber bubble is going to burst even though it has never made back its investment money.
I think OpenAI is undisciplined and poorly run hence the insane burning of cash. Sam Altman is a terrible CEO and a conman. Anthropic is run by legit people.
Companies like Google, Microsoft, and Meta face essentially no negative consequence for burning cash. They have no urgent need to be efficient about their AI investments, even if they could be.
SpaceX is of course not profitable and has a lot of baggage but they still have a major asset, which is that Starlink prints utility company levels of money and is expanding both customer base and profit margins rapidly. Are they overvalued? Yeah, of course.
People keep predicting "house of cards" and keep being wrong. AI bubble was supposed to burst as far back as 2023. When was the last time since 2009 there was a $500+ billion tech valuation that lost 90% or more? After a certain point , 100% market penetration is achieved and these products become mainstream and profitability follows. See Uber and Tesla for examples.
The old saying goes, the market can remain irrational longer than you can remain solvent.
I’m not necessarily expecting a crash any time soon. (But we average a major correction, what? every 8 years? So if you keep predicting one long enough you will eventually have been right all along.) But I do feel comfortable saying OpenAI and Anthropic are overpriced. For more or less the same reason Cisco was overpriced in the late ‘90s. It’s not that what they were making wasn’t valuable; it’s that we got out over our skis a bit over how much of it the world could actually manage to consume in the immediate future.
> After a certain point , 100% market penetration is achieved and these products become mainstream and profitability follows. See Uber and Tesla for examples.
Groupon got to pretty much 100% penetration, still crashed and burned right after IPO. I think Zynga followed a similar trajectory.
> people always think everything is fine ... until it isn't
History is also replete with people constantly predicting collapses that don't come. Timing the market is very hard with numbers, it's total nonsense if one is just going off vibes.
Anthropic, SpaceX and OpenAI are not banks. (Also, we had the largest bank runs in American history three years ago. The ordinary American barely noticed.)
And these equity-investors, do they use their own money to buy the (presumably non-voting) stocks?
Cause if that's the case, I see no reason for a government bailout should things go south. Nobody's pension would be affected by some private investor losing money on a bad investment.
But if that's not the case, then someone somewhere along the chain is acting as a bank, subject to a vibe-driven run.
> these equity-investors, do they use their own money to buy the (presumably non-voting) stocks?
Yes [1].
> Nobody's pension would be affected by some private investor losing money on a bad investment
...pensions also invest in the stock market.
> if that's not the case, then someone somewhere along the chain is acting as a bank, subject to a vibe-driven run
You're confusing deeply unrelated concepts. Whether or not someone who loses money is politically sympathetic has nothing to do with whether they're at risk of a bank run.
I made no mention of anyone being politically sympathetic or otherwise. A private investor is _private_ and thus not subject to a government bailout. The argument for government bailouts used to be that "grandpa would lose his pension", I merely stated the terms that would make this non-applicable.
If pensions invest in the stock market, then they are de-facto acting as a bank. And last I checked, in the land of the free, you get to withdraw your 401k should you vibe with the decision to do so [please don't do this based on this post alone].
It’s an important difference. Pension funds direct their investments. 401(k)s are self directed. Again, these words have meaningful differences you’re ignoring.
If note the dotcom boom lasted from about 1995 until 2000. Housing bubble longer. Theres no time table on when the bubble bursts, and the web didn’t die and neither did housing when the burst happened. It is just a reset and consolidation of overtly excessive speculation. It’s not like the bust leads to an end of civilization.
Net buying of corporate equities by American households, trusts, funds and non-profits has averaged $660bn per year for the last few years [1]. $200bn is not fundamentally a stretch for the American equity markets, let alone capital markets more broadly.
30% above the average. Households bought $1.6 trillion in Q3 of 2025, for example. (Foreigners bought a further $650 and $700 billion in Q3 and Q4, respectively.)
Everyone knows one is stock and the other is flow. It doesn't mean that we can't measuring the ratio between them. Actually, measuring ratios between "stock" and "flow" values is one of the favorite things analysts and economists do! (e.g., rent vs house price, P/E, fixed cost vs marginal cost...)
There is even a name for marketcap/GDP, Buffett Indicator. And historically the current value is very high.
> A third of all spending is not fundamentally a stretch?
Where did you get spending? That's net buying of stocks by non-financial Americans. It's the new money that has, on average, gone into the U.S. stock market from that section of investors every year. A third of it going into these new issuances doesn't need to break anything.
Dumb question here, but would it necessarily mean the other stocks they might've bought (i.e. the rest of the market) will not get the cash infusion and will thus likely drop in valuation?
> would it necessarily mean the other stocks they might've bought (i.e. the rest of the market) will not get the cash infusion and will thus likely drop in valuation?
¯\_(ツ)_/¯.
Almost certainly, to some degree. But that doesn’t mean anything has to drop. Just not rise, or not rise as much as it would have. Or potentially some other company that would have gone public or sold shares doesn’t do it now.
Everything else is up around 3% YoY. And if energy and transportation are up double digits, and producer prices are up double digits, other consumer prices will follow.
The faster your cash loses value, the stronger your incentive to trade it for something else. That something else can be financial assets.
> It's not got loads to do with large-scale, institutional investments
For investors, particularly retail investors, the consumer price index is most relevant. But for whatever it's worth, producer prices are up over 16% in April (7% excluding "foods, energy, and trade services," which jumped over 50% annualized) [1].
To be clear, I'm floating a hypothesis here. I have seen no evidence linking inflation to demand for these companies' shares. (If anything, it should be the inverse.)
That depends. Inflation is a measure of the cost of living in terms of currency. It can be high either if goods and services required for living become scarce, or if currency supply increases. Currency supply increasing does affect asset prices.
Yes, but they're not directly correlated. Of course events can affect them both! Going to war would both increase the cost of living and (some) asset prices would go way up. But that doesn't mean they should be measured together like that.
Right now SPY not be such a great idea with SpaceX launch upcoming since it will be included into it immediately. Retail investors will be bearing that particular flop's cost.
I was old enough to remember the 08 crash. Then the market starting recovering in 2011/2012 and the sentiment was that the system would crash again soon like 08. Turns out, it was an amazing time to invest.
Post 08 crash, all sorts of conspiracy websites like Zero Hedge were popular saying how the world economy would keep crashing.
The only reason this happened was due to taxpayers bailing out financial institutions. This only exacerbated an insane amount of moral hazard already present in the market following previous bailouts.
Unfortunately, the US Government continued to run themselves into the ground spending-wise and may have a difficult time with another bailout, unless everyone pretty much agrees that we cannot have a USG failure, so they all pretend like nothing happened.
Eventually the merry-go-round stops, I'm just not sure what the catalyst will be, and it might be 100 years from now.
I am old enough to have had multiple career changes since starting on a major firm’s rates floor in 2008. These IPOs are tiny compared to the overall stock market and the stock market is absolutely tiny compared to debt markets. People consistently underestimate the size of the world economy or even their local economy. The world may look small from an orion capsule near the moon but almost every aspect of human society is bigger than most people can reason about. It is possible these IPOs have an outsized impact on sentiment for weird reasons. But it won’t be an actual outsized impact on capital markets.
Edit: I should add the AI bubble can absolutely burst but there is no reason to believe these IPOs are the end of the ride. If I knew I would be…
no one is going to get wealthy buying SPY/VOO. you might get rich, but not wealthy. things have changed now in a sense that handful of companies are large percentage of the stock market to the point where one has to question why invest in “s&p 500” vs “s&p 25-ish”
while going with the tried&true makes some sense, I think we have to open our eyes to a different reality of our stock market… and this market concentration into few companies is going to get a lot worse…
> things have changed now in a sense that handful of companies are large percentage of the stock market to the point where one has to question why invest in “s&p 500” vs “s&p 25-ish”
A small number of companies have always driven most stock-market gains. Betting on size isn't fundamentally a bad bet. But it is a bet against value and the historical tendency for small companies to be higher risk and higher reward.
you may be technically correct but today’s concentration in say top 10-15 companies is historic and by significant margin. I have been self-employed for a long time and somewhat “forced” into being “an investor” and starting in 2021-2022-ish I took my money out of all the “funds” … while I do not disagree that it is “a bet” - it is a calculated bet. things are different now even if historically you are right, no question
I very much disagree that it's coming. I think we need to completely reset our expectations of how the market works. There's been nearly an entire generation working in this "new" bull market, where things like EPS mean absolutely nothing and speculation no longer requires actual returns.
> the crash (that we all know is coming) will do that. Until then, history teaches that we'll just keep going up and up
Stock prices don't have to crash. They can just stagnate while profits catch up and multiples compress.
Debt binges, on the other hand, tend to go bust with a bang. But after the recent private-credit scare, the AI build-out has been predominantly financed with stock. (I think.)
Hasn't there been a _lot_ of debt to buy up Nvidia GPUs? I follow this stuff somewhat closely and it feels intentionally confusing, so I've likely lost track.
> Hasn't there been a _lot_ of debt to buy up Nvidia GPUs?
I believe that's been concentrated at the hyperscaler layer, and subsided when the aforementioned private-credit scare reared its head. (I haven't heard a big datacenter debt deal announced in a while. Though of course that doesn't mean they aren't being done.)
> Equity bubbles don't have to crash. Prices can just stagnate while profits catch up and multiples compress.
Is there is historical evidence for that? As someone who used to follow Jeremy Grantham a lot (he considered himself a "bubble historian"), IIRC every bubble he studied always mean reverted, and it usually (maybe always, can't remember) overshot on the downside during the correction.
> IIRC every bubble he studied always mean reverted
This really depends on how we're defining these things. Let's call a stock-market bubble a period of elevated multiples. That can mean revert by prices decreasing while earnings stay constant or by prices staying constant and earnings rising. (Alternatively, both earnings and multiples can rise and fall.)
Yes, for equity prices in particular he talks about P/E ratios (among some other metrics like corporate profit margins), and so you're right, it would be possible for this to mean revert by prices holding stagnant and earnings catching up. However, as far as I can remember (primarily because a big emphasis of his was how unchecked bubbles can cause a lot of damage on the downside) all the historical bubbles he studied (something like 50) always crashed with a big price drop. Not 100% sure though, which is why I was curious if you had any contrary examples.
Corporations across the board are experiencing record profitability. That's the reason behind the high valuations.
This isn't true of AI companies...yet. But these are companies entering the market with pre-IPO userbase (including lots of B2B) numbers that Meta and YouTube would have dreamed of before their acquisition/IPO.
I think this whole situation is very sleazy and corrupt, but ultimately my prediction is that nothing serious will come of it. Even the exposure of index and passive investing is overstated.
> Firms in the broad Russell 3000 share index have a total market value of $79trn
I sometimes try to get people to worry about the catastrophic state of American public finances by pointing out that the net national debt, including unfunded liabilities, is estimated to be $175T [0]. The government could appropriate all the equity from the top 3000 largest companies, and also the entire real estate market, and it still would not be able to pay its debt (RE market is $55T).
The $175T number is unfair because it treats Social Security and Medicare/aid as a liability instead of the service that they are. You might as well say the US is in infinite debt, because we'll always be paying something for our military every year, so infinity years * any dollars = infinite debt.
Also: All of those numbers you use to scare people are way, way off.
The NATO treaty says that we have to maintain our ability to resist armed attack, so there is some minimum. And we’ve made public commitments to spend at least 2% of GDP (though that isn’t part of the treaty).
SS and Medicare aren’t debts either in that sense. Congress can reduce benefits if they please.
In Flemming v. Nestor SCOTUS ruled that SS benefits are not guaranteed contractual rights but are instead statutory entitlements that Congress may modify or revoke.
Including all of the Social Security obligations for the current population is nonsense. For one it is money that will be paid from now for another ~60 years, and for 2 it's something that probably will just get cut as the trust fund starts getting into dire straits. It's not really an obligation if it's one act of congress away from being fixed (and without doing something like a debt jubilee that would destroy the dollar).
The rest of your article is complete bogus and the economic equivalent of climate change denial.
The U.S. Treasury publishes a daily total of the national debt, which as of May 2026 was $39 trillion.
a little less than half of the total national debt is owed to the "Federal Reserve and intragovernmental holdings"
In December 2020, foreigners held 33% ($7 trillion out of $21.6 trillion) of publicly held U.S. debt
This misunderstands the power of monetization, or mistakes "dollars" having some kind of fixed "value." They do not. Whether one agrees with that or not, thinking of this as a "debt" problem where a hypothetical move is to appropriate equity- setting aside the fact that equity ALSO is not in a fixed unit of measure- anyway, thinking of appropriating equity to solve a public debt problem is a category error. That is how accounting works for business structures that exist within a monetary system but NOT for government and currency printers that define the monetary system. The MMT people are right about this. Public debt is a measure of private sector wealth. That is how the machine works.
It goes beyond that. $175 trillion includes all future entitlement spending not debt, it’s crazy to call all future entitlement spending for every living person debt. By that metric there’s essentially no such thing as a solvent government anywhere in the world and there never has been in modern history.
Repayment isn't a goal that anyone in the system should reasonably want. Federal debt is not like credit card debt. Debt is a product that the US Government sells. Me, being a big corporation or human, go to the USG and say "I need somewhere to park my money that is safeish from inflation". The USG sells me debt at X.Y% interest. The money now generates safe interest, which means its safeish from inflation. A world where the USG "repays the debt" is a world where this essential product is no longer available.
High levels of debt only signals high demand for this product.
This is super-counterintuitive, but the debt has little to do with the deficit. We could run a surplus and still be in the same level of debt (in fact, this would be a tremendous place to be). We could run a deficit and have no debt (just print money, duh). The decisions that go into column A generally do not impact the decisions our leaders have to make in column B, though there are of course convenient relationships between the two.
> Repayment isn't a goal that anyone in the system should reasonably want.
Repayment to $0 isn't a reasonable goal but there are a lot of problems with your argument.
The biggest question is about sustainability. Is the debt-to-GDP ratio stable/manageable and is the interest rate on the debt below the economy's growth rate? If the answer is no, you have a problem.
> High levels of debt only signals high demand for this product.
This is backwards. The amount of debt is set mostly by government supply, which is driven by deficits. The demand signal is the price, which in this case is the yield. If the demand was high, yields would drop as the amount of debt grew. Instead, we have rising debt and rising yields, which means supply outstrips demand.
The US no longer has a AAA sovereign credit rating for a reason. When Moody's (the last agency to downgrade the US) stripped the US of its AAA rating, it cited "rising debt and interest costs 'that are significantly higher than similarly rated sovereigns.'"
The biggest issue at this point isn't the principal, it's the interest. Interest is the fastest-growing line item in the federal budget. It's almost at $1 trillion/year now and expected to nearly double by 2035. You either have to cut from other spending or borrow more to pay the interest.
Your comment implies that this doesn't have a real cost, which is silly.
Government debt isn't like personal debt or business debt. The treasury can choose to not honur it, and there's nothing anybody can do about it. Of course they're not going to find a market to sell more debt to after that, but wouldn't you say they already have enough?
No sympathy for people and institutions who make deals with the devil and expect the government to forever enslave taxpayers to honour those deals and pay back with interest.
As mentioned defaults do shockingly little to change future funding. Its been years since i looked but its something like a few years of “cool down” on issuance and a few points of coupon premium. The economist has done some great, very accessible, articles on this over the years.
Second, its critical that treasury bonds are denominated in USD. The us gov controls the monetary policy and can choose to inflate away the debt over time. This is in contrast to EM debt where they get trapped with foreign denominated bonds. See also the tensions around EU debt, greece, etc.
The way I understand my money market settlement account at vanguard, is that it's all, or nearly all, treasuries. Treasury not honoring government debt would be the worst bank failure in the history of the world.
> The index demand is not 100% of the stock available in the IPO, or 110%, or even 50%. But it’s plausibly more than 25%. It’s not a short squeeze, but it’s a lot. Add a reported 30% allocation to retail, and arguably a majority of the IPO is being sold to price-insensitive investors. That is one way to get a high IPO price.
Several guidelines make it clear that this kind of comment is unwelcome here. Corruption and conspiracies are easy to insinuate, but we need more than insinuations to have intellectually gratifying discussions. https://news.ycombinator.com/newsguidelines.html
It defeats the purpose of the value setting part of the IPO if there are guaranteed buyers. It would be better for the market and for the indices if they only hopped onto new entries of the market after any initial instability has passed.
> defeats the purpose of the value setting part of the IPO if there are guaranteed buyers
The indices don't buy into the IPO, but a few days afterwards. That's obviously easier to bridge than 6 months. But IPO buyers are still taking a risk.
Yes, but a stock market index is just that. It is intended to track stocks, not meth sales or the phase of the moon.
Most of these indicies intend to match the largest companies on the market - going up when they do and going down when they do.
If someone doesnt want that, they can pick a different index or invest in a managed fund. Companies like vanguard also offer custom EFTs where you can exclude certian companies if you want - probably the simplest option.
But then you cant complain if they go up and you miss out.
PS: Yes, there are several cannabis ETFs if you are into that kinda thing. look into MJ, WEED, MSOS, and YOLO.
Because they think that a lot of people will want to get in on the historically massive and well-known companies, which would lead to outflows if the index doesn't pick them up fast enough?
It will lead to outflows either way. And I say that as someone who has been an Index fund evangelist for years, strongly considering selling my index funds to build my own collection of companies that I believe in long term.
So why not just stick to the roles we agreed on when buying in?
I find it to be genuinely more likely some level of corruption, and while my insinuation may be overly specific or illustrative, I still hold to it as an ironic statement meant to speak the truth.
In this age of AI marketing taking over the minds and imaginations of most of our businesses leaders in the name of greed and fear, I’ll hold to the more likely truth given the circumstances, regardless of this appeal to some invented tale of uncorruptable corporate governance. Have you never seen decisions being made?
I think that better matches the original spirit of this forum. The progenitors have become the people they once disrupted.
You're claiming without evidence that the bureaucracy and regulators are corrupt to the core? No way I refuse to hear another bad word about the government, they are above reproach sir.
I was a lawyer in 2008 representing banks in the financial crisis. Multiple bankers wives set up companies to by mortgage backed securities using government loans and government guarantees on payment upon default. That let the banks get the toxic mortgages off their balance sheet.
These wives were yoga teachers and socialites. And I say that as a man that is a feminist and upmost respect for the amazing women I have worked with that were absolutely world renowned professionals. The bankers wives were not in that category and were shells to eliminate the “conflict of interest”. The CEO of Goldman Sachs did this. You can find the records if you want to be on a government watch list.
We’ve really hit that point, where our institutions are transparently corrupt, and everyone knows it, and both the guilty and the public just say “yep, we’re doing the corrupt thing”.
It’s depressing as hell, and it’s going to go out with the proverbial whimper, but at least we’ve got to be close to rock bottom, right?
From someone who lives in a country that is still more corrupt than America.
You need to vote for the next several years, no matter what, because you still have a chance.
Once corruption becomes the default, then you are REALLY screwed. Because it kills hope and the faith in the future in the most corrosive way possible.
The death of morale is a far worse and insidious fate that will make today look like a high point.
To be fair, these are not regulators, just private companies making up rules, so technically this is not corruption just something that looks like it but it's just business™
> To be fair, these are not regulators, just private companies making up rules, so technically this is not corruption just something that looks like it but it's just business™
What I find odd is that the comments are critical of how the police didn't caught thieves, but there is absolute silence towards thieves and the fact they have been engaged in thieving for ever.
Another comparison is people blaming the fire department for not inspecting sprinklers after an arsonist torched the place. It seems to me that the arsonist is the root cause, isn't it?
Police are only useful so long as they are effective as policing. It’s insanely difficult to put a price on a cost center which doesn’t add value, but only has a chance to reduce the loss of value if they do their job well.
The problem with the fire department analogy is that there’s a lens through which the fire department IS the arsonist here, or is at least pouring accelerant at the future site of the arson. If you don’t know why I would call the bankers at S&P, Nasdaq the arsonists in this case, you aren’t equipped with the background info about SpaceX’s fast track + goalpost moving to index funds.
I guess we should be thankful there aren’t more Luigi jokes in the comments.
This seems to be the problem. Thieves get a free pass but the very few guardrails that said thieves haven't dismantled yet suffer the blunt of the criticism, to the point people argue they don't need guardrails at all.
Don't you feel you are unwittingly aiding thieves to go unpunished?
> Thieving behavior is deterred by the police doing their job.
Wouldn't it be more productive to place the blame on thieving? Police is a mitigation, and your complain boils down to complaining that police is influenced by thieves. Yet, I don't see people complaining about thieves.
> You're claiming without evidence that the bureaucracy and regulators are corrupt to the core?
The "bureaucracy and regulators" are at most engaged in passive corruption.
For passive corruption to exist, you need massive active corruption effort.
Why is everyone focusing on vilifying passive corruption while completely ignoring active corruption? I mean, I'm hearing lots of conspiratorial remarks directed at regulators but... Who stood to benefit? Aren't those responsible?
I mean, why was regulation required to begin with?
No doubt these companies are woefully overvalued. But this won’t stop me from putting in orders for several thousand dollars of shares with at market open. There will undoubtedly be plenty of buyers and I expect them to gain rapid entry into the indexes which will unlock a flood of additional capital from 401ks and pensions
I don't think the market will swallow the stock offerings until we see early signs of GDP growth attributable to these entities. But until then, I think the cost is higher than the benefit, which "The dead economy theory" essay covered it well [0]
> don't think the market will swallow the stock offerings until we see early signs of GDP growth attributable to these entities
Investors in these companies are going to be looking for revenue and pathway to profitability. I'm not sure anyone needs to see an impact on GDP to invest.
Is SpaceX going to eat Tesla? As in, are a bunch of Tesla investors going to be migrating across to SpaceX since that seems to be getting more of Elon's attention these days, especially with xAI barnacled onto the side of it?
The money to participate in the IPO has to come from somewhere...
Yes. Elon has a massive controlling share in SpaceX, complete control over the board. SpaceX will be double the size of Tesla after a successful IPO, then they can swallow it and then he has the control over Tesla he’s constantly fighting for.
They're doing an IPO now because the war in Europe with Ukraine is almost over it seems, and after that a big percentage of capital will relocate from the USA to Europe again. They are just cashing out right before the tide turns.
I don’t understand why there is so much pushback and skepticisim about SpaceX. They actually have a functioning product, a market where they sell the product and virtually no competition at their pricepoint.
Because they lobbied for a rule change to get fast tracked to an index forcing passive investors to buy it at IPO price instead of being included after market value corrections.
How come? On the books or they're actually selling internet cheaper than they source it?
> xAI is a money burning furnace
So far in the AI business, it looks like only Anthropic might be profitable in the near future. On the other hand, a lot of nonprofitable companies have IPOd for billions with the hopes that one day they will become profitable.
One crucial thing we've learned for the past few years:
- You can't blindly trust the US, or US businesses. Even less when it comes to critical infrastructure.
- You can't rely on underwater cables to be safe.
Starlink is a proven technology. They were the first major mover. But they will not be the last.
It'll be sort of like Tesla cars. For a long time they completely dominated the EV market, but now others are catching up. Yet Tesla is valued more than all other EV manufacturers combined. Some of this is of course from their vertical integration, but most of it is just hopium.
Same will happen with both Starlink, SpaceX, and other products under the Musk umbrella.
I just had this thought:
This is the story of the Great Western Desert eXploration Railway Company. Let's call it WestX for simplicity. They are building a 2000 miles railway line from the east coast into the great western desert. There is nothing there in this desert, but its a great place to set up antennas. The place is called Sunshine Plateau. Unfortunately, there is also absolutely nothing on the entire 2000 miles going there, no water, no coal, no midwest, no great planes, no gold, just empty, barren desert. So every train going out there has to haul all the coal and water it needs for the 2000 miles trip along with it. It needs about 200 wagons of water and coal to pull one wagon of antenna stuff out into the desert, but in the future, they'll build an engine so powerful, it can haul 2000 wagons of coal and water into the desert along with 10 wagons of antennas. Its a big leap forward. In the future, this super steam engine will also be able to roll back to the east coast all on its own, because its all downhill from Sunshine Plateau. The antennas need replacement every couple of years, but there is enough demand for antenna signal to run the train operation at a small profit. Also, the government likes to place some spy stuff there every once in a while, also some science stuff, and every now and then a tourist takes the journey because the view from Sunshine Plateau is really great. But thats not all! In the future, once the super engine works perfectly as promised, they will not roll all of them back down to the east coast, but they will keep an entire train at Sunshine Plateau. Then they will haul a looot of trains with a looot of coal and water into the desert to refill this one single trains 2000 fuel wagons, so it can haul 10 wagons of stuff even further out into the desert. 10 wagons! Sadly, there is no California after the desert, just another desert named Moon Hole and then behind that another desert, named Mars Basin, but thats okay because there may be gold there to exploit. WestX just has to find a way to produce coal and water out in the desert to haul that potential gold back to the east coast. But thats still not all! WestX operates a newspaper where every jerk is allowed to publish racist stuff. It runs at a loss but that doesnt matter, because trains and newspapers go well together. There is also a new hype at the east coast, named thinking machines. They're amazing and are almost always right in their answers. Other companies are at the forefront with those thinking machines, but WestX also has a little sidehustle in this business, even though their thinking machines suck. BUT! They could install those thinking machines up on Sunshine Plateau! Takes only 2000 wagons of coal to put 10 wagons of thinking machines 2000 miles out there into the void, but there is a lot of sunshine up on the plateau. The competitors just install their superior thinking machines back at the east coast, where there is also sunshine, but also cheap coal and lots of other energy resources. Anyhow, thinking machines! The Great Western Desert eXploration Railway Company will soon open up to investors at the good old Wall Street and they value themselves at $15'000'000'000'000 to $20'000'000'000'000. Some grumpy naysayers say thats quite a lot of money for a railway company that doesn't make any profit, but if all their plans work out exactly as promised, you may even not make a loss! The founder, Elon Rockefeller, who is mostly busy publishing racist articles in his newspaper every single day, and also runs a horse carriage business, has a great track record of delivering on promises, and is a well respected man.
Can the stock market remain legitimate after such a brazen example of dumping? Regular everyday people can’t access private shares and participate in upside even if they want to. They don’t have the connections like VCs, and aren’t accredited investors. And companies ban secondary transactions, which should be forced by law to be always allowed.
And then after all that, the public have to deal with their index funds, ETFs, mutual funds, pensions, 401ks, etc buying up these overpriced stocks. You have a space company that also acquired a failing social media platform and failing AI company with little revenue justification for the valuation, and a lot of other obligations that make it financially a disaster (like payments owed for spectrum). And two frontier labs with no real moats, each looking for regulatory capture based on safety or ethics or whatever.
To the everyday person, the stock market after the fast listing rule, these three IPOs, and AI job loss, will feel no more legitimate than prediction markets or crypto.
> then they have to deal with their index funds, ETFs, mutual funds, pensions, 401ks, etc buying up overpriced stocks
Only about a third of American stocks are held by passive capital [1]. Out of that, index funds are about 16%, and most of those in America reference the S&P 500, which has not yet announced whether it is changing its rules.
Sure, but it's the Americans that can least afford to be stood up as exit liquidity that have the most exposure here relative to their net worth. The ultra wealthy are going to be heavily overrepresented in the active basket. Meanwhile the folks lower down on the income scale are more likely to have their money in passive funds.
According to SpaceX's own S100 filed to the SEC their future revenue is projected to be 93% AI and there's also where the overwhelming majority of the CAPEX will go.
One other angle to think of is the midterm elections.
There will be chaos and potential stall for another 2 years following the elections and if the democrats win. There will be natural vested interest in showing economic decline or bad things to win next elections.
Both parties do it.
This is the best time to get to a safe place for all these companies.
I expect it to be catastrophic or at least chaotic and we have removed our investments from the american market and untied ourselves from the dollar as best as we can. We are sitting this one out.
So what people seem to be unaware of or are purposely ignoring is that OpenAI and Anthropic have invested trillions in a rapdily depreciating asset. There was a HN post from a day or two ago where someone bought a V100 for 150 pounds and connected it to their computer. Well that was a $10k GPU in 2017. That's the fate of H100/B100 GPUs in 5-10 years (and I suspect closer to 5). What do you do if you've invested $1 trillion that will be worth $100 billion or less in 5 years? I think it'll be worse than that because modern hardware at that time will still probably be the same Wattage but have much higher performance so you'll be getting much higher performance-per-Watt and that's going to really matter.
The only company I'm confident will survive this hardware crunch and still be relatively successful in this space is Google.
OpenAI in particular is a bet that there will be an AI moat and that OpenAI will "win". I don't think there will be a moat and China is a big reason why (eg DeepSeek).
SpaceX is a little different. Yes, launching rockets is a business but it's not a trillion dollar business. 100 Falcon 9 launches doesn't even break $10 billion in revenue. Plus, Starship faces cost overruns, delays and significant headwinds.
But the real kicker is that SpaceX was used to bail out Elon from the Twitter purchase and the xAI investors from the first Twitter bailout. That's a problem because xAI is burning $1 billion a month in a company where that really matters and I don't think Grok will "win" here. Like, at all. SpaceX would be a significantly more attractive company without xAI.
The big potential growth area is Starlink. For that to justify this valuation I think you need handheld Starlink phones. That requires a lot of satellites at a relatively low orbit, which also means they have a relatively short life (because they burn up in the atmosphere). And for that Starship must succeed.
All the AI data center in space stuff is complete bullshit. It makes no sense. It'll never be viable. It's not going to happen.
EDIT: let me clarify because I was careless in my wording. So, Anthropic individually has not spent "trillions". That was more of a general statement on AI spending. Anthropic has raised ~$100B, the last round of which was $65B (at $965B post-money IIRC). This industry as a whole needs to recoup trillions.
Anthropic seems to be in a better position (as a business) than OpeNAI is but I do think the it's a race to cash out before depreciating assets, well, drepreciate and there's the real risk as compute becomes cheaper and the AI craze wears off, Claude just may not have the growth trajectory that is built into the price.
Now that Moores law is dead I think GPUs will depreciate a lot slower. I mean there's already a lot of hardware that has gotten more expensive in the last 5 years.
As I was reading the start of your argument, I thought you were gonna call the models a depreciating asset! Totally agree about GPUs too, but literally everything they’re spending money on has to be rebuilt to stay competitive. They have to go for the moonshot of training a full new model when better tech comes, they have to upgrade GPUs to keep their data centers efficient.
Technically, the model is a depreciating asset too. Just consider the difference between a model you need a B200 cluster to run vs one you can run on a Raspberry Pi. One's going to have a moat around it that gives it value and the other isn't. It's a hyperbolic argument to be sure but the nature of "enthusiast" hardware is that we're currently running, say, ~27B parameter models on hardware for a few thousand. What's that going to look like in 2 years?
Anthropic/OpenAI really need to train ever-bigger models to keep their moat. But that assumes there isn't a law of diminishing returns and also that a compressed model isn't sufficient for what many people need.
You mihgt say that the training is a barrier. And it is, kind of. Notice how it's Chinese companies coming out with open-source models like DeepSeek and Qwen? That's no accident. As soon as DeepSeek came out I knew what was going on: China is going to make sure no single Western company "owns" AI. It's in their national interest for that not to happen.
I wouldn't be surprised if the rush-to-IPO is motivated, at least in part, by getting ahead of Chinese AI commoditization.
How many failed foundation model training run cycles do you think these companies can tank before the bubble pops and deepseek/etc. catch up to frontier quality?
If Ant, OAI, etc. aren't able to make 20-30% improvements on Opus 4.6 in 2026, does the music stop playing altogether? It seems like they'd lose their ability to charge >10% gross margin on inference in a span of 3-6 months.
"OpenAI and Anthropic have invested trillions in a rapdily depreciating asset".
Anthropic raised a bit over 100B and has 47B ARR. Where are you getting trillions from ?
Starlink Mobile (i.e. Starlink direct-to-cellphone without modifications) is already happening, and fast. Phones that have the recently announced Qualcomm X105 modem will support Starlink Mobile 5G at speeds up to 150Mbps, direct from satellite. The Qualcomm X105 modem will be in most Android flagship phones coming later this year, and by 2027 most new phones will support Starlink direct-to-cell. The next iPhone that supports the 3GPP Rel-19 standard will too.
The rollout relies on Starlink V3 sats, which can only be launched Starship, but Starship progress is going well and is already able to deploy satellites from orbit. SpaceX is capable of launching Starlink V3 on the current iteration of Starship, but they want more testing. We'll probably see Starlink V3 launching late this year or early next year.
How long have the SpaceX, OpenAI and Anthropic investors been waiting for an IPO (excluding tender offers)? 24 years, 10 years, and 5 years.
You really think they are going to hold off against selling for multi-millions for another year, especially SpaceX?
OpenAI (and especially) Anthropic are at risk from being undercut by the Chinese labs and their open-weight models and may cause their valuations to be questioned.
If that doesn't cause a correction, then SpaceX will do it for them. There is no lock up for the 5% of shares being available.
Why wouldn't it? There huge demand for these shares. It's not like $3+ trillion is dumped at once. It's a tiny percentage of it, and the high multiple does the rest of the work.
Yes it can, since they changed the rules to force over $30 trillion in passive 401k and retirement money to buy SpaceX at IPO valuations.
From https://x.com/Hedgeye/status/2060435253928604065:
"Rule changes for the SpaceX $SPCX IPO:
Index providers waived the profitability requirement and cut the seasoning window from 90 days to 5.
This forces over $30 trillion in passive 401k and retirement money to buy SpaceX at IPO valuations.
Bloomberg Intelligence estimates S&P 500 funds must absorb 19% of SpaceX's float within 6 months.
Russell 1000 and Nasdaq 100 funds will absorb 24%.
The rules built to protect passive investors:
1. S&P 500 has required 12 months of trading and 4 quarters of GAAP profitability since 2002. Both waived.
2. Nasdaq cut its inclusion window from 90 trading days to 15.
3. FTSE Russell cut its to 5.
All three benchmarks are now structured to buy SpaceX at IPO pricing."
1. Twitter is purchased with debt
2. Debt is transferred to xAI via acquisition of X/Twitter
3. Debt is further transferred to SpaceX via acquisition of xAI
4. SpaceX IPO offered at extreme valuation
5. Index fund inclusion rules waived for SpaceX IPO: profitability requirement, inclusion period cut from 90 to 5 days
6. Index funds are largely held by passive investors such as pension funds.
7. Index fund managers are not incentivized to exclude a SpaceX from their indexes. (?)
8. Holders of original X/Twitter debt (banks) incentivized to support the rule waiver since post IPO, SpaceX will have liquidity to service/pay the debt.
9. Passive investors are unable to rapidly respond to these types of changes because liquidating portfolios will incur capital gains taxes. (?)
10. SpaceX is in Texas jurisdiction, where shareholder lawsuits are not possible and must instead go for arbitration. (?)
Nevertheless it is part of a pattern of weird deals in Elon’s companies. He’ll do anything to move the goalposts and turn his failures into successes. There is no norm he won’t violate, no boundary he won’t cross.
https://youtu.be/sYA-z0Y8WRQ
There is video explaining the process
Like if both these stocks become penny stocks what happens to the indices?
Isn’t the whole point that they are hedged across the whole market?
[1] https://en.wikipedia.org/wiki/S%26P_500
* S&P500: 0.08% – 0.12%
* NASDAQ-100: 0.47% – 0.70%
* Russell 1000: 0.1%
which is exactly why public markets have always been a superior price discovery mechanism in comparison to private markets
Amazon is worth $2.81T right now and only represents 4.03% of the S&P500.
So a $1T share would represent less than 2% of the S&P500. This is significant for a single company, and 6% for 3 shit-tier companies (SpaceX, OpenAI and Anthropic) is even more significant, but we're far from "losing retirement if they go bust"-levels.
https://en.wikipedia.org/wiki/Public_float
I hear S&P 500 is weighted on float rather than on market cap, while Nasdaq 100 is based on market cap.
Current system: Work until you die.
New system collapses: Work until you die.
New system lucks out: Probably get returns (pension).
Current system isnt great but works. Just fear uncertainity doubt here.
Unless I'm misunderstanding this, buying at the sale price is the least risky way of purchasing the stock, which is what index funds should do. They should pursue the least risky way of indexing the market
More importantly, it allowed organic price discovery to occur. This eschews that process because the indexes are _forced_ to participate essentially at _any_ price, so rather than the market writ large having the opportunity to reward or punish the underwriter pricing of the IPO and determine any true idea of price, they're forced to buy the banker's narrative, which will intrinsically prop up the stock to some degree, but at what cost, and based on what underlying?
While I like the dreams Musk sells of self-driving cars so good they don't need steering wheels, of space colonisation and useful robot workers cheap enough that I could personally afford the, at this point I don't trust him to actually deliver any of those things.
If you disagree with him, he might brand you a paedophile.
They don't, while timing certainly benefits, and potentially was triggered by them and OpenAI and Anthropic IPOs, these rules are not specific to only apply to SpaceX.
FTSE Russell (Russell 1000/2000 etc.) Adopted "fast entry" for large IPOs. Eligible companies (investable market cap above Russell Top 500 cutoff) can join after 5 trading days (previously quarterly rebalances). Also eased float rules with carve-outs.
https://www.lseg.com/en/media-centre/press-releases/ftse-rus...
Nasdaq (Nasdaq-100): Effective May 1, 2026, top ~40 market-cap companies can enter after 15 trading days (previously 3+ months). Adjusted low-float handling.
https://spotgamma.com/spacex-ipo-index-changes-spotgamma/
S&P Dow Jones (S&P 500): Reducing seasoning from 12 months to 6 months for megacaps and waiving the 4-quarter GAAP profitability requirement for large issuers.
https://www.wsj.com/finance/stocks/stock-indexes-are-contort...
So the question remains, why do they warrant a rule change?
The links above provide specifics as to the what's and the why.
It does not, of course, but when oligarch corruption runs supreme, it is whatever they want.
It's basically a money transfer from the average person to the poor richest person on the planet.
The true Great Filter is mental illness, apparently.
I wonder how much better Anthropic is doing.
Instead blame the bankers and market who are putting buying in at 1.5T valuation.
If people really don't want SpaceX in their S&P 500 tracking ETF, we should see a S&P-ex SpaceX in short order.
It is absurd to blame "market" that did not had enough time to settle. "Bankers" are to blame for making this rules change happen.
It is entirely valit to blame people who changed the rules to allow this to happen.
I'd argue that it certainly isn't.
The suckers who have their retirement savings in some kind of index fund because all the experts have been saying, "Buy index ETFs and forget about it" for decades are gonna get fleeced, and the wealthiest get wealthier.
Can't they just be printed and massive funds borrowing money to buy shares?
And more importantly forces them to sell the rest of the market.
Who will be on the other side of these trades? I suspect the stock market is not sufficiently liquid for all of that to happen in a single day without the rest of the market seeing a significantly depressed price, and index holders effectively gifting value to everyone else by effectively pre-announcing their large trades.
S&P has not finalized a rule change yet.
S&P has historically been more conservative. My personal guess is they won't adopt all of the proposals.
I sincerely hope S&P and Nasdaq rollback the SpaceX-targeted changes, but unfortunately I seriously doubt it.
Yes. And I see the argument for it. It’s hard to claim you represent the market if trillions of dollars are outside it for no reason other than newness or capital-structure weirdness. (I agree with excluding unprofitable companies.)
These indices have lots of competition. NASDAQ 100 lost basically zero money when they made these changes. If S&P makes them, I'm doubtful anyone will react either.
When S&P was still taking public comment, I put the link on HN. It got like two upvotes. This isn't something materially care about as much as like to get angry about on the internet.
> S&P has not finalized a rule change yet.
If you were responding to someone saying the benchmark indexes were changing their own rules?
Like the actual intent of the comment and not just observing reality like someone saying the sky is blue.
The minimum marketcap for S&P 500 is ~23 Billion
The highest current marketcap of cannibas companiy is $3 Billion
Not particularly. When I posted the request for comment to HN it got crickets [1].
Not enough people care about this. And the "safe" option has kind of shifted with the other index providers having moved first. That said, there were a lot of proposals and I'm not expecting all of them to be adopted.
[1] https://news.ycombinator.com/item?id=48054324
B: but what about your emotions
Very glad to see HN stereotype being upended :)
That's a request for an opinion, not an emotion.
90 days or 5 days, it doesn't really matter because the float will be tiny due to the 6 month lockup. What kind of price discovery are we expecting that would happen in the other 85 days?
Not really: https://www.reuters.com/legal/government/spacex-allow-early-...
S&P hasn’t changed any rules yet.
The tiny float and just a few days before the index funds buy means they have to buy without any more revenue / earnings info than was already published pre-IPO. 90 days is a quarter, so there WILL be more price discovery before a 0 day index fund seasoning period.
You can’t imagine a scenario where he goes lunatic and does something wild (again)?
Buy MSCI World, enjoy the 0.04% p.a. fees and minimal idiosyncratic risk, and relax.
Index rebalance traders will reduce your annual returns by less (probably much less) than 0.1%, but there is no better alternative for you at this moment in time.
https://etfdb.com/etfs/size/large-cap/
You could switch to one that focuses on stocks which pay dividends, for example. That should provide a bit of protection against an AI market crash:
https://etfdb.com/etf/VIG/#etf-ticker-profile
So-called "smart beta" ETFs are also interesting. https://etfdb.com/themes/smart-beta-etfs/
Here are some factors I would expect to rule out the frothiest stocks:
"Quality Factor ETFs are made up of securities deemed to exhibit strong fundamental characteristics. These ETFs screen for stocks that have healthy balance sheets, encouraging growth prospects, and consistent improvements in their earnings."
https://etfdb.com/themes/quality-factor-etfs/
"Value-centric ETFs invest in securities deemed to possess value characteristics, including those operating in stable industries with relatively low price-to-earnings ratios."
https://etfdb.com/etfs/style/value/
"Low Volatility ETFs invest in securities with low volatility characteristics. These funds tend to have relatively stable share prices, and higher than average yields."
https://etfdb.com/etfs/investment-style/low-volatility/
Be sure to check the expense ratios on smart beta ETFs. Generally, the more sophisticated the stock screening, the more they will charge you in management fees.
As long as you're thinking about your portfolio, you may wish to consider international diversification in case the US economy implodes somehow: https://etfdb.com/themes/international-equity-etfs/
Personally, I keep my portfolio extremely conservative. My bet is that if the singularity arrives, we will all either die, or get UBI. I don't particularly care about having more moons than the other guy: https://www.astralcodexten.com/p/you-have-only-x-years-to-es...
I can't picture any scenario where this ends well.
SpaceX will be ~0.125% of the index. The actual amount of buying is in the low tens of billions, and given these are $30 trillion+ markets, this is hardly anything to fret about.
> Although Nasdaq has already shortened the “seasoning” period before index inclusion to 15 trading days and FTSE Russell has slashed its waiting time to five days (and S&P Dow Jones is reportedly considering something similar), most share indices weight firms in proportion to the value only of shares they have released for public trading (the “free float”). For SpaceX, this means just the $75bn or so of stock it intends to issue in June—so its initial weight in the S&P 500 will be around 0.1%. The NASDAQ 100 is an exception, and has changed its rules to weight companies at up to three times their free float, in an apparent effort to woo Mr Musk. Even so, SpaceX’s probable initial weight in this $40trn index will still only be around 0.5%.
So people who hold ETFs that track the S&P 500 probably don't have too much to worry about. People invested in the NASDAQ 100 probably have more to be outraged about - but then again I suppose if you're invested in the NASDAQ 100, you may be consider more exposure to SpaceX to be a good thing.
At .1% they'll have the same weight as something like DoorDash.
[1]: https://www.forbes.com/sites/garthfriesen/2026/04/25/spacex-...
There is nowhere near enough burning rage for this absurd fleecing of the public.
Similarly Space-X’s IPO valuation is about “data centers in space” vaporware hopium and “timeshare all the GPU time that Grok isn’t using”.
There’s a trend with Musk’s companies.
Jack Barker’s rather blunt monologue in SV about how the stock is the product is more true than ever. It felt very heavy handed at the time but it’s only proven to be more the case than I thought.
These are often both weak signals, though. They'll govern very high level decisions, but all the day to day is inside the company. Just as I want a return on the money in my bank account (as I was promised) investors want a return on their money too, and as you say, the executives and board should care about making sure the people who put money into the company are getting a decent deal out of the arrangement.
EDIT: guys, it's sarcastic... since the parent was talking about latency, cooling is something that is even worse in space than latency
They are planning to capture 100.7% of it?
To quote a message I wrote on a finance channel on telegram:
The 12 largest companies in the USA together have that market cap, so probably not.
Index funds in total had about5 $7 trillion in 2021 [1].
[1] https://alexchinco.com/double-what-you-think-it-is.pdf
> S&P 500 Shariah Industry Exclusions. The index universe consists of all the constituents in the S&P 500 Shariah, excluding companies classified as part of GICS sub-industries 20101010 (Aerospace & Defense), 40203040 (Financial Exchanges & Data), 40201060 (Transaction & Payment Processing Services).
it probably makes it easier to ship in europe where some private banks and pensions (eg denmark gov) ban defence investment
The guy called 401(k)s a Ponzi scheme. Now, he's coming after them to loot.
Think about it: you have hundreds of thousands of pages of evidence that the hyper-wealthy may have trafficked minors across state and international borders. Only one person is in prison over it, and her cell gets upgrades.
35 years ago this would have been a slam dunk for the opposition party of any republic. Instead of standing ten toes down on it, opposition leaders are doing... what exactly? Going on with business-as-usual, for the most part. They should be attempting to add language to every single bill that comes across the floor to see more done. They aren't.
I think stock trading shenanigans are far lower on the list of moral outrages, particularly given Congress' predilection for insider trading.
If SpaceX tanks and 401ks are left holding the bag, this could result in the biggest class action lawsuit ever.
[0]: https://www.bloomberg.com/opinion/newsletters/2026-05-21/spa...
When money is lost in the order of billions, someone is getting sued.
but that doesnt mean any money gets recovered at all. Musk sure as hell aint giving anything back.
The fix is to simply not buy it - those 401k aren't completely passive, you can choose a different investment (instead of NASDAQ index).
Would either published indexes or investment funds exist, if suing them for poor performance was anything resembling that easy?
I'm thinking "no".
It's quite sad that the pillar of American life that is the 401k is given to shady fund managers. The law should be that if you manage a 401k you must be a fiduciary. If that were the case then no one would be bag holding these fake valuations because they'd be liable for negligence. Right now they're just in on the scam.
Away from large cap stocks to what?
I'm not sure you'll come out ahead. (Personally I don't get the outcry, except for nasdaq which has fairly stupid rules, delaying the inclusion of megacaps won't make the problem go away, but probably increase since the float will be massively larger). It's inherent to being a passive index.
Regular people want to invest so they can make money and companies want people to invest so that they can raise money. So pretty much everybody wants the 401k money to be invested in the stock market.
But the issue is that investing in the stock market is very technical, so some smart asses invented the index funds to make it easy for daddy and mummy to put their retirement accounts to work.
The index has safeguards in place to try and reduce its volatilty. So people are happy, cause they are investing in stock without having to look closely at what it is they bought.
But if suddenly some people change the safeguard rule, so that their buddy can dump their overvalued stock over people who think they are investing relatively safely, then it can be argued that there is foul play.
People are not finance specialists and they are heavily incentivized to buy index funds, so they need to trust that the people who are telling them to invest are not hiding things from them. If that trust is broken, lawsuits will follow.
It’s like: imagine you own a Toyota and have a maintenance contract with Toyota, and one day you have your car serviced and they tell you they changed the brakes. They tell you the brand of the new brakes and they tell you it’s fine while in fact, they put some cheap garbage that fail after 100 km of driving.
When the brakes fail and your car falls off a cliff, you go and see them and they tell you: “yeah those brakes were bad, but we told you we put them in, you could have looked up that these were bad, it’s all over the internet, so that’s on you”.
A "lawsuit" isn't a concern for the likes of Musk.
He's got the money to pay lawyers, politicians, and influencers. He's spread this risk around to the right people; if he goes down, they're going down with him, too.
At a certain point you have to start jailing people for long periods of time. I don't mean the Milken, Belfort, or Skilling treatment. I mean being placed away for 30+ years in medium-security facilities at the least.
Bernie Madoff was sentenced to 150 years in prison, if that counts. But then he had committed a crime, which is the usual "certain point" we wait for.
https://api.substack.com/feed/podcast/260347/s/233172.rss
https://podcasts.apple.com/us/podcast/conversations-with-col...
https://open.spotify.com/show/0Cj2lIpGxkrw1RFVIPTa6a?si=f41c...
* Valuation of the sp500, the hyperscalers and Nvidia is (mostly) reasonable based on earnings
* Build out of infrastructure is demand-driven, hyperscalers are not building just for future demand that would not materialize
* OpenAI, anthropic & co can be overvalued but that does not mean there's a systemic bubble
I think this underestimates contagion effects and the fact that demand appears to be subsidized and may disappear quickly, but it's just MHO.
That is a hell of a statement to make (their earnings are mostly negative, after all, except nvidia). Would require exceptional evidence, which doesn't seem to be there.
> * Build out of infrastructure is demand-driven, hyperscalers are not building just for future demand that would not materialize
This does not reconcile with the large amount of empty datacenters and GPUs which have not been installed: https://www.wheresyoured.at/ais-economics-dont-make-sense-ad...
> * OpenAI, anthropic & co can be overvalued but that does not mean there's a systemic bubble
OK? It could also mean there is.
> I think this underestimates contagion effects and the fact that demand appears to be subsidized and may disappear quickly, but it's just MHO.
Even with subsidized demand Microsoft still ended up cancelling over a gigawatt(!) of planned datacenters already back in 2024. But yeah, their arguments are missing a lot.
Funny how this different framing of the exact same person provides a completely opposite expectation of their incentives behind commenting on whether AI valuations are a bubble.
Print money. Push most of it into cheap credit for giant corporations and asset owners. Let a little trickle into the real economy so ordinary people feel temporary relief. Then let inflation quietly do the dirty work.
The public pays through higher prices, weaker savings, and future debt.
The powerful collect the upside.
That is the game: privatize the profits, socialize the losses, and call it capitalism.
And all of this is legal under the disguise of "protecting the economy for regular folks", and they can keep doing it repeatedly.
Also very bold of you to assume voting does much.
(coming from a 22 year old who votes at every federal, state and local election).
Why? It could be sudden. It could be slow and gradual. I've seen no reason it needs to be one versus the other.
More: https://www.gurufocus.com/news/220058/seven-quotes-from-warr...
Just investing less in risky things on the run up means you personally perform worse so even in known bubbles you don't see reasonable slow downs instead of disastrous pops.
What? Source? Plenty of investment bubbles pop before the bag is passed.
This thread involves a lot of people looking at something they don't like and presuming karmic forces will give them what they deserve. There is no reason these companies, even if massively overvalued, have to "pop."
That's fundamentally different from e.g. the financial crisis, or the 2023 bank collapses, or even the dot-com bubble. Those did not have the ability to self correct. There was no slow deflation other than through a bailout.
As I see it, this is the exact same situation - wildly overvalued companies based on investor exuberance, the underlying business is not capable of supporting this kind of valuation. IPO tends to be the crunch point at which this overvaluation is exposed. Once exposed, the valuation correction spreads to other similar businesses quickly and the bubble pops.
What's the self-correction ability that AI companies have?
A lot more revenue. Dot coms were going public pre revenue. And Anthropic is profitable. Both it and SpaceX wouldn’t be dependent on further stock sales to stay alive—that lets them weather a downturn.
As with the dot-com bubble, there is a lot of voodoo accountancy (and flat-out lies) about the actual situation here.
As I understand it, the basic problem is that the big three can't charge enough per token to cover costs because they're in competition with each other (and one of those is Google that can afford to buy market share using its other operating revenues), and the OSS/cheap Chinese models.
And this situation is unlikely to get better in the short term because building cheaper per-token capacity is very expensive and time-consuming.
[0] https://www.wheresyoured.at/anthropics-profitability-swindle...
They don’t need to fix it in the short term.
Look, this could be total nonsense. But what won’t happen is Anthropic or SpaceX disappearing inside a year. That was true in the 90s because the only cash flow going into those companies came from investors.
Agree, some of these are valid businesses. But they are also massively overvalued on that underlying valid business, because of investor enthusiasm. When the bubble pops they are going to have real problems because of that overvaluation. Hopefully they survive, as a lot of the dotcom businesses did.
I think the real bloodbath will be the second-tier businesses that are mostly reselling cheap tokens to a market niche with custom prompts, and also massively overvalued as "AI businesses". And that kinda mirrors what happened in the dotcom bust - all the overvalued "webscale" businesses that hadn't really worked out a solid model yet went to the wall immediately
OpenAI seems to have made debt-like commitments to spending on infrastructure. If those are indeed binding, they may have less flexibility than the others. (If Anthropic’s revenue growth stalls and its valuation halves, it should still be a going concern.)
This is a wild thing say without any qualification.
It’s really not. Bubbles are notable because most elevated asset prices slowly go down. And they have common characteristics that force the reckoning. Usually debt. Sometimes operational leverage.
The point is that nobody wants to be the first out of a hot market nor the last so that bubbles everyone knows are bubbles first hang on despite it being broadly believed to be so and then crash as people head for the exits.
Broadly people are taking on debt to realize profits that may not exist. Retrospectively widely acknowledged bubbles like every crash in the last century all popped im not aware of any big enough to cause a recession that petered out slowly. Since we don't need to look up 100 years of crashes together can you name some similarly large issues that were resolved slowly over time?
It's the same scenario of a ponzi scheme. Everything looks fresh and fine until everyone realizes there is nothing in there.
Robber Barrons existed from like 1860 through 1915 and extracted the wealth of many people, including Native American tribe lands.
Like this shit can keep going until we decide enough is enough and actually change our society.
There is no consistent definition of a bubble. We have no fundamental reason current valuations have to collapse suddenly.
> We have no fundamental reason current valuations have to collapse suddenly.
I would agree, but i think that is just saying that the current situation is potentially not a bubble. Which may be true. We will only find out after the fact.
I’ve seen it commonly used to refer to any period of high multiples.
If everyone is in the bubble and it pops, everyone is in the same boat, so you’re not really going to be poorer than your peers by comparison.
If it’s not a bubble and you are wrong, you will fall way behind everyone else and just watch people get richer and richer doing the exact same thing you should have done.
Also, just because something is a bubble doesn’t mean it has to end in a devastating pop. Sometimes bubbles expand and then just get diffused. The exponential rise stops and prices plateau, but it just becomes a new normal and things stagnate for a while before resuming normal upward growth.
> If it’s not a bubble and you are wrong, you will fall way behind everyone else and just watch people get richer and richer doing the exact same thing you should have done.
I don't get? First scenario, you get richer vs. the average and in the second you gt poorer. So in total you average out? I don't see how not participating makes you poorer in average.
> Sometimes bubbles expand and then just get diffused.
That's not what a bubble is. A financial bubble is defined by the "burst" at the end.
SpaceX used its massive IPO and listing fees (and the prestige of being the largest IPO ever) as leverage. Index providers and exchanges saw financial incentives: listing fees, trading volume, data sales, and long-term revenue from asset managers. Reuters reported that SpaceX advisers contacted major index providers (including Nasdaq) to discuss early index entry, and that SpaceX was leaning toward listing on Nasdaq only if it got early inclusion in the Nasdaq 100.
The rules built to protect passive investors were waived:
- S&P 500’s 12-month seasoning and 4-quarter GAAP profitability requirement → waived
- Nasdaq’s seasoning window (90 trading days) → cut to 15
- FTSE Russell’s seasoning window → cut to 5 days
Meanwhile, Danish pension fund excludes SpaceX citing governance and valuation (Musk holds approximately 42.5% of the equity, but commands roughly 83-85% of total voting control): https://www.reuters.com/legal/transactional/danish-pension-f...
S&P hasn’t announced a final rule change yet.
Yes. Literally right.
There is no second guessing because no decision has been made. A consultation was put out. I’m expecting it will be adopted in parts. Like, the market hasn’t priced in a full rebalancing.
In terms of AI, we've seen even here on HN everything from mathematical problems that remaind unsolved, being solved, mathematical proofs being used to disprove theories, heck we even learned more about alzheimers, new antibiotics, precision targeting in oncology, using AI to flag healthcare anomalies in imaging. The benefits are easy to miss, but they're snowballing into place, there's definitely an explosion of useless crap, but you have to look for the real things and you will come to find, that AI is giving us things we otherwise either might not have discovered or wouldn't have within our lifetimes.
Don't get me wrong. I love LLMs and use them myself. But the biggest gain for me is easier context switch and text manipulation. It's not the: replace X with a bunch of LLMs every CEO is dreaming of. So yes, you have higher productivity, but is the eval of those companies legit? x doubt.
What is _the proof_ if all the proofs are not _proofs_?
I don't babysit my LLM based services which are used by coaches and clients around the world. One of my LLM based solution get 30-4k daily hits and I have users coming back on the regular to use it. without babysitting, doing things that would take them hours of manual work and research.
I don't babysit the developers I work with and our clients, which both use LLM's themselves and at scale with their clients, serving all kinds of LLM powered services to millions of users worldwide.
You are not "seeing" the large adoption because:
- The technology is "a few years old" in its usable state - The corporate adoption cycle is slow - You have to understand the technology to use it in a good way, which most corporate devs and PM's do not
So it will take a bit for the "obvious" adaptation on large scale.
But you won't "know" when the large adoption happens.
Silent inference is growing every day, and that is what real adoption looks like - not an LLM being in your face chatbox, but running in the background, sorting, finding, fixing things, aligning data, figuring out analytics, tuning the ads, cleaning the datasets.
I am a radiologist and researcher predominately focused on AI.
You could also look at the market, one of the biggest players, Paige, was acquired for about 30% of the money they raised.
They will never beat the human instinct tho, but they can be great tools sometimes. Unfortunately, LLMs mostly produce garbage.
In real life pathology is a spectrum not a binary and physicians are not trained to be 100% accurate instead optimizing sensitivity and specificity considering pretest probability as well as the harms of overdiagnosis and under diagnosis for a given scenario.
For something like melanoma which is relatively easy to diagnose with a superficial, extremely low risk skin biopsy and where early staging dramatically improves outcomes you would want to design around overcalling (high sensitivity) rather than maximize accuracy given the significant harms with false negatives and minimal harms with false positives.
An AI may be more accurate at classifying melanoma/not melanoma but if it does not meaningfully improve on the clinical threshold of biopsy/no biopsy or result in less biopsies that accuracy is wasted and may even be detrimental.
Note: I am just using this as an example to illustrate the considerations.
Do you think this will result in more routine/boring/tedious tests? Is the bottleneck on these things the human time to analyse them?
For some things, like 3D volume segmentation of structure or disease (e.g. CVA/stroke volume, cardiac muscle mass, iron quantification) the bottleneck is the time it takes so we currently use approximations like single longest dimension, circular regions of interest, etc. AI will dramatically increase accuracy allowing for more accurate treatment and easier large scale research with quantitative endpoints.
Other things people think of like detection of aneurysms, fracture, lung nodules are not “hard” but AI has already added and will continue to add the second-reader benefit which will reduce detection errors. For this category the clinical benefit is as of yet unclear and we know that increased detection does not necessarily translate into improved patient outcomes and can in fact make them worse from over-diagnosis which means investigation related harms and over-treatment.
We were already in a phase of “over detection” in much of radiology with advances in imaging technology so the incremental benefit of current AI remains to be seen and I personally think is going to be much more limited. I had a case recently where a 2 mm brain aneurysm was missed on 3 CT scans over 10 years but was picked up by AI so now is being followed annually. This is too small to treat considering the risks and a serious argument could be made that 10 years of stability is proof enough that this is almost certainly clinically irrelevant for this patient.
Far more interesting areas of AI in imaging are in acquisition of acceleration (i.e. the medical equivalent of upscaling) which can dramatically decrease costs and increase accessibility as well as analyzing imperceptible features.
It may not be a popular take here but in my opinion the future of radiology is like what we see in software engineering today - a skilled human equipped with AI will outperform humans without AI and AI without humans, the latter of which we are still several years away from prototyping due to various technical hurdles.
> in my opinion the future of radiology is like what we see in software engineering today - a skilled human equipped with AI will outperform humans without AI and AI without humans
I suspect this will be the case across the board. It's a useful tool, but it's just a tool. It's not a replacement.
A self driving car doing better than a drunk on the freeway doesn't reassure me that it'll do better than sober me in a snowstorm.
I also question if the kind of person who actually drives while drunk - knowing perfectly by thousand of society inputs and peer pressure that it is wrong - will care enough to buy a self-driving car.
A whole lot of doctors, if not most, didn’t pick their profession out of an interest in medicine…
What a story this is
Although realistically this will be built from lunar materials, you still need to lift a lot of mass to build the necessary industrial processing and mass drivers to launch it from the Moon to some Lagrange point.
And there are many other useful space megastructures that can be built in space from common materials, like giant solar arrays beaming power down via microwaves: https://en.wikipedia.org/wiki/Space-based_solar_power
Most of these proposals date from even 1980s.
Also, keep in mind that a stock price discounts expected future cash flows. Is it likely that SpaceX will have a near-peer competitor within a few years? No, it's not, and that market share is being priced-in.
If there exists sufficient demand for the product of space launches then it's probably reasonable to expect their to be a near-peer competitor soon, but that's only if SpaceX were to be profitable, which it isn't, even with the subsidization by Starlink on the order of many billions.
Space is not that easy. Even with unlimited money, it'll probably take 10 years to build a rocket like starship. Going from nothing to orbit needs a lot of money but more money doesn't make that faster.
But other than that, yeah - outside of China, progress has been horrendously slow & Blue Origin, the only other US company that demonstrated a partially reusable rocket just had a devastating pad explosion, destroying one of their 2 rockets and their only launchpad.
Were we struggling to do this before? Was the overall percentage reduction in costs? Was some other achievement held back because we couldn't accomplish this? What is now enabled?
> to get any payload into space.
A limited set of payloads into space. No vehicle can get "any payload" to space at a fixed price.
> The benefits are easy to miss,
You've listed a bunch of reasons to publish papers. What is the actual ground level change that's occurred? Are those antibiotics produced? Do they actually work just as predicted? Why is that first world problems are exclusively listed but basic problems like world hunger are never even approached?
> or wouldn't have within our lifetimes.
And your life, your actual life, benefits, how?
We literally couldn't.
> Was the overall percentage reduction in costs?
Starship will bill NASA 1/20th what SLS does.
> What is now enabled?
LEO. Artemis. Out of all of these companies, being confused about SpaceX is super weird.
But now he's also trying to get the indexes to pay for the giant cash fire called X.ai and the far right huddle Twitter too.
I have zero interest in owning anything of either of those companies.
Yes. The thing that’s going public is almost entirely an AI play.
Starlink has made connectivity cheaper and more available. Earth imaging has made various food production processes more efficient. Weather forecasts have become more accurate.
If you’ve genuinely missed the massive economy that LEO has become, it will be a fun thing to catch up on.
Yeah that's working out great for the average American isn't it (https://natlawreview.com/press-releases/2026-consumer-trust-...)
> Earth imaging has made various food production processes more efficient.
I'm not even going to bother sourcing the fact that food prices have only massively gone up negating any gains in productivity. The average American struggling to buy basics like eggs and meat aren't feasting on more efficient food production.
> Weather forecasts have become more accurate.
I'm sure the growing homeless population is happy to know they can better predict the weather they'll be sleeping in.
This is all totally worth supporting a nazi billionaire
Yeah. It did. My neighbour’s rates went up. He switched to Starlink.
> not even going to bother sourcing the fact that food prices have only massively gone up negating
This is like arguing fertilisers are useless because prices went up.
> homeless population
Not super relevant!
> all totally worth supporting a nazi billionaire
Nobody said that. But it doesn’t mean the benefits go away.
SpaceX’s main customer is Starlink. With that in mind: if Starlink takes over all the ISPs in the world its market value should be comparable to Comcast - $89 Billion.
It has massively improved both. The cost, resolution and frequency of imaging has decreased alongside launch cost.
> if Starlink takes over all the ISPs in the world its market value should be comparable to Comcast - $89 Billion
Why? Comcast isn't "all the ISPs in the world." (And Comcast doesn't get defence contracts to build and maintain military networks.)
Reusing rockets reliably rather than "throwing them away" is a great achievement and I'm surprised people have to justify it on HN
You can milk a cow only a set number of times!
What probability you assign to arrive at that expected value and how you adjust for risk is on you.
I haven't found anything out of LLM's that has improved my life. It was a fun little toy but could never find a use case. But clearly, your mileage varies greatly from mine. That's cool.
I just personally don't the use in more when what I think many need is less. But that comes from essentially this point of view - “Better than a thousand hollow words is one word that brings peace.” ― Buddha
I wouldn't say it "significantly improved my life" however. Everything AI has done for me right now is a "Nice to have" but it doesn't fulfill my needs.
What’s the long term plan? Make it up on margin? 100% tariffs on Chinese open weight models?
I don’t plan on pulling from my 401k for decades, so the long term plan is the part I care about.
- Significantly increased my productivity as a software engineer.
- Using it daily for Chinese-English translation. Significantly better than pre-LLM translation software. Also, great at teaching grammar, nuances, etc.
- General Q&A. Like "Googling" but much faster. This is probably the most common use case for me.
This is exactly the point that keeps coming up that folks are struggling to grasp, myself included. How are you measuring this? It certainly makes me feel productive, but I'm not sure I can confidently say it has actually made me more productive. It's made the easy stuff a no-brainer (e.g. boilerplate, simple logic) and the moderate stuff really hard. Never mind the hard stuff. Vetting the code has become a whole other job on its own. The only folks I've found who confidently claim it increases productivity appear to be online (and without evidence), because no one in person is willing to claim that and show it.
For me, the killer use case is debugging. I hate wasting time debugging something that should work except for mistakes, and now I do that probably 75% less than I used to because AI does it for me.
I don't know if it makes me that much more productive, but I certainly enjoy my work more not having to do as much tedious debugging, and it feels like I waste a lot less time doing it.
I've never been a developer. Dabbled in frontend web for a bit (HTML/CSS/JS, no large frameworks) and felt like if I really dedicated some time to learning how to code, I'd be pretty decent at it. It's always intrigued me, and I've always had an itch to build things, but just never found the time. I'm in marketing now - I own an agency.
Over the last 6 months since the coding models really began to step up and get good, I've built several dedicated apps to support my business:
-Profitability optimizer and forecaster based on unit economics and current ad efficiency.
-Creative strategy tool that ingests brand and product data and helps explore primary and secondary personas and emotional motivators.
-Reporting tool that processes natural language queries and connects to multiple data sources to fetch results. Can schedule reports to post directly to Slack or email.
All robust and hosted on Railway. Team members can use them. Clients can use them. OAuth via Google.
Would any of this have been possible for me before the rise of frontier LLMs? Absolutely not. Learning the frameworks alone would have taken me longer than it's taken to just... build. Rapidly build and deploy. Total game changer for me.
Oh - and I'm building a game on the side. LLMs know Godot.
I attempt a programming task with and without LLM assistance. The attempt with LLM assistance is pretty much always completed faster and cleaner.
Another example: https://news.ycombinator.com/item?id=43991777
You’re going to have to define productivity as it applies to software engineering. With LLMs we’ve primarily seen the number of PRs over time being discussed as a proxy for LoC, as well as the speed of bootstrapping a small project. None of these have a known correlation with economic output. They just feel good, to the programmer, their manager, or both.
> Using it daily for Chinese-English translation. Significantly better than pre-LLM translation software. Also, great at teaching grammar, nuances, etc.
Yes dealing with language is the one area LLMs are actually designed for. But what’s the TAM for machine translation?
> General Q&A. Like "Googling" but much faster. This is probably the most common use case for me.
And now you’re missing any kind of traceability for the information that you “learn,” since it all gets spaghettified and then recombined into a pile of plausible slop with no attribution. Where before you had to do slightly more work to find the information you needed, now it’s available faster but you’re at complete mercy of literally 3 American companies plus the CCP for the accuracy of that information. Most people somehow seem happy with this arrangement.
I meant it in a colloquial way. I just get more done, faster.
> And now you’re missing any kind of traceability for the information
Modern LLM assistants provide sources and references. While it can sometimes be just "slightly faster", it can genuinely save hours of research on complex ones. Also the "slightly faster" can add up to hours saved with frequent use.
An LLM correctly diagnosed it, and figure out that we could treat them with Nutri-drench Sheep Supplement, since Tractor Supply was sold out of the chicken version, and they are very similar.
Of course it then immediately recommended we use hemp bedding that would kill them a different way, but the saleswoman sanity checked all of the above,
100% survival rate.
Everyone’s thriving. Chickens would follow the medical advice again, I guess.
There is nothing the LLM can possibly show or teach you because you know everything lol.
You have even known everything since you were a little kid.
I don't understand this. It increased productivity of every developer in the western world, so it didn't really give you an advantage. Your output is more valuable, but your colleagues' output is more valuable too, and your competitors' output too, and so on. So you're doing more things at the same salary and it's not like your company or your employer is making more money than usual or awarding you more eoy bonus. If your "life-change" is "I'm writing more code" without any other advantage (and with the possible disadvantage of your role changing, or being at risk), why is it desirable?
Interpreting reports, avoiding drug interactions, or knowing when to seek medical care. And before people object- I can literally use the same LLM my doctor does to check these things, without waiting 2 weeks for an appointment.
I helped my parents work through bacterial culture results when my dad was hospitalized with sepsis, and had them ask their doctor for specific follow up tests.
I rebuilt my gas furnace and fixed my dishwasher with AI as an assistant.
Those aren't the fun parts tho. My favorite is touring art museums ancient historical sites with an LLM guide. It can give me a short academic essay about every artist, painting, or artifact. It can pull out details quirky stories about the history that I specifically would find interesting.
I cant recommend this enough. Its like visiting with a 10 PhD docents in art history.
How do you trust the placards under a piece of art?
The short answer is you accept that it isn't perfect and move on with life. I have found multiple errors in all of those things. Human tour guides are especially the worst at making things up.
Part of navigating life is dealing with imperfect information and uncertainty.
Just like with a friend, coworker, or spouse, you use your judgment and track records to decide when to trust what is being said based on subject matter and stakes.
Domain matters. I have found it good at history, but less trustworthy in others. For examle, the llm gave me a bunch of bogus advice as I repaired my dishwasher based on weather models that weren't accurate. There is also a lot of bad information on Reddit and Appliance blogs. Repairman are almost as bad as the tour guides, willing to lie straight to your face. I deal with it the same way.
Literally saved his dog's life.
Let me rephrase that to you: The vast, vast majority of people, even in the western world, even the white-collar part of the population, are not whales or power users of AI models.
I use ChatGPT daily. And I never spend more than $25/month. If I lost it, it would suck, but it would not affect my life significantly. I then see people spending $100 / day on Claude Code tokens, programmers in startups / tech companies rack up thousands a month in bills. These people are literally spending 100x more than me, a casual user.
Yeah, I suspect they follow some sort of whale economics - where a relatively small userbase (in the big picture) and providing them with a huge chunk of their revenue.
But still these companies are being valued as if they're some omnipresent companies which humanity simply can't live without.
No body who has a choice is using Grok
> Is Grok solving Erdos problems?
Mēh! At a slower rate than models a fraction of the price
The Grok app had over 100 million downloads in 2025, over 60 million active users, and generated $350 million in revenue. That’s a lot of people being forced to use it.
Final sad note about Starlink: It is helping Ukraine to win the war. It makes their mid- and long-range drones almost impossible to jam. (Most short-range drones use fibre optics these days to avoid jamming.)
The more dollars there are, the more deeply in debt we are. If these were interpersonal debts where we all owe the dollars to each other such that they go away when whatever promise is eventually kept, that would be a tight knit society. But instead we're all indebted to the banks, so instead we have a lot of collateral at risk, and a lot of uncertainty about whether it's a stable arrangement.
If there isn't enough money to satisfy the asking prices set by the owners of these abstractions, then we can always go deeper into debt until there is. Or we could have a debt jubilee and let the prices re-settle to something more in tune with reality.
2. There's a potential to optimize a lot of economic activity in there.
There is going to be a well-deserved shitshow when these IPO proceeds start hitting real estate markets.
The only answer is to make it unacceptable socially, more costly economically (taxes, etc), or the third option which involves pitchforks (perhaps that also falls under "unacceptable socially") that I hope we can avoid at all costs. (is this the show you mention?)
Feels like folks used to understand the balance a bit better - but I think I made that up. This next governance cycle is going to be a trust-busting, wealth-confiscating one I think.
I think there will be a tremendous political opportunity in the next 6 months to capitalize on rage in cities against new tech wealth driving up housing costs.
Where? Rents and home prices are increasing in most American markets.
What you thought your life would improve? Didn't you hear, wages are only increasing, why don't you invest some of that sweet cash into @JumpCrissCross' fund, it'll be alright. What were you going to do with healthcare anyway?
A society should be judged by how it treats those at the bottom and by that metric our current society is pretty awful.
The vast majority of people I've known who have worked for minimum wage were much harder workers and frankly just much better humans (who happened to have less privileged starts in life) than the vast majority of people I've known who are financially secure.
But even if you don't believe they deserve more inherently, it would still be dumb for us to continue to let income inequality grow at the ridiculous rates it has been over the last 40 years. This pattern never turns out well for society.
Starlink and Claude are both awesome and huge QoL improvements for me!
I think these IPOs are going to mint tens of thousands of new millionaires or something. That, in turn, will generate massive tax windfalls for all levels of government.
> other than the ability to produce more crap?
This is a big "other than." (And to be clear, the jury is still out on whether AI will let us produce more in the long run.)
I think it’s very likely AI is a technical improvement. But there is still a chance it’s a small improvement being massively overbuilt.
If you are upset about people spending their extra productivity and labor hours on poision and mental laxitives, i would mostly agree. This is a failure of culture to adapt to distratcions and shiny objects
And what's more crap exactly? it feels like your grasping at straws to take one set of things and associate them with others. yeah, lots of terrible products out there, lots of enshittification, lots of topics of discussion there. But AI and GPUs are being used in such a diverse way it is impossible to have one opinion on it all like how you're trying to.
I'm not even disagreeing (or agreeing with you), I'm just saying that's a lazy comment to make. if these companies making profits without paying taxes, that's a voter problem (not even politics, just people being shitty voters, self not excluded).
For everyone else who might think they have a better formed opinion on this topic, I only ask that you apply the same level of passion to how the US national debt is now 120% of the GDP. The government is fighting wars and printing money, devaluing your wealth, and indebting your country to previously unseen levels. At least the banks and VCs are using their money (unless they get a bail out again), not your actual tax money, and the tax money and wealth of generations of Americans. You have a president literally stealing billions of dollars in broad day light from literally you.
A good portion of that[1] is what alot of people might call fake money--valuation inflation, etc. And global wealth, even just financial wealth, isn't quite as mobile across borders as one might assume. So marshalling a trillion dollars stateside is gonna make at least some moderate waves. Still, in the grand, global scheme of things a trillion dollars is a rounding error. A trillion isn't what it used to be, and there's trillions to be had even without any realized productivity gains from AI.
[1] I'm no financial analyst, but judging by the last few recessions and the overall trajectory over the past 30 years, I'd ballpark at most about 1/3 of that to go up in smoke if we had a severe downturn tomorrow. It's not all fake money. The whole world has industrialized over the past 30 years on a scale that is still unfathomable for most people today.
- bubbles are notoriously unpredictable and generally don't happen when they are loudly and widely proclaimed to happen any minute now.
- large scale infrastructure spending tends to be really good for economies. These three companies are creating lots of jobs that are mostly related to construction, energy infrastructure, hardware spending, etc. That's a lot of money flowing to suppliers and regions where that spending happens.
- While overly pessimistic sentiments about AI and space companies are widespread they aren't much more rational than the overly optimistic ones. The realist scenario could actually be that, AI and especially Agentic AI is already quite useful and the total addressable market for that is obviously larger than it is today. The question is how large. Likewise, dropping the cost of launching stuff into orbit by one or two orders of magnitude, should create a much larger market for launching stuff there. Including possibly some AI relevant compute.
The valuations of these companies are probably on the high side and I'd expect post IPO share values to drop quite a bit and would not personally consider buying anything until after that happens. But that won't necessarily trigger a stock market crisis or a collapse of these well financed companies. All the spending these companies are doing is very real and the profits of their suppliers are going to be equally real. So some of those share value losses might be offset by gains for other stocks and economic growth. The stock market and economy aren't zero sum games.
However, there are worrying macroeconomic trends happening at the same time (Iran conflict, Ukraine war) that are disrupting global markets already. But you could argue that dumping tens or hundreds of billions into e.g. energy infrastructure and data centers isn't the worst way to counter those for a country like the US. The big picture might actually be pretty positive. Especially if we can dodge global economic misery via a prolonged Gulf conflict that at this point seems to serve no point whatsoever for anyone except perhaps Israel.
Is there some sort of way I can positively monetise this?
You can take small profit now or much larger profit later. Insisting that companies need to be profitable even when growing revenue rapidly is failing the marshmallow test.
(not pointing the finger only at you, at least you identified that gross margins is the correct thing to look at rather than net profit!)
Then why IPO? Isn't that even shorter term thinking?
SpaceX gave em discount for the pre IPO quarter so they can show profit
Anthropic signed a deal to lease compute that is the bulk of SpaceX revenue
he's trying to steal OpenAI's limelight and shit on their road show
I'm actually quite surprised how much money Anthropic pulls
Also surprised that OpenAI is not pulling as much as I thought
All in all it looks like OpenAI is in a bit of a vulnerable position.
I am skeptical that Anthropic and OpenAI can defend their dominance for long enough to make meaningful gaap accounted profits
Google seems to have a good B2B and internal leveraging AI to make $. OpenAI/Microsoft seems to have squandered an early product lead.
And then you have the Muskiverse, where we have an rocket ship company that buys surplus cyber trucks, operates a space ISP, an AI company that produces virtual fetish porn and makes money renting GPUs to Anthropic, a rando dying social network and a tunnel company to cock-block public transit.
I may be underestimating the market for AI anime porn, but I think Anthropic is probably the best in class product right now. Google and AWS are probably the best positioned sellers of AI. SpaceXAI is the dark horse because they are likely enriching the dear leader more. OpenAI is fucked.
Whatever Anthropic is paying is too much, since it means xAI will get to observe Anthropic's software, weights and operations in detail. It's probably contractually prohibited from doing so, but I doubt that would stop Musk, given what's at stake.
https://x.ai/news/anthropic-compute-partnership https://www.anthropic.com/news/higher-limits-spacex
https://www.forbes.com/sites/josipamajic/2026/03/25/openai-a...
I don't think open weight models are likely to overtake or match frontier models in the next year or so when it comes to doing the most difficult tasks, but I do expect a lot of people who are currently funneling wheelbarrows of money to Anthropic to realize that they can achieve the vast majority of things they are doing with LLMs just as well with much cheaper open weight models.
https://polymarket.com/event/anthropic-ipo-closing-market-ca...
IPOing and getting a bunch of cash, even if your stock subsequently suffers in the crash, is a lot better than being unable to get that capital infusion before the house of cards collapses.
I think what is happening is that OpenAI is racing to IPO before Anthropic because their growth isn't as impressive. If you are the weaker company, you should IPO first to lock up the cash.
What's the evidence for Anthropic stagnating?
So we’ve got a combination of signs that they’ve been inflating their revenue growth, and signs that their customers are losing their appetite for contributing to that revenue growth. I suppose it’s not a slam dunk, but it feels to me like as strong an indicator as one could hope for a private blitzscaler startup like this.
https://storage.courtlistener.com/recap/gov.uscourts.cand.46...
However, I do see a bit of reduced demand for hardware and datacenters which could reprice these companies to more sane multiples. There will be winners and losers.
Eventually, and likely in the lifetimes of most people living today, we would have to see something akin to universal basic income (UBI) that covers the necessities in order to stave off massive civil unrest.
If the white collar labor of human beings can’t compete with the output of AI, we either all become blue collar workers or we re-invent the concepts of work and play.
I’m not aware of any existing or proposed economy framework that adequately accounts for the automation that is nearly here at scale. We are not just automating away jobs - we are automating away the value that human beings have within a productive community. Before the mass starvation will come the mass suicide. Our culture teaches us that a feeling of self worth is derived from our perceived productivity. If we cannot feel successful, we may lose our wills to live.
Maybe, but history suggests there will be massive riots instead
They said exponential and you read unlimited.
To be clear, S&P hasn't announced a decision on this yet.
S&P don't get a choice around whether they announce their methodology or not.
That said, the rule change at the NASDAQ 100 doesn't seem to have impacted pricing or allocation. I can't imagine that many people are that concerned about this. (I posted the public-comment request from S&P to HN [1]. The response was crickets.)
[1] https://news.ycombinator.com/item?id=48054324
Typically, you IPO when your private funding is drying up and/or some of your early lenders want to cash out.
It's worse for the new investors. (If it crashes.) It's great for the old investors. They got an opportunity to sell if they wanted. If they didn't, they still own their shares, except in a company that has that IPO cash sitting in its account.
Of course, some special souls are excluded from blackouts lol.
In the alternate timeline they would have held shares in a private company. They're still not really getting burned other than getting a tax bill.
In reality, corporations as a whole are seeing record profits continuing through 2026. Whether or not the average person is doing well is pretty irrelevant to the stock market: if companies are increasingly profitable, stocks go up.
Everything I hear about Anthropic points to a company that is actually closer to profitability and possibly already profitable, unlike many of its other peers.
We don't really look at YouTube as a failure and that product was unprofitable for many years. Nobody thinks the Uber bubble is going to burst even though it has never made back its investment money.
I think OpenAI is undisciplined and poorly run hence the insane burning of cash. Sam Altman is a terrible CEO and a conman. Anthropic is run by legit people.
Companies like Google, Microsoft, and Meta face essentially no negative consequence for burning cash. They have no urgent need to be efficient about their AI investments, even if they could be.
SpaceX is of course not profitable and has a lot of baggage but they still have a major asset, which is that Starlink prints utility company levels of money and is expanding both customer base and profit margins rapidly. Are they overvalued? Yeah, of course.
I’m not necessarily expecting a crash any time soon. (But we average a major correction, what? every 8 years? So if you keep predicting one long enough you will eventually have been right all along.) But I do feel comfortable saying OpenAI and Anthropic are overpriced. For more or less the same reason Cisco was overpriced in the late ‘90s. It’s not that what they were making wasn’t valuable; it’s that we got out over our skis a bit over how much of it the world could actually manage to consume in the immediate future.
Groupon got to pretty much 100% penetration, still crashed and burned right after IPO. I think Zynga followed a similar trajectory.
> "There's no way you'll hurt yourself walking to the living room"
> "Read history: people always think everything is fine ... until it isn't."
So just buy the dip if it actually crashes.
History is also replete with people constantly predicting collapses that don't come. Timing the market is very hard with numbers, it's total nonsense if one is just going off vibes.
The good news is that these folks seem to be in possession of a vibe-rator.
Anthropic, SpaceX and OpenAI are not banks. (Also, we had the largest bank runs in American history three years ago. The ordinary American barely noticed.)
Yes. Equity investors. The ones who buy hundreds of billions to trillions of dollars of American stocks a quarter.
Cause if that's the case, I see no reason for a government bailout should things go south. Nobody's pension would be affected by some private investor losing money on a bad investment.
But if that's not the case, then someone somewhere along the chain is acting as a bank, subject to a vibe-driven run.
Yes [1].
> Nobody's pension would be affected by some private investor losing money on a bad investment
...pensions also invest in the stock market.
> if that's not the case, then someone somewhere along the chain is acting as a bank, subject to a vibe-driven run
You're confusing deeply unrelated concepts. Whether or not someone who loses money is politically sympathetic has nothing to do with whether they're at risk of a bank run.
[1] https://www.federalreserve.gov/releases/z1/20260319/html/f22...
If pensions invest in the stock market, then they are de-facto acting as a bank. And last I checked, in the land of the free, you get to withdraw your 401k should you vibe with the decision to do so [please don't do this based on this post alone].
What does this mean? Who do you think benefits from a bailout?
> If pensions invest in the stock market
Pensions are private investors. And pensions invest in all kinds of things. Plenty are already shareholders in these companies.
> last I checked, in the land of the free, you get to withdraw your 401k should you vibe with the decision to do so
This is a non sequitur. Nobody disputed this. And 401(k)s are not pensions.
The bubble can't pop until after an IPO, and that doesn't mean "immediately after".
You can't have a run on a privately held company.
[1] https://www.federalreserve.gov/releases/z1/20260319/html/f22... line 16, 2023 to 2025
30% above the average. Households bought $1.6 trillion in Q3 of 2025, for example. (Foreigners bought a further $650 and $700 billion in Q3 and Q4, respectively.)
American capital markets are ridiculously deep.
American market valuation is more than twice the entire US GDP. So ridiculous is a good description of what's going on.
Stock versus flow.
There is even a name for marketcap/GDP, Buffett Indicator. And historically the current value is very high.
[0]: https://en.wikipedia.org/wiki/Buffett_indicator
Where did you get spending? That's net buying of stocks by non-financial Americans. It's the new money that has, on average, gone into the U.S. stock market from that section of investors every year. A third of it going into these new issuances doesn't need to break anything.
¯\_(ツ)_/¯.
Almost certainly, to some degree. But that doesn’t mean anything has to drop. Just not rise, or not rise as much as it would have. Or potentially some other company that would have gone public or sold shares doesn’t do it now.
Other than it not going somewhere more productive. Are you willing to just bury 1/3 of your income in the back yard?
Maybe getting more of these big private companies public will bring valuations down a bit.
(Just my impression. No math or financial studies behind it :)
Keep in mind that inflation ran over 7% annualized in April [1].
[1] https://www.bls.gov/news.release/cpi.nr0.htm
Everything else is up around 3% YoY. And if energy and transportation are up double digits, and producer prices are up double digits, other consumer prices will follow.
The faster your cash loses value, the stronger your incentive to trade it for something else. That something else can be financial assets.
> It's not got loads to do with large-scale, institutional investments
For investors, particularly retail investors, the consumer price index is most relevant. But for whatever it's worth, producer prices are up over 16% in April (7% excluding "foods, energy, and trade services," which jumped over 50% annualized) [1].
To be clear, I'm floating a hypothesis here. I have seen no evidence linking inflation to demand for these companies' shares. (If anything, it should be the inverse.)
[1] https://www.bls.gov/news.release/ppi.nr0.htm
It's frustrating people who parrot it think they're smart by saying it to others with no basis and finally when it does happen they're like SEE SEE!?
> Until then, history teaches that we'll just keep going up and up
And this is the more important part. As long as you're <40 you SHOULD always buy SPY or VOO, even at the very top.
People have been saying the crash has been coming since 2022. If you believed this and acted on it, you would've missed 3-4 +10%/yr returns.
As Buffet says: You can't time the market; be in it.
S&P has not announced a methodology change yet.
https://www.spglobal.com/spdji/en/documents/indexnews/announ...
Post 08 crash, all sorts of conspiracy websites like Zero Hedge were popular saying how the world economy would keep crashing.
Unfortunately, the US Government continued to run themselves into the ground spending-wise and may have a difficult time with another bailout, unless everyone pretty much agrees that we cannot have a USG failure, so they all pretend like nothing happened.
Eventually the merry-go-round stops, I'm just not sure what the catalyst will be, and it might be 100 years from now.
Edit: I should add the AI bubble can absolutely burst but there is no reason to believe these IPOs are the end of the ride. If I knew I would be…
Even if all signs point to impending doom, at the end of the day if people are still buying, stocks will hold their value.
But why? The US population is set to dramatically shrink in the next 30 years. Where does all the money come from?
while going with the tried&true makes some sense, I think we have to open our eyes to a different reality of our stock market… and this market concentration into few companies is going to get a lot worse…
A small number of companies have always driven most stock-market gains. Betting on size isn't fundamentally a bad bet. But it is a bet against value and the historical tendency for small companies to be higher risk and higher reward.
Is this not just "It's different this time" thinking? I remember it being used all the time during the dotcom boom
You mean 0DTE babies?
Stock prices don't have to crash. They can just stagnate while profits catch up and multiples compress.
Debt binges, on the other hand, tend to go bust with a bang. But after the recent private-credit scare, the AI build-out has been predominantly financed with stock. (I think.)
I believe that's been concentrated at the hyperscaler layer, and subsided when the aforementioned private-credit scare reared its head. (I haven't heard a big datacenter debt deal announced in a while. Though of course that doesn't mean they aren't being done.)
Is there is historical evidence for that? As someone who used to follow Jeremy Grantham a lot (he considered himself a "bubble historian"), IIRC every bubble he studied always mean reverted, and it usually (maybe always, can't remember) overshot on the downside during the correction.
This really depends on how we're defining these things. Let's call a stock-market bubble a period of elevated multiples. That can mean revert by prices decreasing while earnings stay constant or by prices staying constant and earnings rising. (Alternatively, both earnings and multiples can rise and fall.)
This isn't true of AI companies...yet. But these are companies entering the market with pre-IPO userbase (including lots of B2B) numbers that Meta and YouTube would have dreamed of before their acquisition/IPO.
I think this whole situation is very sleazy and corrupt, but ultimately my prediction is that nothing serious will come of it. Even the exposure of index and passive investing is overstated.
I sometimes try to get people to worry about the catastrophic state of American public finances by pointing out that the net national debt, including unfunded liabilities, is estimated to be $175T [0]. The government could appropriate all the equity from the top 3000 largest companies, and also the entire real estate market, and it still would not be able to pay its debt (RE market is $55T).
[0] https://balajis.com/p/americas-175-trillion-problem
Also: All of those numbers you use to scare people are way, way off.
It's a liability because the U.S. has promised to pay it. We haven't committed to a level of military spending backed by our full faith and credit.
EDIT: Never mind! Apparently we can just cut social security payments.
In Flemming v. Nestor SCOTUS ruled that SS benefits are not guaranteed contractual rights but are instead statutory entitlements that Congress may modify or revoke.
The rest of your article is complete bogus and the economic equivalent of climate change denial.
"If you owe the bank $100, that's your problem. If you owe the bank $100 million, that's the bank's problem."
High levels of debt only signals high demand for this product.
This is super-counterintuitive, but the debt has little to do with the deficit. We could run a surplus and still be in the same level of debt (in fact, this would be a tremendous place to be). We could run a deficit and have no debt (just print money, duh). The decisions that go into column A generally do not impact the decisions our leaders have to make in column B, though there are of course convenient relationships between the two.
Repayment to $0 isn't a reasonable goal but there are a lot of problems with your argument.
The biggest question is about sustainability. Is the debt-to-GDP ratio stable/manageable and is the interest rate on the debt below the economy's growth rate? If the answer is no, you have a problem.
> High levels of debt only signals high demand for this product.
This is backwards. The amount of debt is set mostly by government supply, which is driven by deficits. The demand signal is the price, which in this case is the yield. If the demand was high, yields would drop as the amount of debt grew. Instead, we have rising debt and rising yields, which means supply outstrips demand.
The US no longer has a AAA sovereign credit rating for a reason. When Moody's (the last agency to downgrade the US) stripped the US of its AAA rating, it cited "rising debt and interest costs 'that are significantly higher than similarly rated sovereigns.'"
The biggest issue at this point isn't the principal, it's the interest. Interest is the fastest-growing line item in the federal budget. It's almost at $1 trillion/year now and expected to nearly double by 2035. You either have to cut from other spending or borrow more to pay the interest.
Your comment implies that this doesn't have a real cost, which is silly.
No sympathy for people and institutions who make deals with the devil and expect the government to forever enslave taxpayers to honour those deals and pay back with interest.
Second, its critical that treasury bonds are denominated in USD. The us gov controls the monetary policy and can choose to inflate away the debt over time. This is in contrast to EM debt where they get trapped with foreign denominated bonds. See also the tensions around EU debt, greece, etc.
Argentina is doing fine. The real constraint would be that defaulting on the debt would cause a credit crisis and bank collapses.
> The index demand is not 100% of the stock available in the IPO, or 110%, or even 50%. But it’s plausibly more than 25%. It’s not a short squeeze, but it’s a lot. Add a reported 30% allocation to retail, and arguably a majority of the IPO is being sold to price-insensitive investors. That is one way to get a high IPO price.
We detached this subthread from https://news.ycombinator.com/item?id=48364986 and marked it off topic.
I can’t find any because the admin is so horrendously corrupt.
These indices aim to replicate the market. They’re not trying to pick stocks.
There is a serious argument for saying they fail to replicate the market if they structurally exclude trillions of dollars of it.
The indices don't buy into the IPO, but a few days afterwards. That's obviously easier to bridge than 6 months. But IPO buyers are still taking a risk.
Which index are you thinking of?
Most of these indicies intend to match the largest companies on the market - going up when they do and going down when they do.
If someone doesnt want that, they can pick a different index or invest in a managed fund. Companies like vanguard also offer custom EFTs where you can exclude certian companies if you want - probably the simplest option.
But then you cant complain if they go up and you miss out.
PS: Yes, there are several cannabis ETFs if you are into that kinda thing. look into MJ, WEED, MSOS, and YOLO.
So why not just stick to the roles we agreed on when buying in?
In this age of AI marketing taking over the minds and imaginations of most of our businesses leaders in the name of greed and fear, I’ll hold to the more likely truth given the circumstances, regardless of this appeal to some invented tale of uncorruptable corporate governance. Have you never seen decisions being made?
I think that better matches the original spirit of this forum. The progenitors have become the people they once disrupted.
These wives were yoga teachers and socialites. And I say that as a man that is a feminist and upmost respect for the amazing women I have worked with that were absolutely world renowned professionals. The bankers wives were not in that category and were shells to eliminate the “conflict of interest”. The CEO of Goldman Sachs did this. You can find the records if you want to be on a government watch list.
It’s depressing as hell, and it’s going to go out with the proverbial whimper, but at least we’ve got to be close to rock bottom, right?
You need to vote for the next several years, no matter what, because you still have a chance.
Once corruption becomes the default, then you are REALLY screwed. Because it kills hope and the faith in the future in the most corrosive way possible.
The death of morale is a far worse and insidious fate that will make today look like a high point.
What I find odd is that the comments are critical of how the police didn't caught thieves, but there is absolute silence towards thieves and the fact they have been engaged in thieving for ever.
Another comparison is people blaming the fire department for not inspecting sprinklers after an arsonist torched the place. It seems to me that the arsonist is the root cause, isn't it?
Police are only useful so long as they are effective as policing. It’s insanely difficult to put a price on a cost center which doesn’t add value, but only has a chance to reduce the loss of value if they do their job well.
The problem with the fire department analogy is that there’s a lens through which the fire department IS the arsonist here, or is at least pouring accelerant at the future site of the arson. If you don’t know why I would call the bankers at S&P, Nasdaq the arsonists in this case, you aren’t equipped with the background info about SpaceX’s fast track + goalpost moving to index funds.
I guess we should be thankful there aren’t more Luigi jokes in the comments.
This seems to be the problem. Thieves get a free pass but the very few guardrails that said thieves haven't dismantled yet suffer the blunt of the criticism, to the point people argue they don't need guardrails at all.
Don't you feel you are unwittingly aiding thieves to go unpunished?
Wouldn't it be more productive to place the blame on thieving? Police is a mitigation, and your complain boils down to complaining that police is influenced by thieves. Yet, I don't see people complaining about thieves.
The "bureaucracy and regulators" are at most engaged in passive corruption.
For passive corruption to exist, you need massive active corruption effort.
Why is everyone focusing on vilifying passive corruption while completely ignoring active corruption? I mean, I'm hearing lots of conspiratorial remarks directed at regulators but... Who stood to benefit? Aren't those responsible?
I mean, why was regulation required to begin with?
[0]: https://www.owenmcgrann.com/p/the-dead-economy-theory
Investors in these companies are going to be looking for revenue and pathway to profitability. I'm not sure anyone needs to see an impact on GDP to invest.
The money to participate in the IPO has to come from somewhere...
How come? On the books or they're actually selling internet cheaper than they source it?
> xAI is a money burning furnace
So far in the AI business, it looks like only Anthropic might be profitable in the near future. On the other hand, a lot of nonprofitable companies have IPOd for billions with the hopes that one day they will become profitable.
- You can't blindly trust the US, or US businesses. Even less when it comes to critical infrastructure.
- You can't rely on underwater cables to be safe.
Starlink is a proven technology. They were the first major mover. But they will not be the last.
It'll be sort of like Tesla cars. For a long time they completely dominated the EV market, but now others are catching up. Yet Tesla is valued more than all other EV manufacturers combined. Some of this is of course from their vertical integration, but most of it is just hopium.
Same will happen with both Starlink, SpaceX, and other products under the Musk umbrella.
And then after all that, the public have to deal with their index funds, ETFs, mutual funds, pensions, 401ks, etc buying up these overpriced stocks. You have a space company that also acquired a failing social media platform and failing AI company with little revenue justification for the valuation, and a lot of other obligations that make it financially a disaster (like payments owed for spectrum). And two frontier labs with no real moats, each looking for regulatory capture based on safety or ethics or whatever.
To the everyday person, the stock market after the fast listing rule, these three IPOs, and AI job loss, will feel no more legitimate than prediction markets or crypto.
Only about a third of American stocks are held by passive capital [1]. Out of that, index funds are about 16%, and most of those in America reference the S&P 500, which has not yet announced whether it is changing its rules.
[1] https://alexchinco.com/double-what-you-think-it-is.pdf
There will be chaos and potential stall for another 2 years following the elections and if the democrats win. There will be natural vested interest in showing economic decline or bad things to win next elections.
Both parties do it.
This is the best time to get to a safe place for all these companies.
Not if anyone is cheating or scheming or being a rules lawyer, but is it good?
Yes. Even if this capital is just rotated out of the equity markets, it would be fine. The bond markets are orders of magnitude deeper.
The only company I'm confident will survive this hardware crunch and still be relatively successful in this space is Google.
OpenAI in particular is a bet that there will be an AI moat and that OpenAI will "win". I don't think there will be a moat and China is a big reason why (eg DeepSeek).
SpaceX is a little different. Yes, launching rockets is a business but it's not a trillion dollar business. 100 Falcon 9 launches doesn't even break $10 billion in revenue. Plus, Starship faces cost overruns, delays and significant headwinds.
But the real kicker is that SpaceX was used to bail out Elon from the Twitter purchase and the xAI investors from the first Twitter bailout. That's a problem because xAI is burning $1 billion a month in a company where that really matters and I don't think Grok will "win" here. Like, at all. SpaceX would be a significantly more attractive company without xAI.
The big potential growth area is Starlink. For that to justify this valuation I think you need handheld Starlink phones. That requires a lot of satellites at a relatively low orbit, which also means they have a relatively short life (because they burn up in the atmosphere). And for that Starship must succeed.
All the AI data center in space stuff is complete bullshit. It makes no sense. It'll never be viable. It's not going to happen.
EDIT: let me clarify because I was careless in my wording. So, Anthropic individually has not spent "trillions". That was more of a general statement on AI spending. Anthropic has raised ~$100B, the last round of which was $65B (at $965B post-money IIRC). This industry as a whole needs to recoup trillions.
Anthropic seems to be in a better position (as a business) than OpeNAI is but I do think the it's a race to cash out before depreciating assets, well, drepreciate and there's the real risk as compute becomes cheaper and the AI craze wears off, Claude just may not have the growth trajectory that is built into the price.
Anthropic/OpenAI really need to train ever-bigger models to keep their moat. But that assumes there isn't a law of diminishing returns and also that a compressed model isn't sufficient for what many people need.
You mihgt say that the training is a barrier. And it is, kind of. Notice how it's Chinese companies coming out with open-source models like DeepSeek and Qwen? That's no accident. As soon as DeepSeek came out I knew what was going on: China is going to make sure no single Western company "owns" AI. It's in their national interest for that not to happen.
I wouldn't be surprised if the rush-to-IPO is motivated, at least in part, by getting ahead of Chinese AI commoditization.
If Ant, OAI, etc. aren't able to make 20-30% improvements on Opus 4.6 in 2026, does the music stop playing altogether? It seems like they'd lose their ability to charge >10% gross margin on inference in a span of 3-6 months.
I think the aim would be to generate at least $900bn of cash flow from those assets.
The rollout relies on Starlink V3 sats, which can only be launched Starship, but Starship progress is going well and is already able to deploy satellites from orbit. SpaceX is capable of launching Starlink V3 on the current iteration of Starship, but they want more testing. We'll probably see Starlink V3 launching late this year or early next year.
As far as I can tell it is in machines they cannot make work, servicing markets that do not exist for a service that will not matter for 20-years.
That and a third rate AI company that no body wants, except to get rid of.
This will probably go swimmingly at the start - but as time goes by and they raise more capital, Musk snorts more K and the glory fades, what then?
You really think they are going to hold off against selling for multi-millions for another year, especially SpaceX?
OpenAI (and especially) Anthropic are at risk from being undercut by the Chinese labs and their open-weight models and may cause their valuations to be questioned.
If that doesn't cause a correction, then SpaceX will do it for them. There is no lock up for the 5% of shares being available.
Turns out it was a scam and shares fell on the first day. Soon after the entire bubble burst.
That said, I don't even see "huge demand" for the AI triocorns right now. Unlike in 2000, most people are skeptical.
Meanwhile, Anthropic is adding ~$10-$15b ARR every month.
I personally think there is massive demand. I think Anthropic will easily eclipse $2 trillion marketcap on first day of trading.https://en.wikipedia.org/wiki/Bypass_Paywalls_Clean
The project has been going on for years, it moved to gitflic after being banned from github and gitlab.