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  • Schiendelman · 1 hours ago

    It's hard to read this because it's AI written, and at least three times as long as it needs to be.

    TL;DR: A lot of credit crises happen because of a decrease in acceleration (the second derivative) rather than a decrease in point in time slope (first derivative), or absolute value. The author (or at least the person who prompted AI for the article) says they think AI capex has to continue to accelerate in order for the frontier model companies (and associated) to continue to pay their debts.

    I think the theory is sound, but I'm also bullish on LLM/LBM market size being very undervalued today.

    • jdlshore · 1 hours ago

      Agreed. The article is very sloppy, but that doesn’t mean the central thesis is wrong. I’m not conversant enough with financial theory to say one way or another. Anybody care to critique this?

      • Schiendelman · 46 minutes ago

        I don't agree it's going to break these companies; they are all capable of paying their debt service. The reason this was an issue in mortgages was that the mortgages were adjustable rate - the borrowers were defaulting when the rates adjusted because they weren't able to pay the new rates. I'm not aware of any financial instruments for these AI companies that would balloon like this.