About one month ago, when the Mag 7 stocks were screaming higher every day without a care in the world, and before the masses had even considered who would fund the trillions in future capex needs once the organic cash flow topped out – something we had just discussed in “AI Is Now A Debt Bubble Too, Quietly Surpassing All Banks To Become The Largest Sector In The Market” in which we explained why attention would very soon turn to AI companies issuing gargantuan amounts of debt (something we first discussed in July, long before anyone was considering this issue) as has now become the case – we decided to move even further beyond the curve and said that not even the debt would be the gating factor for the AI revolution-cum-arms race, but rather access to energy. That’s because at some point – somewhere around the time companies realized they would no longer be able to rely on either equity or debt capital markets – the US government itself, if it wanted to win the AI war with China where the state directly subsidizes local data centers and AI figures, would have to step in and provide the required capital.
Specifically, we said that “The money is not the problem: AI is the new global arms race, and capex will eventually be funded by governments (US and China). If you want to know why gold/silver/bitcoin is soaring, it’s the “debasement” to fund the AI arms race.”
Even Elon Musk decided to respond to that particular observation.
And since it had become the norm, we thought it would take the market the usual 6-9 months to catch up to what we – and our readers – were already considering, especially since there still was ample “dry powder” capital among the hyperscalers to delay the rather unpleasant conversation of who would fund what once the money was gone, or so we thought.
Because this time it took less than a month.
What happened, as the market learned the hard way this week, is that OpenAI’s CFO Sarah Friar, with all the finesse of a bull in a China data center, slammed the growing market skepticism that AI would cure cancer, slice bread and lead to universal utopia, and said “I don’t think there’s enough exuberance about AI, when I think about the actual practical implications and what it can do for individuals.”
Her comments came in response to a podcast in which her boss Sam Altman participated, and where he was grotesquely – in a Jeff Skilling sort of way – defensive when billionaire Brad Gerstner asked how a company with $13BN in revenue can afford $1.4T in commitments. Altman’s reply? “If you want to sell your shares, I’ll find you a buyer.”
Hellbound and Down 