Google, Amazon owns Anthropic shares. Microsoft owns OpenAI shares. Fairly sure some of the others also have Anthropic and OpenAI shares. And I mean large chunks, at least 5% up to 30%, I think.
I agree with the rest but I think hyperscalers will just get drastic haircuts.
> hyperscalers will just get drastic haircuts.
I think everyone may get drastic haircuts (though I'm still hoping for a 'soft unwind' type slow-mo crash, I don't think the odds are good). Hyperscalers are what probably breaks first and worst because more of their money is from creditors vs investors, combined with, more of their creditors are financial speculators / banks who have no vested interest in propping up the AI market (like an NV, FL do). They are only loyal to their cash.
I think we're essentially saying nearly the same thing and agree it eventually leads to a similar outcome. The difference is in part saying it in different ways and in part addressing the flow and feed backs at different points. Ultimately there are three key players in an ecosystem flow that supplies end-user demand:
[NVidia (NV)] <-> [HyperScalers (HS)] <-> [Frontier Labs (FL)]
TSMC is upstream of NV but they're diversified enough to be sheltered, and end user demand is the ultimate gating factor. Most people agree that in the long-term (10+ yr) AI compute services will be a very big viable business.
> Frontier labs are losing money and are most likely to go bankrupt and be absorded by bigger companies.
Anything's possible but I don't think that's likely. It really depends on who is left 'holding the bag' on committed contracts and callable loans. While all the Frontier Labs have essentially taken what nets to equity-secured loans from NV, AFAICT it's not collateralized in way that NV (nor HS) can force FLs into bankruptcy. Creditors with capital were willing to take FL equity for cash, making them investors, not creditors. Post-IPO that will change. FL sales will continue to steadily grow but not at rates required to make their equity worth what investors thought it would be worth in the time frame they expected/needed.
> Hyperscalers ... already control the frontier labs.
Through what legal or financial mechanisms is this control? If end-user demand continues to grow super-linearly, FLs will need more compute from HS than they get. In that case, HS continue to have pricing power due. If future end-user demand growth rates taper from super-linear to just strong linear, FLs will need less compute than they've projected. HS pricing power will erode.
Hyperscalers ... are ultimately profitable
HS are collateralized to their bankers, GPU and power suppliers in ways that CAN force bankruptcy. When demand softens, prices will fall. HS have bought, and committed to buy, more GPUs, power and real estate sooner than they are going to need it from people who CAN force them into bankruptcy. The HS have secured their loans by pledging their GPUs, committed power contracts and real estate/physical plants as collateral.
When cash flow is high and the growth rate of cash is increasing, lenders will loan $2 to $4 for every dollar of 'sellable asset' the loan is secured by. The HS are already extending their GPU depreciation time frames to SIX years which inflates the forward book value of their GPUs - so they can borrow more at cheaper rate. When the growth rate of cash flow starts to taper from super-linear to just very good, lenders start to demand more collateral per dollar (or capital costs go up). Both are already happening.