The AI industry is in correction mode. Last week Nvidia reported its earnings and the world was holding its breath. If they miss, it is so over. If they crush it, we are so back. In the end, earnings beat expectations, but the stock slid anyway after an initial bump. Many things in the AI boom smell bad. The way money fuels the investment spree is quite questionable and it has become a meme, with the same $1T investment check moving hands among a small set of participants. We can call this “vendor financing”, but it is not a great look.

In my opinion the players more at risk here are the hyperscalers like Microsoft, Amazon and Oracle, and the neocloud players like Nebius and CoreWeave. They are in between the providers of chips like Nvidia and the buyers of compute like OpenAI. They really have no choice other than buying real chips from Nvidia, and hoping that there will be sustainable demand (read: revenue > COGS) from buyers of compute so that they can honor those commitments. If not, the buyers of compute will walk away, resizing their commitments (or going bankrupt), Nvidia already sold those GPUs, and the hyperscalers are left with billions and gigawatts of unused capacity that depreciate very quickly due to the short GPU lifespan. — Read More

The artificial intelligence revolution will be only three years old at the end of November. Think about that for a moment. In just 36 months AI has gone from great-new-toy, to global phenomenon, to where we are today – debating whether we are in one of the biggest technology bubbles or booms in modern times.

To us what’s happening is obvious. We both covered the internet bubble 25 years ago. We’ve been writing about – and in Om’s case investing in – technology since then. We can both say unequivocally that the conversations we are having now about the future of AI feel exactly like the conversations we had about the future of the internet in 1999.

We’re not only in a bubble but one that is arguably the biggest technology mania any of us have ever witnessed. — Read More

A month ago, I set out to answer a deceptively simple question: Is AI a bubble?

Since 2024, people have been asking me this as I’ve spoken at events around the world.

Even as Wall Street bankers largely see this as an investment boom, more people are asking the question in meeting rooms and conference halls in Europe and the US.

Some have made up their minds. 

Gary Marcus called it a “peak bubble.” The Atlantic warns that there is a “possibility that we’re currently experiencing an AI bubble, in which investor excitement has gotten too far ahead of the technology’s near-term productivity benefits. If that bubble bursts, it could put the dot-com crash to shame – and the tech giants and their Silicon Valley backers won’t be the only ones who suffer.” The Economist said that “the potential cost has risen alarmingly high.”

The best way to understand a question like this is to create a framework, one that you can update as new evidence emerges. Putting this together has taken dozens of hours of data analysis, modeling and numerous conversations with investors and executives.

This essay is that framework: five gauges to weigh genAI against history’s bubbles. — Read More

In just six months, the consumer AI landscape has been redrawn. Some products surged, others stalled, and a few unexpected players rewrote the leaderboard overnight. Deepseek rocketed from obscurity to a leading ChatGPT challenger. AI video models advanced from experimental to fairly dependable (at least for short clips!). And so-called “vibecoding” is changing who can create with AI, not just who can use it. The competition is tighter, the stakes are higher, and the winners aren’t just launching, they’re sticking.

We turned to the data to answer: Which AI apps are people actively using? What’s actually making money, beyond being popular? And which tools are moving beyond curiosity-driven dabbling to become daily staples?

This is the fourth installment of the Top 100 Gen AI Consumer Apps, our bi-annual ranking of the top 50 AI-first web products (by unique monthly visits, per Similarweb) and top 50 AI-first mobile apps (by monthly active users, per Sensor Tower). Since our last report in August 2024, 17 new companies have entered the rankings of top AI-first web products.  — Read More

There were a lot of speculation over the past years about what the next cycle of AI development could be. Agents? Reasoners? Actual multimodality?

I think it’s time to call it: the model is the product.

All current factors in research and market development push in this direction.

— Generalist scaling is stalling. 
— Opinionated training is working much better than expected. 
— Inference cost are in free fall. 

This is also an uncomfortable direction. All investors have been betting on the application layer. In the next stage of AI evolution, the application layer is likely to be the first to be automated and disrupted. — Read More

DeepSeek roiled the US stock market last week by proposing that AI shouldn’t really be all that expensive. The suggestion was so stunning it wiped about $600bn off of Nvidia’s market cap in one day. DeepSeek says it trained its flagship AI model, which topped US app stores and nearly equals the performance of the US’s top models, with just $5.6m. (How accurate that figure is has been disputed.) For a moment, it seemed like the joint announcement of Stargate, the US’s $500bn AI infrastructure project that joins Oracle, Softbank and OpenAI, would be an enormous over-commitment by people who didn’t know what they were talking about. Same with Meta and Microsoft’s enormous earmarks. Hey, big spender: investors want to see this cashflow turn the other way.

Amid the mania, Meta and Microsoft, two tech giants that have staked their futures on their artificial intelligence products, reported their quarterly earnings. Each has committed to spending tens of billions of dollars next year to build out their artificial intelligence infrastructure, which each has lavished tens of billions on already. Meta has promised $60bn, Microsoft $80bn. — Read More

… [W]henever I meet with and chat with my friends and ex colleagues from the hedge fund world, the conversation quickly turns to Nvidia. It’s not every day that a company goes from relative obscurity to being worth more than the combined stock markets of England, France, or Germany! And naturally, these friends want to know my thoughts on the subject. Because I am such a dyed-in-the-wool believer in the long term transformative impact of this technology— I truly believe it’s going to radically change nearly every aspect of our economy and society in the next 5-10 years, with basically no historical precedent— it has been hard for me to make the argument that Nvidia’s momentum is going to slow down or stop anytime soon.

But even though I’ve thought the valuation was just too rich for my blood for the past year or so, a confluence of recent developments has caused me to flip a bit to my usual instinct, which is to be a bit more contrarian in outlook and to question the consensus when it seems to be more than priced in. The saying “what the wise man believes in the beginning, the fool believes in the end” became famous for a good reason. — Read More

OpenAI has announced ‘The Stargate Project,’ a new company set to invest $500 billion into AI infrastructure over the next four years

The data centers will be exclusively used by OpenAI as it expands its generative AI compute portfolio. Of the total investment, $100bn will be deployed ‘immediately.’

SoftBank, OpenAI, Oracle, and Abu Dhabi’s MGX are the equity investors in Stargate, with SoftBank having financial responsibility and OpenAI having operational responsibility. SoftBank’s Masayoshi Son will serve as chairman.

The buildout is currently underway, starting in Texas – likely Oracle’s project in Abilene, Texas, which is itself leased from Crusoe. — Read More