The Worst is Almost Over

TL;DR

The AI investment bubble is beginning to deflate as OpenAI's financial instability and broken commitments spook major infrastructure investors.

Key Points

• 1.OpenAI's $852B valuation is deeply disconnected from its financials. It earns $2B/month in revenue but burns billions annually, while Samsung — valued lower — earns $220B in revenue and $28B in profit.
• 2.OpenAI's DRAM decommmit was a major confidence-shaking moment. Altman signed a letter of intent to buy 40% of global DRAM production capacity, then abruptly cancelled, spooking multi-year, multi-billion dollar infrastructure investors.
• 3.Energy costs and product cancellations signal operational strain. OpenAI cancelled the Sora 2 video app apparently due to prohibitive running costs, and Oracle — despite boasting AI demand — laid off 18% of its global workforce.
• 4.Meta and Google are better insulated because AI isn't their sole valuation basis. Unlike OpenAI, their worth is tied to existing profitable products, so OpenAI stumbling actually relieves competitive pressure on them.
• 5.The bubble won't pop overnight, but the bean counters are regaining control. DDR5 prices are already dropping globally, and AI infrastructure investment is expected to return to a more demand-driven, revenue-justified scale.