Who are they paying? Or I guess a more accurate question is what are they spending money on?...like advertising campaigns or something?
OT: Nvidia/AI/Tech Exposure
- Thread starter horshack.sixpack
- Start date
Thats not how any of this works. (Though I think 2026 has double the AI costs as 2025). Its ongoing investment needs. Thats the problem. These data centers are obsolete in 5 years. Its ANOTHER $400b in debt for every, what, 2 or 3 years? The $35B a year isn't paying it off, just servicing it. So in a couple years, theres $70B gone to yearly profit. A couple more, $105B gone. See the problem? AI has to be paying for itself within 5 years. Probably 2 to avoid a major correction in markets.
With China in the picture, it seems a poor bet to bet on them not having competition, right?
Thats part of the problem here.
You're just assuming as fact that Google raises their profit by 5x???
True. I just dont think any of that is possible. The main problem, besides that their product doesnt work, that their customers hate it, and it doesnt turn a profit....is it doesnt SCALE. the product, by its nature, will be 10x as expensive to provide than the competition, but not be able to charge 10x more. Sure, you can get people to throw $10 a month for movies when they can get them free from the library.....but for this to work you'd have to get them to be spending $1000 a month. Its moronic. We're talking about people that wont even spend an extra dollar for Doritos.
I think "AI" becomes the new New Coke. Every little mistake from businesses that utilize it will be seen as another AI hallucination. And people will hate it.
But can they all maintain these valuations?
I think they merge into the "winners".
I've had plenty of Sr managers push the newest IT tool. They all sucked.
Ah, a retreat into "we dont really know anything". A classic.
Until it isnt.
Its just math. Let me make a baseball analogy. I am not contesting that the Phillies may win 140 games next year. I highly doubt it based on history, but its at least plausible. I am contesting that everyone in the NL east will win 140 games next year. Because its impossible, because they play each other.
(And yes, it started this as 120, checked it on chatgpt, and had to change to 140. Lol)
Companies generating this kind of profit causes effects that will have major consequences....that will eliminate those profits. They cant do it without government keeping China out. They cant do it without mass layoffs. They cant do it without absorbing all the profit from general business. Thats not just gonna happen and we all accept it!
Apparently, they are targeting Data Centers with misinformation. A lot of info out on the internet. I mean a lot. Where there's smoke there is fire. This is the type of stuff the ChiCom's do.
This just one.
China fueling U.S. data center resistance, AI groups claim
I believe it is happening. China will do anything to get ahead of the United States. They will probably crash their own system without using safe guards to win.
I’d like to know how many bubbles that SPS has predicted in the last 15 years…. Seems once a month someone else is predicting a bubble.
There is most definitely a boom right now that has to cool…. But I don’t think this market is about to crash.
There is most definitely a boom right now that has to cool…. But I don’t think this market is about to crash.
Yep but on the product side - at least for next 3-4 years. People don’t realize what damage has been done to the worlds refiners
At FYE25, Alphabet had an EBITDA of $181 billion and total debt (including lease liabilities) of about $59 billion. So essentially, they could retire every bit of their debt in about 4 months. Amazon had an ebitda of about $165 billion and total debt of $152 billion (including long term leases) they could retire obligations completely in slightly less than a year. This does not take either companies liquidity into account, and it’s massive with both companies.
These companies can handle so much more debt service they are in no real danger here.
You’re reaching a bit on this continuous debt cycle. The data centers aren’t getting totally mothballed after 2-3 years. That’d be a terrible strategy. Some of these things cover 600 acres. See above. They are already incorporating long term, modular strategies into the design framework to allow for refurbishment and restoration without affecting day-to-day operation. Yes, that costs money too, but its a drop in the bucket compared to new construction from scratch.
China is not building any data centers on U.S. soil. The Chinese equivalents of Amazon and Google will be more competitive when they’ve got their infrastructure up and running, but they’ve been trying to undercut Amazon and Google for years while making very little headway in other business (retail, etc.).
Personally, I don’t see any Chinese company being able to compete at all with AWS, GCP, or Azure on US soil, no matter how many data centers they build over there. The regulatory environment will eat them alive even if they are able to build a semi-competitive platform.
It really isn’t. Expecting any of the Mag 7 to “take a 50% hit to profit for decades” is not a reasonable position. It’s not any of their first rodeos in cutting edge tech developments.
No. First off, I was referring to AMZN. Secondly, they are already 75% of the way to $1T in revenue annually. They are 2~2.5 years away from that threshold. $1T in revenue could easily yield $250B in profits. They are already at ~$120B when you exclude the huge front end cut they took from their cash flow to start their AI / cloud computing build-out. $250B profit / $250B debt / $500B operating income is not unreasonable at all for them in 2-3 years time. They wouldn’t be raising profits by 5x, more like 2x ~ 2.5x.
I think you might be taking a somewhat narrow view here. “AI” is the buzzword and it brings about a visceral response from many, but these infrastructure investments are about so much more than AI alone. We’re headed to a world already where actual websites are becoming background noise and obsolete. More and more of the internet is running through AI queries that can pull info together so much faster than 100,000 people typing on 100,000 search engines at the same time. AI is the conduit, but what we’re really talking about is the next generation of the “information superhighway”.
People think of AI and they think of what can ChatGPT / Gemini / Alexa do, what can Anthropic do, what can Claude do, what can Tesla vehicles do, etc. It’s way bigger than all that. How good any of those are individually right now doesn’t really matter at all, they’re all going to be 1000x better 2,3,5 years from now. What Amazon, Google, and Microsoft are doing is not trying to have the fastest, smartest car on the road, they are quite literally taking on full ownership of the roads themselves. They are going to eventually divide ownership of the entire internet in the United States, and elsewhere. That’s how big this really is. THAT’S why these mega investments are a no-brainer for them.
Elon Musk is a giant pretentious douche bag, but he had an interesting perspective he shared on at least one thing, and that same principle applies here. A little while ago, he was quoted as saying that Tesla was “a charging company that also makes cars.” All the while, the carrot of Tesla vehicles had been what was dangled to the public as the profit center. But he literally gave away all the patents for everything. He wanted to be copied, and for that to start a serious conversation about EV’s, so he could start selling the “gas” to everyone. Here, the AI is the carrot, but the “gas” is actually the superhighway - the flow of the information itself, in any form that it takes.
“These valuations?” You tell me. By most educated accounts, the Mag 7 are currently trading at the cheapest valuations that they have in years, when taking account of all their fundamentals. Who do you view as having an outrageously high valuation? AMZN and MSFT specifically have been really subdued vs. their metrics for awhile.
Google merging with Microsoft? Meta folding into Amazon? Wowzers. That’s quite a take.
I don’t work for an IT company, and we rarely use “IT tools” of any sort.
I think that’s where you took it first, which was kind of my point.
It’s just going to be illegal all the sudden? How / why? You think these data centers being thrown up for hundreds of billions of dollars are being built with no foresight at all into the legal environment?
We’re saying the same thing. I’m not saying everyone shoots to some stupid parabolic earnings level. But take a step back and think - what happens if Google owns 30% of the US internet traffic, Amazon owns 25%, Microsoft owns 25%, Meta owns 10%, Tesla 3%, Apple 2%, and everyone else owns 5%. When I say they own it, they have complete control of ISP’s accessing on one end AND content coming in from the other end. They want to block out China, they can. They want to direct whatever AI driven ad targets toward individual users, they can. Unlimited access to user data? That’s possible, too. VIt’s all on the table. You’re telling me those individual companies wouldn’t all be doing 20%+ YoY profit increases for another long while?
That’s been said about all of them for 20+ years. Hasn’t slowed them down.
They can, actually. They can block China ISP’s and content quite easily. It’s actually the reverse problem, they only CAN’T do it if the US government lets China in, which sounds like a pretty toxic approach for either party to even attempt right about now.
We’ll see. Investors rarely care about that, though.
It’s already happening. The “general business” has changed for everyone. AWS and Azure are already the profit leader segments for Amazon and Microsoft. They’ve both moved wayyyyy past just having Windows / Office 365 and Prime Day. GCP for Google is a little behind both of them, but they are catching up quickly.
“We” don’t all have to accept it for it to happen.
Jet gas and diesel prices will send us into the next big downturn ….2008 style
Bring on the robot women! Imagine the sandwich skills of an AI woman, they can wash dishes and clothes timely, mix you a drink accurately, never have a headache, and do full bedroom Olympics, no constant spending and beeactching! Throw a new wig on them and it's some strange every day. That's the AI I want to invest in