AI Boom - Start of the end or end of the start?

Time will tell but I can claim that the fountain of easy money is spluttering for sure. Richly valued stocks are feeling it, and debt deals are wobbling. 

OpenAI set out to raise $30 billion, a sum it could have assembled almost effortlessly a few months ago and my sense is that it will end up well short of that number. Altogether 11 billion raised. 

Lenders, meanwhile, are pricing SpaceX, an investment-grade heavyweight, as though it were a speculative punt on a junk-rated startup.

Both will probably find the capital they need somewhere. 

What is fading is the one-way bet, the trade fuelled by FOMO and by the comforting belief that a bigger fool would always arrive to buy at a higher price. 

In its place we now have a heap of dry powder waiting for a match. The spark could come from almost anywhere. A delayed data centre could trigger a quarrel over hyperscaler guarantees, a swarm of rogue AI agents could breach a major national power grid, or a personal scandal that could engulf the leader of a marquee chipmaker (!) and the list goes on.

Markets are sobering up and returning to their real job of sorting winners from losers. 

I suspect some of those losers will be famous names carrying valuations in the hundreds of billions. The West has a way of excusing financial meltdowns with a mea culpa. 

The AI boom drew in companies well beyond Silicon Valley and the unwinding will travel just as far. 

A boom that travelled this widely will leave a nosebleed the size of a Niagra falls. Hope the world financial system doesn’t get a fatal haemorrhage.

Disclaimer: The views expressed here are solely those of the author and do not in any way represent the views of exchange4media.com.