this post was submitted on 19 Nov 2025
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Which companies have gone into massive debt in order to produce goods for Open AI? As far as I know the biggest supplier to Open AI is Nvidia and Nvidia is spewing cash machine. There are some small data center companies that they have made contracts with but those aren't big enough to bring down banks the way housing bubble threatened to.
the majority of nvda's revenue is hardware sold on bnpl schemes...if those ai companies dont turn a profit, which they can't without spreading IOU's around as fake revenue...the whole thing falls apart.
They've made 10s to 100s of billion dollar deals each to Amazon, Google, Microsoft, and Oracle for cloud compute that will require expansion of data centers to meet that demand, and similar deals to Nvidia, and AMD for chips. There are many more companies, smaller companies, too.
I know that these bets on OpenAI are not quite as risky as they seem for some of these companies. Many have been sitting on liquid cash for years without any real investments in R&D or tech advancement until this AI bubble, so they can actually withstand some amount of loss and not feel anything themselves. However, A) That is not univerally true. Some companies are over extending and likely counting on a bailout when openAI fails to pay them back. B) That doesn't mean that they won't all go crawling to Trump to save them from these inevitable losses. And he'll almost certainly do it. And C) Even if they can financially withstand OpenAI defaulting on their deals, that doesn't mean that their bloated market caps won't tank once the idea of some magic money printing AGI tech dies. If allowed to happen, the markets will tank, investors will collectively lose trillions, people will lose jobs, and the US will lose ground in the global markets and the AI tech race, which the Trump administration will likely not allow.
Just those companies listed make up around 3% of the actual US GDP, and their combined market cap is actually more than 50% of the US GDP due in part to this AI bubble. And so many other companies are directly reliant on at least one, if not many of these companies, for cloud computing, for hardware, or as vendors for them, that their losses can ripple out way further than just those companies.
If and when this bubble bursts, there is no way that it doesn't cause a market crash, and there is no way that the US government, under Trump (and honestly probably under most in Washington, even Dems, even if Trump weren't in office) will not act to decrease the severity of it for these corporate and market investors by throwing tax payer dollars at it.
Let me just correct one thing here - market cap is NOT the same as GDP. One measures valuation of a company while GDP measures OUTPUT of an economy which includes output of a company. US GDP does NOT measure the MARKET VALUE of the US as a whole. Yes the market caps of the big companies are ridiculous. Of the magnificant seven all of which are HUGELY PROFITABLE, only one is wholly dependent on AI bubble. When their valuation crashes, it's not going to stop the world economy. They will still keep making chips like they used to. Because we still need chips post bubble yes? Yes.
I didnt say that it was. I listed both their actual contribution to the GDP and their market cap and the relative value compared to the GDP to point out how massively bloated the market cap is.
I also didnt say that the companies would cease to exist or to function post crash. Most, if not all, would continue on without a ton of outward change. That doesn't mean the crash will not have a stupid wide ripple of negatives on any number of industries not directly related to AI.
If a company like Microsoft overextends into AI and sees nothing for it, when the bubble pops, we'll still have Microsoft. They'll still make, sell and support Azure, and Bing, and Windows, and all their other products. But if their bet doesn't pay off, they'll have to rebudget, reorganize and likely end up laying off hundreds or thousands that were expected to be used and paid for from the AI work that is no longer coming. They may reduce orders with or cut ties with Vendors they were expecting to need things from to serve their AI work. They may close offices making businesses that depended on those employees for revenue see sudden drops in customers. Big sudden market shifts WILL have a lot of negative effects and chaos come with them. It is inevitable.
Also, I didnt say that their loss will crash the world economy. I dont think it will. It might not even have that big of an effect on the US economy. I'm actually in favor of letting them take their losses.
But the Trump Administration will not let that happen because they are prioritizing competition with China above everything, with AI being a particularly major area for that competition right now. They'll bail them out to prevent this crash, and to make sure the US remains competitive in the race against China. I think the companies involved know this, and that's why they are taking these IOUs from a non-profitable company with not substantial plans for a revenue stream that will come even close to what they would need to pay off these debts. I think they are all counting on Trump's administration as a guarantor on these debts, and are expecting their money to come from the American tax payer. I say fuck them. Let them take their losses, tank the US economy if it does, and the ones that are responsible can be charged with tax fraud among other crimes, I'm sure. To do otherwise is to guarantee it will happen again and again. But Trump won't do that.