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Ask HN: Is anyone shorting the overspend in AI yet?

6•ggm•3h ago
I and a small cohort of friends truly believe that the "$1T" floats are going to burn capital. We think this is a disaster of landgrab spend, and that the cost of a token cannot be recovered by future commercial use.

If this theory is correct, then following on from the housing debt crisis, this is a hollow shell and so somebody in finance should be shorting the floats, and betting on a crash to clean up.

Polymarket betting aside, is anyone able to confirm that there are funds looking at a short play in the AI space, or is everyone on-board with things and nobody is taking the other side of the bet?

I am not in fintech or investing, I am not seeking alpha to do this, I don't invest directly. I am however interested in validating my theory that somebody smart out there sees a huge upside in the explosion when this attempt to buy market share in Unicorn juice explodes.

NVDA as an example has under 2% of its trade in shorts. I can't tell if thats big or small TBH. Feels small.

Comments

freakynit•2h ago
Did this research last week on the same thing:

NVIDIA (NVDA) — The Short / Underperformance Thesis - https://nvidia-stock-analysis.pagey.site/

This is pump and dump on the largest scale we have ever seen. It's effectively privatize the profits and socialize the losses.

bigyabai•2h ago
Who replaces Nvidia? That's the 5 trillion dollar question, and nobody has stepped forward to answer it.

The closest the industry came to replacing CUDA was with Khronos and OpenCL, but that ship has sailed. CDNA, Apple Silicon, Intel Inside, none of them are trying to take Nvidia's crown. The niche for HPC will exist, and Nvidia continues to serve the niche while others turn up their nose.

For my money, shorting Nvidia is like betting on Glass Joe to beat Mike Tyson. There's going to be incredible cloud spend on unglamorous stuff like defense and automated computer vision, and that will keep Nvidia's demand afloat even at a wild valuation.

ggm•1h ago
That's a substantive point, the GPUs are reprogrammable to do other tasks so the people who pay for massive CFD computation in Mil and Oil will have competitive offers, but I'm unsure the spectacular future value is there, if the perpetual "buy more" dries up. They could wind up alive, but with a smaller horizon.

I know I harbour resentment because of the knock on effects on ram and SSD pricing, but I'm serious that I think the amount of capital being sunk in hyperscalers does not look to me to be recoverable inside the investors ROI. If my example is poorly chosen, perhaps the people currently buying the kit are the ones destined to have a fall.

Ekaros•10m ago
With Nvidia no one needs to replace them. Their valuation is build on large demand and huge margins. Demand just going lower or margins dropping following that should lead to lower valuation without anyone replacing them.

I could very well see current market being in state of overinvestment. Meaning future demand is lower which could lead to less units sold thus lower profits thus lower valuation.

rowbin•1h ago
Many have theorized this. But i wouldn't bet money on it, the timing is just too unpredictable IMO.
NoahZuniga•24m ago
The market can stay irrational longer than you can stay solvent.
ggm•20m ago
I absolutely do NOT want to do this. I am asking if any of the people with real money and fintech are doing this. Not because I want to, because I want to UNDERSTAND.
da-x•3m ago
AFAIK Michael Burry is shorting it via PUT options ­­— can look into what he is doing.

I'm Eric Ries, author of "The Lean Startup" and new book "Incorruptible" – AMA

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