El Oh El.

If AI share crashes, that’s actually good for the public because all the value is now captured by them instead of companies. This is because a crash can only happen if prices go down (which is good) or Chinese models become as good as frontier (which is also good).

The question is, if this happens then how do you incentivise more R and D? Which investor would invest without the returns?

Who would have guessed ?

With an AI bubble implosion now all but inevitable, the shift of the key players behind the scenes has focused on making this seem too big to fail and thus needing a bailout.

The “it’s dangerous, regulate us please” angle as an out for explaining terrible financial performance doesn’t seem to be working. The final Hail Mary pass is the “if we fail you fail” play.

However all data indicates the risk here is fairly concentrated in private markets. It will be painful but it’s unlikely to take the whole economy out with it. Some VCs are in for a world of hurt and private credit markets will lose their shirts, but the average person would see limited direct impact.

With everything going on in the datacenter space a bailout for AI seems incredibly unlikely. The general sentiment amongst the masses seems to be “let it burn.”