[rob74]

The real reason is "make number go up". A few years ago, you showed the stock market (or your investors if you weren't listed yet) how amazing a company you were by hiring people like crazy, even if you didn't need them, and giving them all sorts of perks, including (but not limited to) home office. Now, the stock market wants to see blood, so you have to sacrifice people - not because you're actually losing money, but because you're not making as much profit as the stock market thinks you should, and therefore your shares are "underperforming".

[Sparkyte]

This tactic is wearing thin on investors. All companies doing layoffs as of recent have started to lose share value. AI or not.

I think investors are starting to see stress on the market for fewer working people contributing back as customers and investors themselves. This creates depreciation in share value as no one is willing to invest.

[gofreddygo]

It helps to think of investors in tiers. The lower tiers mimic higher ups. Each tier has two orders of magnitude deeper pockets than the lower tier.

At the very top are the big investment banks and fund houses, berkshire. Second are smaller institutions and third retail/individual.

The top two layers demand a steady return, never losing money on average in any 36 month window. Otherwise it triggers a selloff top down to cover for it.

The bottom follows the top so the selloff or buy just gets mimicked, with the top tier never losing (the bottom layers make sure of it by following blindly)

With wild indicators already set a massive selloff should have already been in motion, but its not. The top tier is getting more greedy.

No one is betting on AI long term. Everyone's in for the ride. As always the bottom will feed the top.

[Sparkyte]

Also to add investors know stock can't keep winning. They will diversify before too long and doing more splits does not ensure more value as it depreciates.

Nvidia is worth so much if it fails it takes investments with it. The risk is too high.

[gofreddygo]

yes I don't like the term investor anymore, because there aren't anymore. in my mind I just switch the word to a compulsive gambler or at best a speculator. and everything else is just bots.

[wcxcv]

Ahem, the word trader fits it lol

[librasteve]

this “square wave” effect is driven by interest rates … when the bank rate is very low investors will tolerate high level of gambling on growth (ponzi-like). as soon as money will grow anyway in the bank, then investors demand actual RoI

[hyperadvanced]

It’s hard to square this with the post 2024 AI-investment economy. Interest rates have stayed higher longer than expected, while many, many companies (Vercel, Cursor, Wave-whatever that got bought out last year, whatever Alexandr Wang’s thing) got billion dollar valuations with no path to profitability and no revenue.

It seems that ROI has become more important in the last 5 years, but then again you have these Space or Rare Earth shitcos trading at -200x PE while all of their industrial promise is directly undermined by rising costs from AI.

The likely forecast for this year is either rate hikes combined with further labor market deterioration and consumption somehow going negative, or inflation eating up all of the (still non existent) profits from AI mega caps themselves.

It’s hard to see how this ends well without a lowered cost of capital or more interest in taking on capex risk, which seems frankly unlikely. The worst case scenario seems to be a lot of bad debt with nobody except for perhaps Berkshire or China who would be interested or capable when it comes to salvaging it. Armchair economist here, grain of salts a plenty.