[wongarsu]

In a world where Tesla has stayed at "severely overvalued" stock prices for about a decade, with occasional crashes to just "overvalued", I'm not so sure the big AI companies really need returns that justify their stocks. Sam Altman and Dario Amodei are both in their own ways trying to capture that same lighting in a bottle where the company is evaluated solely on the CEO's vision

[christophilus]

Yeah. This is the whole “market can stay irrational longer than you can stay solvent” thing. I think there’s almost always a plausible bearish case to be made. Hence: permabears.

[abirch]

I feel like this is dot com 2.0. The dot com's valuations eventually were proven to be true, only way too early. With investing Timing is everything, if you invest in Pets.com you lost, if you invested in chewy.com you won. If you invested in Broadcast.com you lost, if you invested in YouTube.com you won.

AI is going to transform things but these current prices are crazy.

[ethbr1]

> With investing Timing is everything, if you invest in Pets.com you lost, if you invested in chewy.com you won. If you invested in Broadcast.com you lost, if you invested in YouTube.com you won.

During bubbles valuations are driven by growth at any cost.

During crashes businesses are kept alive by their ability to function profitably.

So if trying to separate winners from losers, then central question is "Do I believe this company has an ability to pivot from growth to profitability without torpedoing itself?"

Which ultimately gets to unit economics and cost vs profit scaling trends.

[surgical_fire]

For how long can the gamble be detached from real life?

It's an honest question. In the real world, resources and people are finite. Things have to make sense, the bills have to be paid.

In the stock market however, a company can be completely worthless in the real life, but if the money blobs all agree to pumo money into it the stock price goes up anyway.

[Anon1096]

Wealth is not in fact finite. If you take a piece of lumber and carve it into a dresser you've just generated wealth. Resources kind of are but not really, extraction takes it from unusable to usable and essentially creates it (also, trees literally grow out of the ground). Similarly Tesla has made a lot of cars that people drive and AI companies have created products that have hundreds of millions of DAU.

Whether that "justifies" the market prices is orthogonal, all the market price says is that people want to own a piece of the pie at the current price being offered. It can stay that high as long as there continue to be people interested in owning shares of the companies.

[shash]

Wealth is not finite, but it does have to obey physical limits and real world implications. If person A takes a piece of lumber and carves it into a dresser, and person B, seeing that, buys up lower quality lumber that cannot become a dresser, is that wealth generation? What then, of the guy who buys up lumber futures and dresser futures, on something that won't actually ever happen (say, those lumber futures are for trees that are completely not viable) and then claims to be creating wealth? And asking the stock market to value him on the basis of hype?

There's real wealth and there is all of the manipulation to drive up prices.

[ethbr1]

> If you take a piece of lumber and carve it into a dresser you've just generated wealth.

I'd make the note that you've converted raw materials and labor (and maybe some capital machinery/tools) into a finished good.

Whether the market will value that finished good at more than the sum of what you paid for its parts is a fair question though!

It's entirely possible to have net-unprofitable economic activities, especially in a bubble.

[redwood]

Well the question is what's a more appealing place to put your money? Because in the absence of one the stock market by default is viewed as an appealing place which drives up demand for it. You might say well folks should just spend their money and enjoy it instead of putting it in the market but that's a whole different strategy. You might say folks should buy real estate well that's a whole different strategy. You might say folks should sit on cash and bonds and other low-risk assets well that's another strategy. High interest rates actually make cash or at least bank savings rates more appealing than they were 5 years ago... yet folks are still seeking those double digit returns. Can you blame them? What will trigger the downturn will be folks who've overextended themselves on margin forced to sell in order to liquidate assets

[ethbr1]

> What will trigger the downturn will be folks who've overextended themselves on margin forced to sell in order to liquidate assets

Curious question... do the ultra wealthy ever get margin called on personal loans secured by unsold equity?

I'd assume the folks we're talking about doing that have sufficiently small loan to value (a year's expenses vs all their stock) to avoid, even in a downturn.

Maybe at the more upper income segment where LTVs on smaller equity totals are higher?

[redwood]

Absolutely anyone can get called if thr bank deems there's a payment risk

[mschuster91]

The problem is, the last two decades were marked by extremely low, zero and sometimes outright negative interest rates plus a ton of outright printed money that got blown up the arses of the big banks. Worldwide.

That money sought returns and found them in hypergrowth of increasingly dumber nonsense. First it was Meta (or back then, just Facebook), then Tesla, then during Covid cryptocurrencies and NFTs, and now it's AI... but now, there seems nothing to be the "next big thing" to sink money into when the old thing dies down in growth and expectation and matures. Maybe gambling, but that's not sustainable, the number of whales/marks to make money from is finite.

IMHO, we're headed for a very big worldwide correction to deflate the markets and hand back a lot of the money to the central banks where it can be taken out of circulation, and it will be an event larger than the dotcom bust plus 2007ff combined. But, unfortunately, the markets can stay irrational longer than a good short-seller can stay solvent...

[redwood]

Right now it seems like space, defense, robotics, and in the fullness of time quantum computing are very clearly positioned as the next big things. Let alone bio and healthcare stuff which is always humming along especially after ozempic shakes things up

[mschuster91]

Almost all of these fields has some sort of regulation attached that makes hypergrowth very unlikely though.

[adrianwaj]

In terms of tech, the Mecha Comet was funded in 6 minutes on KS. After it ships in October, will be interesting to see the doors it opens up for people. Comet to where?

A 1-device to rule them all could be very empowering. Sodium batteries will be big. True wireless power would be huge for solar energy generation from space and sent to Earth. Any power breakthroughs are very noteworthy as the effects cascade.

Lots of 'next big things' (and people) likely 'shelved' on purpose as too disruptive. Welcome to Earth. It's not so much 'what' will be big, but 'who.' Headshots and lineage still matter. Heart and soul is really the only big thing.

A bulls### detector (and repellent in an aerosol) would also be a timeless classic. As would a latent human superpower training and attunement school - until it gets shutdown.

[bryanlarsen]

In 2022, Tesla had a P/E of 34 and a growth rate of 50%.

[jauco]

But it’s 2026 now

[bryanlarsen]

It's a reply to OP's "for about a decade".

In 2022 we still had ZIRP, so a P/E of 34 was relatively low. (Interest rates are E/P for cash).

[jauco]

Ah sorry. I thought it was just saying tesla wasn’t overvalued.