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"So, you're saying a third of the stock market is tied up in seven AI companies that have no way to become profitable and that this is a bubble that's going to burst...?" (pluralistic.net)
submitted 1 year ago by to c/fuck_ai@lemmy.world
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CWs: Cory Doctorow, newsletter, mentions of his upcoming book that he's selling.

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[–] 17 points 1 year ago (15 children)

AI may not be profitable right now, but there's a lot more to "the magnificent 7" than AI that keeps them profitable. Even if the AI bubble popped, people would still be wasting their time on Facebook and Microsoft teams.

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  • [–] 31 points 1 year ago (14 children)

    They still have to make that money back somehow though. They can't just put a load of investment down on AI, make zero money off it (or worse, less than zero) and then expect everything to be fine with the existing profits. They need to raise revenue from existing streams to cover for the loss they just incurred by doing AI. That, or cut costs, which means layoffs, which means people have less money, meaning they spend less money, which means businesses make less money, so they do layoffs, and so on and so on leading to a recession.

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  • [–] 17 points 1 year ago (5 children)

    US taxpayes will be proud to carry this burden, as always.

    Privatize profits, socialize losses. The American (and thus global) way

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  • [–] 4 points 1 year ago (3 children)

    I could understand the arguments about banks being too big to fail, because normal people and businesses have their money tied up in them.

    But is Meta too big to fail? Are any of the tech giants too big to fail? Let them.

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  • [–] 1 point 1 year ago

    When you look at how the stock market works and who invests in it, yes it is too big to fail. We have moved away from companies providing pensions to retirees.

    What we moved to us stuff like IRAs and 401K's. Occasionally you'll see an SEP. But what you have to understand about that is a lot of the general public's retirement savings are accruing value by being invested in the stock market.

    I know that a lot of media portrays this as a thing that makes it seem pretty farfetched but the stock market and most of the commodities traded there are too big to fail because their profitability and stock price is what the US retirement system (if you can call it that) is based on.

    Even social security is invested in the stock market. A lot of people don't think they're investing anything in the stock market and therefore crashes, dips, and even the bankruptcy of publicly traded companies doesn't effect them. They're not usually right about that.

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  • [–] 2 points 1 year ago (7 children)

    I don't know the exact numbers but I doubt these 7 companies employ enough people to cause a recession even if they fired everyone. Hell, they are laying of a lot of their employees already.

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  • [–] 24 points 1 year ago (2 children)

    The economy is weird man, it's all about collective vibes. If enough people in the right places care about these companies, they'll see small changes and freak out, making their own small changes and so on and so forth.

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  • [–] 4 points 1 year ago (1 child)

    Vibes is a pretty loose way of putting it. It’s about information and lack thereof. Like a poker game or a real time strategy game. You might have some idea what your opponents are doing but you don’t know exactly what it is, and you don’t know if it’s actually going to work or not. You also have plenty of cash (minerals, vespene gas) to spend on a possible defence that may not work out.

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