Derek Thompson

This is basically the question, are stocks overpriced?

And my god, are stocks going absolutely bonanzas if they have anything to do with artificial intelligence?

I mean, just a few statistics.

In the last two years, roughly 60% of the S&P 500's growth has come from AI-related companies like Microsoft, Nvidia, and Meta.

And if you look at the reason for why some of these companies' valuations are soaring, it often seems very circular.

So NVIDIA, for example, will say we're investing $100 billion in OpenAI.

But in return, OpenAI agrees to buy billions of dollars from NVIDIA.

And then I think just last week, OpenAI signed a deal with NVIDIA's rival, Advanced Micro Devices, AMD, to buy tens of billions of dollars worth of chips from them.

But in exchange, OpenAI is going to get like 10% of AMD.

I mean, it's like, I will buy a billion dollars from you if you give me a billion dollars worth of your stock.

At some point, this whole thing just seems like some incredibly interconnected spider web evaluations.

I guess I wonder how you see this as similar to or distinct from, say, the last bubble in tech, the dot-com bubble.

Is there any reason to worry that a vendor financing model that worked for a stable economic sector, like car buying in the middle of the 20th century...

might, if applied to a brand new sector like AI in the 21st century, present a kind of risk that we haven't seen before and don't know how to fully map onto historical analog.

Your final gauge, gauge five, you call funding quality and the coming credit strain.

By your calculation, about $3 trillion in global data center CapEx is going to be spent in the next three years, $3 trillion.

The big tech companies, which some call the hyperscalers, will be able to cover about half of that.

And the bottom line is that the other half,

The other $1.5 trillion has to come from somewhere else.

Maybe that somewhere else is private credit, securitized finance, new operators, maybe even governments.