HACKER Q&A
📣 ggm

Is anyone shorting the overspend in AI yet?


I and a small cohort of friends truly believe that the "$1T" floats are going to burn capital. We think this is a disaster of landgrab spend, and that the cost of a token cannot be recovered by future commercial use.

If this theory is correct, then following on from the housing debt crisis, this is a hollow shell and so somebody in finance should be shorting the floats, and betting on a crash to clean up.

Polymarket betting aside, is anyone able to confirm that there are funds looking at a short play in the AI space, or is everyone on-board with things and nobody is taking the other side of the bet?

I am not in fintech or investing, I am not seeking alpha to do this, I don't invest directly. I am however interested in validating my theory that somebody smart out there sees a huge upside in the explosion when this attempt to buy market share in Unicorn juice explodes.

NVDA as an example has under 2% of its trade in shorts. I can't tell if thats big or small TBH. Feels small.

  👤 freakynit Accepted Answer ✓
Did this research last week on the same thing:

NVIDIA (NVDA) — The Short / Underperformance Thesis - https://nvidia-stock-analysis.pagey.site/

This is pump and dump on the largest scale we have ever seen. It's effectively privatize the profits and socialize the losses.

👤 bigyabai
Who replaces Nvidia? That's the 5 trillion dollar question, and nobody has stepped forward to answer it.

The closest the industry came to replacing CUDA was with Khronos and OpenCL, but that ship has sailed. CDNA, Apple Silicon, Intel Inside, none of them are trying to take Nvidia's crown. The niche for HPC will exist, and Nvidia continues to serve the niche while others turn up their nose.

For my money, shorting Nvidia is like betting on Glass Joe to beat Mike Tyson. There's going to be incredible cloud spend on unglamorous stuff like defense and automated computer vision, and that will keep Nvidia's demand afloat even at a wild valuation.

👤 rowbin
Many have theorized this. But i wouldn't bet money on it, the timing is just too unpredictable IMO.
👤 NoahZuniga
The market can stay irrational longer than you can stay solvent.
👤 da-x
AFAIK Michael Burry is shorting it via PUT options ­­— can look into what he is doing.
👤 roryirvine
A related question might be whether anyone is seriously preparing for whatever opportunities present themselves after the bubble bursts.

For example, after the dot com bust, there was plenty of money to be made in aggregating bankrupt or underutilised telecoms assets - endless duct shares, dark fibre, and networking kit which could turn a profit if bought cheaply enough in a fire sale.

Is anyone preparing to bid pennies on the dollar for bankrupt AI datacentres? I can see how it might potentially make sense to do so in places like the EU or UK where increasing data sovereignty concerns might make locally-based small/mid-scale private inference an attractive proposition if the capital costs are low enough.

👤 TimByte
I think a lot of people are mixing two different ideas: AI is overhyped and AI company stocks are about to crash. The first might well be true, but the second might not be. The dot-com bubble burst too, but the internet didn't go away. The question is more about who will be left standing once the era of endless capex growth ends.