The AI Bubble Warning Just Came From Europe’s Central Bank

13 hours ago by technocrit to c/fuck_ai

ECB researchers warn AI stocks face a likely correction, putting pension and index fund holders at risk — regardless of whether AI succeeds.

Passive investing turned everyone into a tech investor without anyone asking permission. That’s the uncomfortable reality your pension statement won’t spell out. Concentration risk isn’t theoretical — it’s sitting inside the funds you forgot you owned, quietly indexed to the same seven companies the ECB just flagged as the core of a potential AI Infrastructure financial stability problem.

jaykrown 33 points 13 hours ago

Good, the bubble needs to burst as soon as possible. The longer it goes on the worse the outcome will be.

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ElChinchilla 2 points 13 hours ago

Fax.

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Laser 10 points 12 hours ago

Posting an AI outline (or part of an article written by AI, I didn't click the link after the summary) in fuck_ai is somewhat ironic

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chortle_tortle 7 points 12 hours ago

From the cited report:

This post explains why a correction should be expected even if current valuations are rational...

And from the linked article:

When investors price in excessively steep growth paths, even strong actual AI performance can disappoint. Markets aren’t betting on good — they’re betting on perfect.

So unless straining all NAND production out to late 2027 for chips that haven't been made for data centers that haven't been built, to train on data that doesn't exist, is perfect in it's returns, there will be a much more drastic "correction" than dotcom. All while as the linked article points out:

Unlike 2001, central banks don’t have much runway to cut rates. Fiscal space across the euro area is already constrained by high public debt and existing spending commitments. The usual cushions are thin. That’s the detail that elevates this beyond routine caution — when the correction arrives, policymakers will have fewer options to slow the fall than they did during the dot-com bust.

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sudo 4 points 12 hours ago

They are making the chips, building the data centers and collecting the data. None of those are the missing piece. The missing piece is being able to actually turn a profit from that entire pipeline.

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chortle_tortle 3 points 12 hours ago

Oh I agree. My point more was that this is the level of investment, and that these have to have perfect returns to be rational.

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schipelblorp 4 points 9 hours ago

Are they rationally including replacing GPUs every three years? I mean, how many years before they even pay off the GPUs they have now?

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chortle_tortle 4 points 8 hours ago

Well they are, rationally, assuming they are gonna make "a genie that can grant any wish", so they will simply ask how to solve the next round of funding issues.

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