AI's $600 Billion Question An investor letter published by Sequoire Capital

AI's $600 Billion Question

An investor letter published by Sequoire Capital yesterday is a big issue. Sequoire warned in the article "AI's $600B Question" that the end of the AI bubble is in sight. Nvidia sales are the cost of big tech, which means the gap is $600 billion, which is not realistically feasible.

There were many articles that warned of AI bubbles, but there is a reason why Sequire's articles are particularly noticeable. Sequire is not only a long-standing venture capital that created Silicon Valley itself, but it has invested a lot in artificial intelligence-related companies early on. The head of the VC division of such a fundamental company warned of a bubble.

Coincidentally, I covered the AI bubble in my article on Coffee Pot yesterday. Bubbles must burst to clearly show that they are bubbles. So you should be careful to conclude that the status of a particular asset is a bubble. However, compared to the narrative of large growth stocks that have repeatedly appeared in the past, I believe that the current price of large growth stocks will be difficult to sustain for a long time.

Based on their monopolistic competitiveness in their respective fields, Big Tech companies were able to maintain high profit margins while minimizing cash expenditures such as facility investment. This monopoly power and excellent cash generation power became the basis for paying a premium to Big Tech's stock price. Now, Big Tech has to spend more than in the past (but still has a lower ratio of facility investment to sales than the average manufacturer), and uncertainty about how to recover the investment has increased.

Of course, Sequire's writing is deeper than mine. But my writing is much easier to read. Sequire's writing is not about the general audience, but about professional investors or tech workers. I recommend you to read it because it is much easier for the general public.

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