Comment by pdayton
10 hours ago
> In those intervening years, a bunch of AI companies might be unable to pay back their debts.
Dumb question: isn't a lot of the current investment in the form of equity deals and/or funded by existing tech company profit lines? What do we actually know about the debt levels and schedules of the various actors?
Google, Meta, and Microsoft are funding AI out of their existing profits so they will probably be fine. The others may be getting GPUs in exchange for equity but they still have to pay real money for the datacenters, generators, etc. That real money is borrowed and they would default in case of a crash. Potentially hundreds of billions of defaults.
Huh? Surely most of the investment in AI labs is equity investment, not debt (so it can't be defaulted on).
The latest xAI GPU SPV is 2/3 debt; maybe that's a trend or maybe not. The debt will be defaulted and the equity will be recapitalized to almost nothing. Same outcome.
We'll find out