Comment by jvanderbot
2 days ago
Is it unclear? Compared to other times a "too big to fail" industry failed?
If OpenAI crashes, for example funding stops, they go broke, fall behind, nobody buys anything, then all the money they invested for data centers or demand they created for NVIDIA chips and compute collapses. That creates surplus of hardware, causes lots of construction/buildout / stockup orders to get cancelled, and the whole thing ripples as suppliers and construction and data center providers etc etc suddenly lose a ton of anticipated profits.
Share prices drop as people dump to protect their portfolios, anticipating dips in the prices because share prices will drop as people dump to protect their portfolios (I'm not kidding).
Given that the big 7 AI companies are basically _all_ of the market growth lately, it doesn't even take a serious panic / paranoia episode to see the market itself stagnate or significantly regress, as people pull from anything AI related, and then pull from the market itself anticipating the market will fall.
It's a fairly standard playbook at this point.
That's different from saying that boeing is too big to fail for example. The US can't accept to lose its only major commercial aircraft manufacturer. Or Intel for similar reasons.
But what you're describing is about keeping the AI bubble from popping. Can a bubble really be too big too fail?
What I'm describing is the scare-quotes too-big-to-fail. Some actually are. But we use that term to mean anything that might cause significant economic trouble nowadays.