This is great analysis. Lots of interesting facts. But the whole article is in these last three paragraphs:
"But history also shows us that when it comes to foundational technologies, there likely will be overinvestment. The internet/telecom boom resulted in more than 80 million of fiber being laid. Within a few years, the cost of bandwidth fell by more than 90 percent and by 2005, almost 85% of broadband capacity was still unused. Similarly, during the railroad buildout of the 19th century, over a quarter-million miles of tracks were laid, most of which were underutilized.
Yet, the cheap bandwidth enabled the next wave of internet companies like Google, Facebook and Netflix to thrive. Similarly, the excess railway capacity led to cheaper transportation costs, enabling companies to grow their customer bases and expand operations. Where there were some losers in the cycle, society as a whole benefited immeasurably.
AI will be no different. The power of AI will transform every facet of our society, from the micro changes in our day-to-day lives to the macro changes in global geopolitics. It will challenge our values and assumptions and make us reconsider what it means to be human. It is inevitable that some capital will be wasted getting there. We may even experience a bubble or two. But this is part of the growing pains of advancing humankind. Society, like our individual lives, seldom take the shortest route. As to the argument that we are in a bubble right now, we think it deserves some reconsidering."
If at the end what we see is that overcapacity at each so-called "bubble" that ultimately is preceded each time with insane levels of technological progress, then why change anything? It net net levels out. Even the losers eventually win with the bets that follow. This is not day-trading... it is a long game. The long game yields results. I say we "leave it alone" and keep plowing the field folks.
Great analysis! Delving into the depreciation problem focused on in the Sequoia article would be beneficial (https://www.sequoiacap.com/article/ais-600b-question/). Seems like the base layers will depreciate fastest, and lead to margin compression, even while apps and marketplaces and related ecosystems will grow in impact/valuation. Also, you need to fix your link for the Dalio analysis: https://www.linkedin.com/pulse/we-stock-market-bubble-ray-dalio-zpdre/
This is great analysis. Lots of interesting facts. But the whole article is in these last three paragraphs:
"But history also shows us that when it comes to foundational technologies, there likely will be overinvestment. The internet/telecom boom resulted in more than 80 million of fiber being laid. Within a few years, the cost of bandwidth fell by more than 90 percent and by 2005, almost 85% of broadband capacity was still unused. Similarly, during the railroad buildout of the 19th century, over a quarter-million miles of tracks were laid, most of which were underutilized.
Yet, the cheap bandwidth enabled the next wave of internet companies like Google, Facebook and Netflix to thrive. Similarly, the excess railway capacity led to cheaper transportation costs, enabling companies to grow their customer bases and expand operations. Where there were some losers in the cycle, society as a whole benefited immeasurably.
AI will be no different. The power of AI will transform every facet of our society, from the micro changes in our day-to-day lives to the macro changes in global geopolitics. It will challenge our values and assumptions and make us reconsider what it means to be human. It is inevitable that some capital will be wasted getting there. We may even experience a bubble or two. But this is part of the growing pains of advancing humankind. Society, like our individual lives, seldom take the shortest route. As to the argument that we are in a bubble right now, we think it deserves some reconsidering."
If at the end what we see is that overcapacity at each so-called "bubble" that ultimately is preceded each time with insane levels of technological progress, then why change anything? It net net levels out. Even the losers eventually win with the bets that follow. This is not day-trading... it is a long game. The long game yields results. I say we "leave it alone" and keep plowing the field folks.