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I think the core insight is that tech stock valuations depend entirely on future growth potential and any tech company without that growth on the horizon is just a regular old service provider where returns are incremental and programmers are a cost center. Now that the industry has basically flatlined and technology stratas have normalized the whole AI push is a last-trench effort to escape being priced like normal companies instead of magic ponies, which means stock price collapse.
in reply to mhoye

BJ Swope âž–
mastodon - Link to source
BJ Swope âž–
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have you read Ed Zitron’s latest on the bubble? wheresyoured.at/the-haters-gui…

The Hater's Guide To The AI Bubble

Hey! Before we go any further — if you want to support my work, please sign up for the premium version of Where’s Your Ed At, it’s a $7-a-month (or $70-a-year) paid product where every week you get a premium newsletter, all while supporting my free w…
Edward Zitron (Ed Zitron's Where's Your Ed At)
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mhoye
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mhoye
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Practically speaking return to office policies are the same shape; everyone whose board of directors aren’t heavily invested in commercial real estate has figured out that it makes no sense, but many big companies are now forced to put quasi-fictional shareholder value - famously described by noted communist hippie Jack Welch as “the dumbest idea in the world” - over any real-world outcomes or market realities, not because they don’t know what’s happening but because they can’t say it out loud.

reshared this

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mhoye
mastodon - Link to source
mhoye
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The evidence of this is in how so many big tech companies are paying for their new datacenters with layoffs.

That is, the evidence that all this is baldly unsustainable is that companies are cutting their staff rather than reinvesting earned profits. Reinvesting profits - something well-run companies could reasonably do if they believed there was a real future growth path here! - cuts into this quarters' shareholder earnings, and layoffs do not.

This entry was edited (4 weeks ago)
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mhoye
mastodon - Link to source
mhoye
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You might think that in a sane world, cutting staff to pay for rapidly-depreciating, rapidly-commodifying hardware would be an investor-legible signal that something had gone horribly amiss at the top, but that signal is only meaningful if what these companies make actually mattered to its investors. What really matters is "The Market" as a performative exercise for major shareholders, not a signal someone is making useful goods or services anyone wants. That idea is just a polite fiction now.
This entry was edited (4 weeks ago)
in reply to mhoye

jwz
mastodon - Link to source
jwz
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The press release says the investors are Jackie Chan but they're not even Hulk Hogan.
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JWcph, Radicalized By Decency
mastodon - Link to source
JWcph, Radicalized By Decency
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Exactly right. Unfortunately the idea that valuation is tied to actual output value is EXTREMELY sticky - I've tried dozens of times to explain it to people who know how markets & business works & even they don't believe me.

Conversely, laypeople may believe that the wild valuations of corporations is bullshit but it's just a feeling & they also don't understand the shell game.

- and yet it's so obvious with the slightest application of common sense...

in reply to mhoye

Bruno Nicoletti
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Bruno Nicoletti
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It’s all about second guessing what other investors are thinking, not necessarily about what a business is actually worth. To quote Keynes “Successful investing is anticipating the anticipations of others.” So if enough people are thinking it will go to the moon, you get bubbles, which lead to another Keynes quote “Markets can remain irrational longer than you can remain solvent.”
in reply to mhoye

đźš˝
pleroma - Link to source
đźš˝
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Why publish it as unlisted? It should be shouted from the rooftops. :lainstress:
Lain Iwakura of Serial Experiments Lain looking downward, holding the sides of her head with her hands, with a stressed expression on her face.
in reply to mhoye

Quinn Norton
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Quinn Norton
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I feel like I'm having to run around and correct this all the time, but that's because big tech's lips are moving, ergo they are lying. The layoffs are driven by a change in tax law that let them write down their taxes for any employee they claimed was working in R&D, and with that provision gone they're just throwing anyone they have to pay real money out of the window.
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Eleanor Saitta
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Eleanor Saitta
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Mm. A big unmentioned part of this is that US tax law has changed recently, and that staff time spent on research and development is no longer tax deductible. Those programmers just became much more expensive and that's driving a lot of the layoffs. But they really really don't want to talk about that, and AI is a much more useful narrative.
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zeh
mastodon - Link to source
zeh
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it's almost as they read about the tendency of the rate of profit to fall and thought yeah what a nice playbook let's speedrun that shit
(or maybe i got it backwards as usual)
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