"Hyperscalers, by contrast, look like winners. Their cloud revenue (a stat Wall Street uses to measure AI demand) grew 50% in the second quarter. They have huge contract backlogs and the capacity to absorb higher borrowing costs."

And if that revenue was coming from end users, it would be great. But it isn't---most of it is coming from the very same debt that is the subject of the article. There's a huge difference in my financial outlook if my biggest customer is borrowing all the money they are spending with me vs earning it in the marketplace. In the latter scenario, my business is tied into the success of the my customer in the market (harder to grow), in the former it's just a question of how much money they can borrow (much easier to grow, especially if I'm Nvidia and I can guarantee their debt).

I see the business press make this fundamental mistake all the time, starting off by drawing a boundary around the AI industry as a whole and correctly assessing the staggering levels of debt, but then switching perspective to individual sectors and completely forgetting about where the revenue actually originates, and treating it the same as organic growth.

The markets are just in the Twilight Zone at the moment. The CDS on some of these bonds are now priced assuming the bonds will fail (or at least more likely than not). Per headlines on Friday, Anthropic would likely be rated as “junk” status from a bond risk standpoint were it to go public.

From a financial standpoint this is all looking like early 2008. The risk assessment bits of the market seem to have concluded this is all totally f*ked. But money keeps getting pumped into things that the market has decided will fail because the only thing that stops it from imploding is pumping more money in.

Like 2008 once key players get their armor on, expect things to suddenly unleash in a way that gets real ugly real quick. This is essentially what the article is saying. This all only hasn’t collapsed because money lenders haven’t pulled the plug yet. When that happens, and with every day this looks like a question of when not if, it will be a $hitstorm the likes of which we’ve not seen in a while.

It’s “How much longer will the bond market sustain the nonstop spending spree?”

Methinks they're calling it a bit too early. Earnings volatility combined with the upcoming midterms, some profit taking after a substantial rally and possibly investors freeing up capital ahead of some major IPOs could explain a good portion of the drop. There have been some disappointing earnings and forecasts that added fuel to the fire, and the increasing cost of financing AI infrastructure is certainly a legitimate concern, but I don't think we've seen enough evidence of a fundamental deterioration in demand to conclude that the whole thing is coming apart. Unless the bad news continues to stack up, I don't think this is The End.

As much as it'd thrill me in one of the worst Pyrrhic victories to see the AI bubble burst, I think it is way too early to claim that a single bad day or a single bad week means it's collapsing.

The only thing that matters is who has the Compute.

I bought a gaming GPU six months ago for running local LLMs, at outrageous price (2x MSRP), and in 6 months it's price doubled again.

AWS already sold all the compute it has planned for 2026, 2027 and 2028.

> the government is trying to pay for Social Security, Medicare and an expensive war, all at the same time.

Total BS. We the poor and middle class paid for Social Security and Medicare through our taxes, NOT the government. Up taxes on the rich to allow people to get what they are due based upon what we paid into these programs.