The entire semiconductor industry
relies on two companies:
one is OpenAI, the other is Anthropic.
Nvidia sells data center equipment to companies like Amazon.
Amazon then sells computing power to O and A.
O and A aren't fully profitable yet,
so they mainly rely on fundraising to cover their computing costs.
But the market doesn't have enough money to invest in O and A.
After going around in circles, only Nvidia, Amazon, and companies like them have the money.
So Microsoft, Nvidia, and Amazon have all invested in O and A.
The loop is complete.
In fact, Nvidia and Amazon are now starting to feel they can't keep investing.
What can they do?
So they have both issued debt to the market,
shifting the financial risk onto society as a whole.
If A and O's revenue were growing rapidly
and they could earn enough to cover their costs,
then the risks associated with their equity and debt wouldn't be that high.
But O and A's revenue growth is now falling short of expectations,
so the risks tied to equity valuations and debt have grown.
This is the core reason behind the semiconductor sell-off this time around,
and why the decline hasn't stopped since O and A reported their earnings.
The market is extremely worried
that AI's consumer-facing business has hit a growth ceiling,
while profitability is still a long way off
and massive investments must continue.
What could save the market
is another set of better-than-expected revenue figures from O and A,
along with strong growth forecasts going forward!
$BNB
relies on two companies:
one is OpenAI, the other is Anthropic.
Nvidia sells data center equipment to companies like Amazon.
Amazon then sells computing power to O and A.
O and A aren't fully profitable yet,
so they mainly rely on fundraising to cover their computing costs.
But the market doesn't have enough money to invest in O and A.
After going around in circles, only Nvidia, Amazon, and companies like them have the money.
So Microsoft, Nvidia, and Amazon have all invested in O and A.
The loop is complete.
In fact, Nvidia and Amazon are now starting to feel they can't keep investing.
What can they do?
So they have both issued debt to the market,
shifting the financial risk onto society as a whole.
If A and O's revenue were growing rapidly
and they could earn enough to cover their costs,
then the risks associated with their equity and debt wouldn't be that high.
But O and A's revenue growth is now falling short of expectations,
so the risks tied to equity valuations and debt have grown.
This is the core reason behind the semiconductor sell-off this time around,
and why the decline hasn't stopped since O and A reported their earnings.
The market is extremely worried
that AI's consumer-facing business has hit a growth ceiling,
while profitability is still a long way off
and massive investments must continue.
What could save the market
is another set of better-than-expected revenue figures from O and A,
along with strong growth forecasts going forward!
$BNB
