Microsoft and Uber slam on the brakes of AI
In a Nutshell
Microsoft and Uber's high AI token costs sparked claims of an impending bubble and collapse, but the speaker argues these isolated spending cuts do not signal a broader slowdown. Even if valuations crash, Fortune 500 companies and VCs remain committed to AI, with the vast majority of planned data center buildouts still proceeding. Real signs of retreat would require investors declaring AI a mistake, which has not happened.
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Microsoft has canceled all of its internal cloud use. Uber exhausted its entire AI budget in a few months after an internal leaderboard revealed token consumption. Reports indicated roughly $500 million in tokens used over 5 months. Some information came from leaks and some was allegedly tied to Amazon.
The unifying trend is that AI is viewed as too expensive to run. This has prompted widespread claims that the AI bubble is about to pop. Many observers state they are waiting for AI to go to zero in the same way Bitcoin was predicted to collapse.
An asset being dramatically overvalued qualifies as a bubble under colloquial usage. The speaker notes this is not the technically correct financial definition but is the simplest and most commonly applied one.
SpaceX is being prepared for an IPO expected to exceed one trillion dollars. Internet commentary labels the valuation a liquidity trap and claims it is dramatically overvalued. The price-to-earnings ratio and other financial metrics resemble those of Tesla or Anthropic rather than a traditional rocket company because xAI is now attached to SpaceX. The speaker states these valuations are not being priced like a rocket company or a car company but like an AI company.
Even if the bubble narrative is accepted and stock prices crash, with Anthropic falling from a trillion-dollar valuation to perhaps 20 billion and shifting from mega-cap to medium-cap status, the AI build-out would still proceed. Every Fortune 500 CEO is focused on AI as the most transformative technology of the decade. Every venture capitalist and Fortune 500 CEO remains committed to AI, so the performance of any single company does not alter the broader trajectory.
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