So about 70% of Nvidia’s earnings this last couple years has been from selling specialized GPUs to data centers. And their valuation has grown significantly more than that under the assumption that those data center sales will continue to grow.
So say, it turns out, that these big models that need data centers to run fail to ever be profitable. And all these companies have massively overbuilt the infrastructure for a demand that fails to materialize and Nvidia’s sales crater as everyone ceases to expand the data centers. Their stock value will crater in turn. Nvidia is about 8% of the value of the S&P 500, and other companies heavily invested in such data centers account for another 10%. S&P 500 index funds are the most performant index funds, and thus the ones most heavily invested in.
Right now, the wealthiest 10% of the US population accounts for the majority of consumer spending, this a weird situation that’s been going on since the end of the pandemic. A significant portion of the wealth they can easily draw on to fund that spending is in index funds based on the S&P 500. If 10% of their portfolios was to just poof over the corse of a month, and then… not shoot back up. Think they might start… cutting back on spending? And then all those companies they stoped spending on start letting people go…
… and we’re already in a low hire no fire kind of jobs market with high unemployment (the U-6 rate is at about 8 percent and that’s probably an underestimate) and record breaking underemployment (people who are employed but not working full time, or working a job they are overqualified for) .
Yah, probably not a 2008 kind of situation, but maybe an early 1990s kind of situation. This is gonna fucking suck. Hey at least we have an incredibly stable and well run federal government right now that will handle such a situation with the grace and care needed, definitely won’t panic, have a stroke and shit their pants the moment they have to deal with a real situation.
So about 70% of Nvidia’s earnings this last couple years has been from selling specialized GPUs to data centers. And their valuation has grown significantly more than that under the assumption that those data center sales will continue to grow.
So say, it turns out, that these big models that need data centers to run fail to ever be profitable. And all these companies have massively overbuilt the infrastructure for a demand that fails to materialize and Nvidia’s sales crater as everyone ceases to expand the data centers. Their stock value will crater in turn. Nvidia is about 8% of the value of the S&P 500, and other companies heavily invested in such data centers account for another 10%. S&P 500 index funds are the most performant index funds, and thus the ones most heavily invested in.
Right now, the wealthiest 10% of the US population accounts for the majority of consumer spending, this a weird situation that’s been going on since the end of the pandemic. A significant portion of the wealth they can easily draw on to fund that spending is in index funds based on the S&P 500. If 10% of their portfolios was to just poof over the corse of a month, and then… not shoot back up. Think they might start… cutting back on spending? And then all those companies they stoped spending on start letting people go…
… and we’re already in a low hire no fire kind of jobs market with high unemployment (the U-6 rate is at about 8 percent and that’s probably an underestimate) and record breaking underemployment (people who are employed but not working full time, or working a job they are overqualified for) .
Yah, probably not a 2008 kind of situation, but maybe an early 1990s kind of situation. This is gonna fucking suck. Hey at least we have an incredibly stable and well run federal government right now that will handle such a situation with the grace and care needed, definitely won’t panic, have a stroke and shit their pants the moment they have to deal with a real situation.