What‘s happening to the AI bubble?
Last week google announced that it wanted to raise $85 billion by selling stock.
Hank goes on to explain the difference between regular stock trades and selling new stock, which can be summarised to:
The stock trade is normally a trade, where investors mostly sell one stock to buy another. Raising money is when a company sells new stock, which means a whole bunch of new stocks enter the market. It siphons off liquid money into the stock, or causes investors to sell off a lot of other company’s stocks to buy the new stock.
Here is what I think about Google aiming to raise $85 billion. With this move, Google takes away money from other companies, including expected IPOs, like the one of OpenAI. Since AI is widely regarded to be inflated in its valuation, or simply put, a bubble, Google’s move to raise capital ahead of the IPOs of other AI companies is basically like calling a bluff at a poker game.
Google has gone “all in”, apparently betting on OpenAI, Anthropic, Perplexity, and SpaceX bluffing. Bluffing as in having overstated their value and collapsing upon IPO, when there simply isn’t enough liquid money or trust by investors to buy their shares at their asking price, when they go public.
The impact of this move will be very, very, interesting! Possibly in a seriously bad way.