Breaking news: “they hadn’t figured out how OpenAI would pay for it”
Sign of things to come?
Breaking news from The Information:
Remember this chart? Broadcome wasn’t even shown.
It’s already wildly out of date (e.g. the Anthropic-XAI deal from yesterday isn’t there and indeed Anthropic isn’t even shown; a bunch of Amazon and Alphabet deals are missing, etc. But you get the point.
Who knows how many of the connections in this diagram depend on financing that could fall through.
Or what might happen if it does.
Bonus: egged on by me earlier today, someone on X asked ChatGPT Pro to update the circular financing chart from Bloomberg that I include above The output ChatGPT produced is below.
If you have time on your hands, you can try spot the errors of omission and commission, starting with the omission both of yesterday’s deal Xai-Anthropic deal and the Broadcom-OpenAI deal, and also has some very obsolete valuations. Even so, what’s there (mostly true?) is still pretty wild.
This is funded by 1) semiconductor companies and 2) hyperscalers. The hyperscalers burned through cash reserves and are now taking on debt (some off balance sheet like Meta). The private debt markets are imploding. The semiconductor companies are priced to perfection and facing a looming helium crisis that will hit Taiwan and South Korea especially hard. It seems like the money fueling this cash burn is running out. It looks like fabs are not going to hit production targets. That will impact revenues and earnings for the semiconductor companies. How many more quarters until this bubble dies? Paul Tudor Jones says we have a couple more years. I hope not.
Meanwhile..... Whirlpool said appliance demand hit 2008 lows and suspended its dividend. Planet Fitness paused price hikes because members are too cash-strapped. Shake Shack posted an operating loss as foot traffic dried up. The NY Fed survey showed inflation expectations rising and household finances deteriorating. Mortgage rates climbed back toward 6.5. These are different companies in different industries all saying the same thing.