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Reader Response to "AI Overinvestment"

mbi-deepdives.com · 1,741 words · saved by 1 readers

I received some thoughtful emails in response to that piece. One reader named Craig Melillo took the time to share a more detailed thoughts which he granted me the permission to share with all of you. I am copying his email below which I think adds to my aforementioned piece (slightly edited; emphasis mine): “This is/was a great exercise. I am sure you are not alone in attempting this (I know that I am and have). I think the four incumbent hyperscale spenders (AMZN, META, GOOG, MSFT) are in somewhat of a “tails I win, heads you lose” situation given their AI spend to date is discretionary and it is not damaging the balance sheet. Some capacity will get utilized immediately, and some capacity will get utilized eventually. The attached revenues might not be what investors hope for, but it doesn’t kill them and IRR is likely >0%. In your scenario, NVDA would be in for a really tough time, which likely means in the short term, at least for stock prices, that everyone would be in for a toug

A couple of days ago, I wrote a piece titled “ What if there’s an overinvestment in AI? ” I received some thoughtful emails in response to that piece. One reader named Craig Melillo took the time to share a more detailed thoughts which he granted me the permission to share with all of you. I am copying his email below which I think adds to my aforementioned piece (slightly edited; emphasis mine): “This is/was a great exercise. I am sure you are not alone in attempting this (I know that I am and have). I think the four incumbent hyperscale spenders (AMZN, META, GOOG, MSFT) are in somewhat of a

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