Liz’s view
The AI bubble is starting to leak, and the industry’s frontmen are doing a lousy job plugging the holes.
Genuine questions about the pace of spending has fueled steep stock-price slides from CoreWeave and Oracle, which together have lost $400 billion in market value, about 40%, since mid-October.
But mixed messages and rookie mistakes from Silicon Valley executives have fueled those concerns, and given the sense that neither this technology nor the companies developing it are ready for primetime.
Sam Altman got huffy when a friendly tech investor asked him an obvious question — how OpenAI would pay for the $1.4 trillion in spending commitments it’s made. His chief financial officer, Sarah Friar, stepped in it a few days later when she suggested the government should “backstop” AI investments, a statement Altman then had to walk back. CoreWeave’s CEO misspoke on the extent of data-center delays on a recent earnings call, forcing his own CFO to clarify — then repeated the mistake on Jim Cramer’s show. Larry Ellison might have made an exception to his no-interviews approach as Oracle’s stock cratered.
This technology is changing fast. Humans misspeak. There are always construction delays. (CoreWeave’s were weather-related, according to The Wall Street Journal.) But a generation of CEOs used to acting, and being treated, like small gods, seem unused to the everyday crises of running a business. What will happen when they face real crises?
Notable
- The opaque overlapping structure of some of the current AI deals bears an ominous resemblance to the pre-2008 financial system, but this time, rather than being caught off guard by a crash, the government appears to be “courting one,” Rogé Karma argues in The Atlantic.