Wall Street is fueling the AI 'crazy train'

"The easy answer is we have seen this movie before. Structured credit isn't fundamentally dangerous. But it does distribute risk throughout the system in a way that makes it harder to see and track and understand. And yes, that does worry me. It makes the job harder for investors, regulators, journalists, and others who act as a natural counterbalance against excess."

"At some level, I do believe that Zuckerberg and Altman and others believe that there is money to be made. They think it will become a profitable, a very profitable business, at some point in the future. I do think their egos are involved in the belief that they could be the ones to usher in AGI and become the legends of history."

"Railroad tracks and locomotives are long-lived assets, whereas that is not true of GPUs. Tech blogger Paul Kedrosky, who I quoted in my piece, says about 60% of the cost of data centers is the GPUs. You can argue whether their depreciable life is three years or six years, but whatever that is, it is considerably shorter than railroad assets. There is of course the shell of the data center"

The tech industry has rapidly accelerated AI infrastructure investment, now attracting Wall Street financing through elaborate borrowing methods and circular deals. Structured credit is being used to finance these projects, distributing risk throughout the system and making that risk harder to see, track, and understand. That diffusion complicates oversight for investors, regulators, and journalists and raises concern even though structured credit is not inherently dangerous. Founders such as Mark Zuckerberg and Sam Altman pursue both potential profitability and legacy in AI, believing AI can become very profitable and that they might usher in AGI. GPUs account for roughly 60% of data center costs and have much shorter depreciable lives than railroad assets, although data center shells remain longer-lived.

Read at Business Insider