Sneha Pandya

[DavidLinthicum @DavidLinthicum]

The Emperor Has No Clothes: Why the AI Infrastructure Buildout Math Doesn't Work

I have to give IBM CEO Arvind Krishna credit. He's saying what many of us in this industry have been thinking but haven't been willing to say out loud. The math just doesn't add up.

Here's what I'm seeing that's deeply troubling. We're in the middle of another mass hallucination. Just like the dot-com bubble, just like blockchain, just like the metaverse — everyone is convinced that building massive data centers will automatically create massive wealth.

But here's the thing about building infrastructure. You actually have to sell what's inside it.

Let's talk numbers. The planned data center buildout over the next 5-10 years is staggering. We're talking about commitments in the hundreds of gigawatts globally. The capital expenditure commitments are in the trillions. Yet when you look at the actual demand signals, not the projections, not the potential, but the actual consumption patterns, there's a massive gap. These AI companies are betting everything on demand that simply doesn't exist at the scale they're planning for.

Let me be direct. AI services are expensive. Enterprise adoption is slow. Consumer AI is still finding its footing. And the compute requirements being promised by the hyperscalers require a level of demand that would represent a fundamental shift in how businesses consume technology. That's a big ask.

I've seen this pattern before. The overbuilding. The belief that if you build it, they will come. The groupthink that turns critical analysis into heresy. The result is always the same. Companies are going to touch the stove. We're going to see massive write-downs. We're going to see pivots, shutdowns, and strategic reviews. We're going to see companies that spent years and billions trying to be the AI infrastructure leader become case studies in how not to read a market.

The IBM CEO is right. The math doesn't work. And unlike 1999, we don't have the excuse of we didn't know. We know exactly what's happening. We just don't want to believe it because the alternative, being a skeptic while everyone else is piling in, feels like career suicide. It's not. The ones who survive the next decade will be the ones who built for reality, not fantasy.

Wake up. The emperor has no clothes.

As reported by Futurism, Krishna laid out striking calculations: a 1 gigawatt data center costs roughly $80 billion today. If one company commits 20-30 gigawatts, that's $1.5 trillion in capital expenditure. The total commitments across the industry for chasing AGI are approximately 100 gigawatts, equaling $8 trillion. To break even, you'd need $800 billion in profit just to cover the interest. That's not investment. That's hoping.

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[Essential Mastery @EssentialMastry]

“No intelligent person is interested in dominating others. His first intrest is to know himself.”

- Osho

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[Sneha Pandya @Spandya2007]

@satymahajan Thank you!

[The Long Investor @TheLongInvest]

$SPY if anyone believes we are at the start of a Bull Market, just show them this chart.

I don't believe we are at the Top yet, euphoria has not taken over yet but we are not in Wave 1.

We are DEEP in Wave 5 now.

Save this.

[Luke Coutinho @LukeCoutinho17]

No amount of meditation , nature walks , ashwgandha , pranayama , spiritual scriptures , gurus , can helps us find peace and calm unless we first change perceptions in our mind , embrace uncertainty of everything as opportunity or as randomness of the infinite …

we can name diseases , we can label love and emotions , we can judge people and events , but we are finally not in control of anything …. but our choices and actions …. and thoughts

when we understand that we are not above nature and natural energies but part of it and learn to live part of it and not against it ….

when we understand that everything we do , achieve , build , create , is not us alone but millions and millions of small and large moments that have fallen together randomly , good or bad , we understand how humbleness , humility , gratitude , grace , acceptance , surrender and prayer becomes our most powerful tools for true peace , freedom and true wealth …….

There is science and then there is beyond science , mysteries that have no answers , problems that have no solutions , and sometimes that itself is perfection of the universe , working not according to what we like and dislike or feel entitled to , but it’s perfectly imperfect in it’s own ways … integrate real science into your lives but don’t be naive to think
there is nothing beyond it which can be more powerful … hope is powerful and is born of faith in the unknown too

Luke Coutinho

[Bhagavad Gita 🪷 @Geetashloks]

Hare Krishna 💗

[Bill Ackman @BillAckman]

This is a permanent stain on the Democratic Party and its leadership that will echo in eternity.

[Sneha Pandya @Spandya2007]

@DaveHcontrarian @AnthonyFatseas Thanks David. Will watch this weekend.

[Trader Brian Jones @MasterBJones]

I never ask anyone to pay me a penny in my life.
But if you want me to keep teaching everyday.
All I ask if for you to retweet the system to others.
Let's change the world.
Let everyone learn the system for FREE and decide for themselves if they want to use it.

[Sneha Pandya @Spandya2007]

@stltaper ha ha!

[Sneha Pandya @Spandya2007]

@satymahajan Happy Anniversary!

[Stringg @StringReveals]

😂

[Sneha Pandya @Spandya2007]

@SulliStonks A sight of very scary future too.

[Riteish Deshmukh @Riteishd]

Stand up India !!

Every Voice Matters…

#justiceformoumitadebnath

[Yardeni Research @yardeni]

Blaming the Sahm Rule, Carry Trades & Too Many Bulls. The stock markets’ adverse reaction to Friday’s jobs report apparently was to price in a hard landing and to expect a series of federal funds rate (FFR) cuts by the Fed, including a 50-basis-point cut in September. Helping to unnerve investors was that the increase in the unemployment rate might have triggered the Sahm Rule, implying that the jobless rate is about to soar, as it has in the past once the rule was triggered.

In his presser, Powell dismissed the Sahm Rule as a “statistical regularity.” We agree. We acknowledge that the tightening of monetary policy in the past led to gradually rising unemployment followed by big spikes in the unemployment rates. But those spikes were attributable to financial crises that morphed into credit crunches that forced employers to cut payrolls and consumers to retrench (Fig. 14). There was a credit crisis last year, but the Fed averted an economy-wide credit crunch and recession.

Show us a credit crunch, and we’ll agree that the unemployment rate is about to soar as the economy falls into a recession.

We also believe that Friday’s market selloff was exacerbated by a mad scramble by speculators to cover their carry trades in the Magnificent-7 stocks (Alphabet, Amazon, Apple, Meta, Microsoft, and Nvidia) and other financial assets around the world. The one exception was US Treasury securities, which rallied strongly in reaction to the global financial turmoil. In addition, sentiment was overly bullish in the stock market, making it vulnerable to the tumultuous selloff that occurred on Friday.

The rapid unwind of carry trades injected another dose of volatility into the financial markets. Carry traders borrowing at ultralow rates in Japan effectively short the yen, borrowing and selling it to then buy other currencies of countries with higher interest rates so they can invest in those countries’ assets.

Carry trades have worked out well since global central banks (except for the Bank of Japan) began raising interest rates in 2022, and especially last year as the weakening yen gave the trade extra juice. (The preponderance of carry trades also helped push the yen to weaker than 161.00 to the dollar thanks to all the selling pressure.)

Carry trades are great, until they're not. This one started to unravel in the past few weeks after Japan’s Ministry of Finance defended the currency and the BOJ subsequently started to tighten monetary policy. The rising yen forced carry traders to cover their shorts in the yen rapidly and to liquidate their assets that were financed by their carry trades. Many had piled into momentum stocks, including the Magnificent-7 and those in the Nasdaq 100 (Fig. 15).

The yen is now trading at 146.50 to the dollar versus more than 161.00 a few weeks ago. The carry trade unwind likely spurred much of the spike in the CBOE Volatility Index (VIX) to above 29 midday Friday, as seen by increased volatility in bonds and currencies (Fig. 16).
Finally, the Investor Intelligence Bull/Bear Ratio has been around 4.00 for several weeks (Fig. 17). The percentage of bears has been hovering around lows only seen a few times since the survey started in 1987, which is a contrarian indicator.

Try our research service. See our Predicting the Markets book series on Dr. Ed's Amazon Author Page. Please see our hedge clause.

[Sneha Pandya @Spandya2007]

@SulliStonks consolidation is the name!

[Sneha Pandya @Spandya2007]

@SulliStonks your conviction is contagious! thank you though. would have never known any of these if I would have never came across your talks.

[Sneha Pandya @Spandya2007]

@SulliStonks Thank you. I figured but somehow TOS will not show this ticker symbol.