Over the past few weeks alone, several AI leaders, including OpenAI CEO Sam Altman, began hinting that they expect governments to step in and bail out AI companies if and when the bubble bursts. After all, the U.S. government did exactly that in March of 2023 when Thiel’s last big withdrawal of funds (from Silicon Valley Bank) precipitated a series of bank collapses.
With so much pension money and other public funds riding on AI stocks Carney could also decide to bail out AI giants and data centre builders with public funds, rather than take a precautionary tact and pull out investments now from over-bloated AI firms.
Bail out the victims of bad investments, not the drivers of the bad investments.
At the end of September the Canadian Pension Plan Investment Board (CPPIB), to which all working Canadians outside Quebec are subscribed, held $8 billion of Nvidia stock as its largest single equity holding. In fact, its eight largest stock holdings were all AI stocks. At $33 billion of combined value, these holdings amount to a quarter of the value of the entire pension fund.
Quebec’s main pension fund, La Caisse de dépôt et placement du Québec (CDPQ), also reported Nvidia as its largest holding at the end of September. Almost all of the “Maple Eight” big pension funds also lead with Nvidia and other AI stocks as their largest holdings, or they are loaded up on index funds that are in turn overloaded with Nvidia and other AI stocks.
That doesn’t sound at all good.
I think there’s some additional context that should be provided. CPPIB operates at arm’s length from the government which is probably a good thing. There also something to be said about them switching passive index strategy and what we’re paying executive now with questionable returns.
https://en.wikipedia.org/wiki/CPP_Investments
CPPIB is not considered a sovereign wealth fund because it operates at arm’s length from the Government of Canada and solely manages CPP contributions paid by workers and employers, not public funds.
I guess we’ve learned absolutely nothing from putting all the retirement eggs in the Nortel basket and we’re about to lose everyone’s pensions yet again.
It’s not ideal, but Nvidia is the biggest equity in the biggest market, it’s no surprise it’s prominent in diverse portfolios.
Demand for AI isn’t going to disappear even if valuations collapse. If the hyperscalers pull out of infrastructure deals on data centers being built by big Canadian businesses and leaving them with huge liabilities, bail out the big Canadian companies by buying them out and nationalizing the data centres. The big companies are saved from liabilities, the assets transfer to the public balance sheet, and Canada ends up with real sovereign AI and the capacity to serve inference from nationalized providers.
How much demand for AI is there? We were forced to pilot it at work and found it was a net detractor in time and quality.
It’s being forced into everything as the ultimate spyware so I guess there is something.
Some folks - myself included - don’t even believe that “AI” as currently described matches even the hype.
Canadians should be ready to go full into cash. We’ll wait for the explosion and buy up the fancy server racks, chips, hard drives, and other hardware at pennies on the dollar to set up our own data centres that will actually do real tasks besides AI slop.
LOL watch him bail them out, “for the good of the economy”.
This is just normal contractions during the approach to the new year. I mean AI is a bubble, and hopefully it will burst before we have major breakthroughs in robotics and battery technology, but I feel like the Al bubble has another 1-2 years before there is a huge implosion at the consumer and business level. It will still be viable in military and industrial capacities, and a few other niche applications/fields
Aside from cohere, who are a minor player, we have nobody to bail out.
Of course you do. Anyone with large shares of nVidia or the other AI companies…
And this is always the question. Will you bail out banks who make shitty decisions, knowing the risk and doing it anyway? Will you bail out individuals who didn’t know the risk and got played by their financial advisors?
Cue the Always Sunny intro text.
