Chinese Tech Stocks Plunge as Investors Here Insist We’re Different
BEIJING, China (Bohiney.com) — China’s artificial intelligence boom has run into a problem no computer scientist saw coming: mathematics.
The STAR 50 index of Chinese technology and semiconductor shares has fallen more than 40 percent in four months, erasing roughly $480 billion in market value. As Reuters reported, investors are asking whether companies selling the future might eventually have to earn money in the present.
The question has reportedly stunned the technology industry, where revenue is considered an outdated metric used by people who still own calculators.
In Silicon Valley, executives immediately reassured investors that American artificial intelligence is completely different. Chinese AI is an investment bubble. American AI is a paradigm shift. The distinction appears on a slide near the end of a presentation, right above a request for another $40 billion.
The World’s Most Expensive Autocomplete: How AI Valuations Work
AI valuations follow a sophisticated formula: take whatever the company earns, multiply it by infinity, and accuse anyone who questions the result of not understanding exponential growth.
A conventional business sells a product, collects money, pays expenses and hopes something remains.
An AI startup buys $600 million worth of computing equipment, gives away its product, loses $900 million and receives a higher valuation because its quarterly losses demonstrate commitment.
It’s a restaurant where meals are free, ovens cost more than the airport, and the waiters hold doctorates in explaining why profits are five years away.
Investors don’t ask how much the restaurant earns. They ask whether it can disrupt lunch.
China’s selloff suggests customers might enjoy AI without paying enough to support everybody building it. That’s not a market failure. That’s a very expensive group project.
Series F Term Sheet, Page 41, Footnote 9
9. “Revenue,” where referenced in this document, means anticipated revenue, projected revenue, revenue the Company intends to explore, or revenue as a general concept. Actual revenue is not a defined term.
Investors acknowledge that quarterly losses are a measure of commitment and shall not be construed as losses. Valuation shall be calculated by multiplying the Company’s most recent funding round by a number the Company will communicate on the call. Nothing herein shall be read to require the Company to sell anything.
Lumenform AI, Inc. Initialed by all parties, including one party’s dog.
Tech Workers Discover Stock Options Aren’t Groceries
The first casualties of an AI valuation collapse may include engineers who negotiated compensation packages consisting of salary, stock options and the firm belief their employer would eventually purchase the moon.
For years, adding “AI” to a résumé increased its value faster than experience.
A man who once maintained the office printer became a machine-learning strategist after informing management that the printer was “data adjacent.”
Now some are confronting a brutal economic reality: a stock option in a company worth nothing is worth considerably less than a sandwich.
An expensive apartment in San Francisco cannot be paid for with tokens, optimism or an investor’s Medium post about transformational scale.
The landlord wants dollars. The chatbot suggests communicating your feelings clearly.
Classifieds Listing, SoMa
Meditation pod, barely used. $4,500 OBO. Pickup only.
Purchased as part of our wellness initiative. Used by three employees, two of whom have since been let go. Seats one. Does not fit through a standard door, so bring a plan. The pod was assembled inside the room and nobody here can say how.
Ambient rain sounds still work and cannot be turned off. Will consider trade for a working landlord. No lowballers. No venture capitalists.
Posted by Lumenform AI Facilities (one person).
Wall Street Insists This Time Is Different, Again: AI Stocks and the Dot-Com Crash
Goldman Sachs calculated that AI-linked shares represented 42 percent of market capitalization and 57 percent of turnover across major Chinese and Hong Kong listings.
That is diversification in the same sense that ordering six flavors of ice cream constitutes a balanced diet.
Chinese robotics darling Unitree has seen its shares halve since its August listing. Investors who imagined robots serving breakfast may now need those machines to find second jobs, preferably with actual paychecks and decent health insurance.
American venture capitalists, meanwhile, have issued the traditional warning that anyone drawing parallels with the dot-com crash is an idiot.
During the dot-com boom, companies lost money promising to transform society through the internet. Today, companies lose money promising to transform society through computers connected to the internet.
Completely different.
The internet eventually did transform society, of course. It also transformed plenty of shareholders into former shareholders.
LinkedIn Post, 412 Reactions
Humbled and energized to share that I am open to new opportunities.
After 14 months as Head of Prompt Strategy at Lumenform AI, I’m taking a moment to reflect. I learned what scale really means. It means the money runs out at scale. Grateful to my team, my manager and the printer.
If you know a company that needs someone who understands data adjacent systems, my DMs are open. #OpenToWork #AI #Grateful #ThoughtLeadership
3 comments. All three say “Congrats!”
The AI Valuation Reset: The Future Has Been Temporarily Repriced
As Futurism noted, China faces distinct pressures, including export restrictions and demand concerns. Its stock-market collapse does not prove American AI shares must follow tomorrow, or that useful AI technology will disappear.
It does prove a machine can be revolutionary while its owners pay too much for it.
The greatest irony is that AI was supposed to eliminate human error. Instead, humans used it to industrialize an ancient error: buying something at an absurd price because somebody else might pay even more. Economists have a name for that, and it has been on the books longer than the computer.
Eventually, a shareholder will ask the most dangerous question in modern technology: “Can this thing make a profit?”
And somewhere in California, a chatbot will reply: “I’m sorry, but I can’t help with that request.”
Automatic Reply, Corvane Systems
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Five Observations
- Four hundred eighty billion dollars. I lose a phone charger and I take it personally for a week. These guys lose half a trillion and the headline says “bubble.” A bubble. Like it floated off at a kid’s birthday party.
- Every AI company says this time is different. You know who else said that? Everybody. Right before it wasn’t. It’s the “hold my beer” of finance.
- A computer that writes emails is getting a national budget. I’ve written emails. Nobody handed me a national budget. I got a “per my last message.”
- “Data adjacent.” That isn’t a skill, that’s what my cousin says about his job at the airport. “I’m airplane adjacent. I’ve seen a plane.”
- Unitree’s down half since August. First time in years something dropped in price and I wasn’t allowed to buy it.