In Reply to: tech company earnings inflated by investments in other techs posted by mh on August 14, 2026 at 11:54:08
Companies like Google, Amazon, Microsoft, NVIDIA, and Meta have benefited financially from investing in AI companies such as OpenAI and Anthropic. But rising valuations are not necessarily real economic value—they are often just paper gains. An increasingly circular flow of investment and revenue also concerns me.
For example, if AI companies borrow money to buy NVIDIA chips and data-center capacity, NVIDIA records that spending as revenue even though the underlying money ultimately came from debt or investor capital rather than profitable AI operations. That can create the appearance of enormous growth without equivalent underlying cash generation.
That’s why I’m keeping AI companies that already generate significant cash—Amazon, Google, and Microsoft—and avoiding cash-poor AI plays like Oracle or SpaceX.
The dot-com bubble is a good example. Amazon lost more than 90% of its value when the bubble burst, but ultimately emerged as a dominant company because many competitors disappeared.
I'm not trying to time the market. I want to own the likely long-term winners if the AI bubble pops. That’s why I’m selling QQQ and have already sold my S&P 500 position. With roughly 40% of the S&P 500 concentrated in its ten largest companies, most of which are heavily exposed to AI, I’d rather pick my AI winners and diversify outside the U.S.