CES 2026 is over and it has revealed the situation with memory being consumed by AI companies is much worse than we initially thought.
What I heard on the ground floor from various system integrators, components manufacturers, and other companies, is memory supply has been tied up for all of 2026, and that shortages could last as long as until 2031.
Sure it’s scuttlebutt but wouldn’t surprise me as being true.
As much as private equity wants to think it is, housing is not a commodity like DRAM is.
Housing always has a base value in that people always need places to live, so it’s price is sticky. The need for DRAM could disappear overnight if it so happened that way.
For the dram unfortunately won’t be possible to use it in the consumer space, at least not in the current form. Hbm is really server stuff, and as is, you cannot repurpose it. As for the GPUs, maybe they can be used for the consumer space but I am not entirely sure the specs would be wise to use it at home, since they need some very serious cooling capabilities, as well electricity consumption. Biggest winners of this pop in my opinion would be anyone who need cheap server rack stuff.
Part of it is not finished DRAM that was sold yet, it’s wafer capacity at the factory.
Sam Altman has promised orders for a kazillion wafers that don’t exist yet. It’s been argued this is less legitimate demand and more an effort to crimp the scaling ambitions of other competitors.
If his cheque bounces early on, the manufacturers are likely to reassign his slots to other buyers.
The manufacturers are taking a fair bit of risk though. If they aren’t getting paid before work starts, and the bubble pops in the middle, thry could end up with a lot of (partially or fully) finished wafers that they can’t just slice up and sell to Corsair and G.Skill.
You are not wrong about the reallocation part. However, if you see the actions from micron (fuck you micron BTW), they are going all in and having a shit storm in PR on the consumer side. If they are taking these risks without proper assurances, then they are utterly deranged
I’m not sure there’s a way to have proper assurances for such vast sums of silicon and money. You’re going with the flow of the speculation at that point. If it pops, their best hope is for bailouts to save them (not unrealistic, but their interlocutors will then be governments, not corporations).
You do have a good point that at a certain point it is not possible to have assurances as in values. However, there are other assurances that can be even more important, such as, contractual ones. If they do not have the proper assurances at that level too up to a certain point, then everyone is highly blindsided on the c suite.
But my biggest point has to do with burning a massive bridge, the consumers, and take a dive into this nonsense.
Promises of buying only work if the buyer still exists at the time you produce the goods.
Besides, I’m pretty sure that the main buyers type on the consumer side are PC and phone makers. So they could go back there almost unharmed.
This has happened before with LCD panels. I remember my mother’s work laptop had a 1900x1200 panel (back when they were still 4:3 aspect ratio). It was a mid-tier ThinkPad, not cheap but not crazy expensive.
A few years later, panel makers started pushing widescreen formats and user friendly language to “help us understand and make informed choices” like HD and FHD.
The resolution of HD? 1280x720.
High-definition was already a concept, but the idea of calling panels that were a huge step back in resolution “high-def” was exactly how they managed to extract more from consumers for less.
I’m sure they’ll find a way to mislead people into buying overly expensive RAM they don’t actually need.
“You totally need ECC for your HTPC bro, wouldn’t want cosmic rays to mess with your movies!”
I hope so, but there’s a way that bubble doesn’t burst even if we’re right that AI never delivers competent/competitive quality: that monopolies simultaneously integrate AI into their products and the entire world simply gets worse, while consumers pay extra for those very AI features they don’t want and which produce an inferior product.
Even that isn’t going to be enough. OpenAI has to start making payments on some (most) of these deals and startups starting this fall. If they don’t make these payments (it’s mathematically impossible for them to do so) then everything gets wiped out and the bubble pops.
Pro tip to all you investors here, if your hot new thing can’t do anything other than net360 terms and has double-pledged collateral, it’s not a good investment.
As far as it being like the dotcom crash, at least the few companies that were actually viable and legitimate survived and it “separated the wheat from the chaff” or something along those lines.
There is no viable AI company here, and the market will quickly find out that there isn’t even chaff to be found here, it’s mostly floor sweepings of post processed MDF sawdust and dirt.
I suspect very creative firms of accountants and CFOs are working hard right this moment to identify the next step in the shell game. So I suspect some creative refinance could avoid that outcome. But I definitely hope you’re right.
Oh no it’s far worse than that. Private equity is heavily invested into data centers, and so are most large international banks. Private equity is playing the fun “volatility laundering” game where they are deliberately not reevaluating assets to make them look like they are worth more on paper than they actually are. They are basically saying this asset house is still worth the $50,000,000 it was valued at 5 years ago, never mind the fact it burned down and is now a superfund site and uninhabitable.
International banks are also issuing loans based solely on “just trust us bro” paperwork, using the AI companies paperwork as gospel and not looking at anything other than what they are presented with. The average cost of renting a Blackwell CPU is now $4.41 an hour, and that’s before the vast majority of these data centers have even come online.
Something something supply and and demand just trust us tho.
Currently, with data from all AI compute companies and services COMBINED in 2025, revenue comes out to 0.5831% of expenditures.
So for every $1,000,000 spent, you will make $5,831.
The only way out of this mess is if the banks either get paid back for their loans (see previous figures) or private equity gets a lot more capital… and starts paying back banks again (see previous figures comment about previous figures)
As an additional note if I am right and this bubble pops (if a single startup goes under, literally any one) then it’s pretty much the collapse of the global financial system and an economic crisis at the level that the world has never seen before.
Literally, and I cannot stress this enough, the entire current system is built on the belief/sentence/mantra “number go up” with no regard for literally anything else.
Well, great. So looking at 2008 for the most recent model, I suppose that means government bailouts or subsidies using taxpayer money to save the companies and thereby prevent a complete collapse of markets?
Kind of? Except the lenders with the largest amounts of loans in order are:
1.Blue Owl (USA) (remember this company, it’ll be important as a canary probably)
2. Mitsubishi UFJ financial group (Japan)
3. JP Morgan Chase (USA)
4. Deutsch Bank (Germany)
5. BnP Paribas (France)
6. Morgan Stanley (USA)
7. Sumitomo Mitsui Banking Corporation (Japan)
So kinda like 2008 but you need (at the very least) Japan, Germany, France, the USA, and possibly South Korea to all coordinate and do bailouts cooperatively together to maybe have a chance.
Good thing we haven’t pissed off our allies or disrupted trade in general, and we also haven’t fucked with interest rates or bonds or anything so we have plenty of tools in our arsenal (god help us all, puts on all of our collective livers.)
There is no saving the AI companies because it is mathematically impossible for them to make money. You would have better luck investing in your local meth heads trying to make alchemy real using nothing but books published by Wizards of the Coast.
Long story short, Moss explains how we’re in heading towards an inflationary crash, instead of a deflationary one, like what 2008 was. 2001, 2008, 1929, and 1903 were all deflationary currency crashes if I’m not mistaken, and this one will be due to the US Dollar failing, which is predicted to happen this year (due to the amount of money printing that happens as a result of Babylonian money magick). However, I have a sneaking suspicion this has to do with some length of time before the crash is noticed.
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The AI bubble will pop long before then, and everyone will have more RAM and GPUs than they know what to do with.
looks at housing bubble “… god i hope you’re right”
As much as private equity wants to think it is, housing is not a commodity like DRAM is.
Housing always has a base value in that people always need places to live, so it’s price is sticky. The need for DRAM could disappear overnight if it so happened that way.
For the dram unfortunately won’t be possible to use it in the consumer space, at least not in the current form. Hbm is really server stuff, and as is, you cannot repurpose it. As for the GPUs, maybe they can be used for the consumer space but I am not entirely sure the specs would be wise to use it at home, since they need some very serious cooling capabilities, as well electricity consumption. Biggest winners of this pop in my opinion would be anyone who need cheap server rack stuff.
The RAM for 2026-2031 hasn’t been produced. It’s the production capacity that’s been bought out.
If the AI bubble bursts, the manufacturing can be reassigned.
Part of it is not finished DRAM that was sold yet, it’s wafer capacity at the factory.
Sam Altman has promised orders for a kazillion wafers that don’t exist yet. It’s been argued this is less legitimate demand and more an effort to crimp the scaling ambitions of other competitors.
If his cheque bounces early on, the manufacturers are likely to reassign his slots to other buyers.
The manufacturers are taking a fair bit of risk though. If they aren’t getting paid before work starts, and the bubble pops in the middle, thry could end up with a lot of (partially or fully) finished wafers that they can’t just slice up and sell to Corsair and G.Skill.
You are not wrong about the reallocation part. However, if you see the actions from micron (fuck you micron BTW), they are going all in and having a shit storm in PR on the consumer side. If they are taking these risks without proper assurances, then they are utterly deranged
I’m not sure there’s a way to have proper assurances for such vast sums of silicon and money. You’re going with the flow of the speculation at that point. If it pops, their best hope is for bailouts to save them (not unrealistic, but their interlocutors will then be governments, not corporations).
You do have a good point that at a certain point it is not possible to have assurances as in values. However, there are other assurances that can be even more important, such as, contractual ones. If they do not have the proper assurances at that level too up to a certain point, then everyone is highly blindsided on the c suite.
But my biggest point has to do with burning a massive bridge, the consumers, and take a dive into this nonsense.
Promises of buying only work if the buyer still exists at the time you produce the goods.
Besides, I’m pretty sure that the main buyers type on the consumer side are PC and phone makers. So they could go back there almost unharmed.
I mean, you and I can’t, but memory manufacturers? They’ll find a way.
This has happened before with LCD panels. I remember my mother’s work laptop had a 1900x1200 panel (back when they were still 4:3 aspect ratio). It was a mid-tier ThinkPad, not cheap but not crazy expensive.
A few years later, panel makers started pushing widescreen formats and user friendly language to “help us understand and make informed choices” like HD and FHD.
The resolution of HD? 1280x720.
High-definition was already a concept, but the idea of calling panels that were a huge step back in resolution “high-def” was exactly how they managed to extract more from consumers for less.
I’m sure they’ll find a way to mislead people into buying overly expensive RAM they don’t actually need.
“You totally need ECC for your HTPC bro, wouldn’t want cosmic rays to mess with your movies!”
I hope so, but there’s a way that bubble doesn’t burst even if we’re right that AI never delivers competent/competitive quality: that monopolies simultaneously integrate AI into their products and the entire world simply gets worse, while consumers pay extra for those very AI features they don’t want and which produce an inferior product.
Even that isn’t going to be enough. OpenAI has to start making payments on some (most) of these deals and startups starting this fall. If they don’t make these payments (it’s mathematically impossible for them to do so) then everything gets wiped out and the bubble pops.
Pro tip to all you investors here, if your hot new thing can’t do anything other than net360 terms and has double-pledged collateral, it’s not a good investment.
As far as it being like the dotcom crash, at least the few companies that were actually viable and legitimate survived and it “separated the wheat from the chaff” or something along those lines.
There is no viable AI company here, and the market will quickly find out that there isn’t even chaff to be found here, it’s mostly floor sweepings of post processed MDF sawdust and dirt.
I suspect very creative firms of accountants and CFOs are working hard right this moment to identify the next step in the shell game. So I suspect some creative refinance could avoid that outcome. But I definitely hope you’re right.
Oh no it’s far worse than that. Private equity is heavily invested into data centers, and so are most large international banks. Private equity is playing the fun “volatility laundering” game where they are deliberately not reevaluating assets to make them look like they are worth more on paper than they actually are. They are basically saying this
assethouse is still worth the $50,000,000 it was valued at 5 years ago, never mind the fact it burned down and is now a superfund site and uninhabitable.International banks are also issuing loans based solely on “just trust us bro” paperwork, using the AI companies paperwork as gospel and not looking at anything other than what they are presented with. The average cost of renting a Blackwell CPU is now $4.41 an hour, and that’s before the vast majority of these data centers have even come online.
Something something supply and and demand just trust us tho.
Currently, with data from all AI compute companies and services COMBINED in 2025, revenue comes out to 0.5831% of expenditures.
So for every $1,000,000 spent, you will make $5,831.
The only way out of this mess is if the banks either get paid back for their loans (see previous figures) or private equity gets a lot more capital… and starts paying back banks again (see previous figures comment about previous figures)
As an additional note if I am right and this bubble pops (if a single startup goes under, literally any one) then it’s pretty much the collapse of the global financial system and an economic crisis at the level that the world has never seen before.
Literally, and I cannot stress this enough, the entire current system is built on the belief/sentence/mantra “number go up” with no regard for literally anything else.
Well, great. So looking at 2008 for the most recent model, I suppose that means government bailouts or subsidies using taxpayer money to save the companies and thereby prevent a complete collapse of markets?
Kind of? Except the lenders with the largest amounts of loans in order are: 1.Blue Owl (USA) (remember this company, it’ll be important as a canary probably) 2. Mitsubishi UFJ financial group (Japan) 3. JP Morgan Chase (USA) 4. Deutsch Bank (Germany) 5. BnP Paribas (France) 6. Morgan Stanley (USA) 7. Sumitomo Mitsui Banking Corporation (Japan)
So kinda like 2008 but you need (at the very least) Japan, Germany, France, the USA, and possibly South Korea to all coordinate and do bailouts cooperatively together to maybe have a chance.
Good thing we haven’t pissed off our allies or disrupted trade in general, and we also haven’t fucked with interest rates or bonds or anything so we have plenty of tools in our arsenal (god help us all, puts on all of our collective livers.)
There is no saving the AI companies because it is mathematically impossible for them to make money. You would have better luck investing in your local meth heads trying to make alchemy real using nothing but books published by Wizards of the Coast.
What way is that?
AI is not the bubble. The USD and bonds that are covered thereof are the bubble, and it had burst recently.
Huh?
This, from Mark Moss: https://inv.nadeko.net/watch?v=ttMDQB0TJJc
Not watching that. Would you like to explain?
Long story short, Moss explains how we’re in heading towards an inflationary crash, instead of a deflationary one, like what 2008 was. 2001, 2008, 1929, and 1903 were all deflationary currency crashes if I’m not mistaken, and this one will be due to the US Dollar failing, which is predicted to happen this year (due to the amount of money printing that happens as a result of Babylonian money magick). However, I have a sneaking suspicion this has to do with some length of time before the crash is noticed.