So Sam Altman just dropped some serious truth bombs last week, and honestly? The guy’s giving us whiplash.
First, he’s out here saying OpenAI is gonna spend trillions (with a T!) on data centers in the “not very distant future.” Like, okay Sam, we get it – you’re basically printing money over there.
But then – plot twist – he turns around and basically calls the whole AI investment scene a bubble. He’s literally comparing it to the dot-com crash and saying some investors are gonna get “burned.” Talk about mixed signals!
Here’s the thing though: he’s probably right on both counts. And that’s exactly why AI stocks are such a headache right now.
The “AI is Taking Over Everything” Case
Luke Lango (one of the smart money guys) is basically saying we’re witnessing the biggest spending spree in corporate history. Microsoft went from spending $15 billion a year to $90 billion. Meta jumped from $20 billion to $90 billion. These aren’t rounding errors – these are “buy a small country” numbers.
The math is wild: the top five tech giants are about to drop $400 billion this year alone on AI stuff. By 2030? We’re talking $1 trillion annually. That’s more than most countries’ entire GDP.
Every new AI model needs more everything – more chips, more storage, more power, more cooling (seriously, these data centers run hotter than a Phoenix parking lot). It’s a snowball effect that keeps getting bigger.
The “But Wait, These Prices Are Insane” Case
Then you’ve got Eric Fry playing the voice of reason, pointing out that Nvidia – yeah, the chip darling everyone’s obsessed with – is trading at 56 times earnings. That’s double what the overall market trades at.
His point? Great companies can still be terrible investments if you pay too much. It’s like buying a Ferrari for the price of a yacht – sure, it’s a nice car, but maybe wait for a sale?
How to Not Lose Your Shirt
Here’s where it gets interesting: both guys are probably right. The AI spending boom is real and massive. But some of these stock prices are living in fantasy land.
The smart play? Don’t buy the companies writing the checks (looking at you, overpriced mega-caps). Instead, buy the companies receiving those checks.
Think about it like a gold rush – you don’t want to be the guy digging for gold. You want to be the guy selling shovels.
That means companies making the actual hardware: chip manufacturers, data center builders, power companies (those AI farms need serious electricity), and cooling system makers. These are the picks-and-shovels plays that could ride the wave without the nosebleed valuations.
Altman basically gave us the roadmap: massive spending is coming, but some current prices are “insane.” So follow the money, but don’t overpay for the privilege.
The AI revolution is real. Just don’t let FOMO turn you into the person who bought pets.com stock in 1999.