> Markets don’t reward long term investments. Everything has to be short term, and if it’s not paying off instantly, short term investors get no value and want it stopped.
The AI investment bubble is almost entirely about making long-term, extremely expensive investments. That's what the gigantic datacenter build-out is about, not short-term investments and short-term returns. They're telling everybody, persistently, that they're making huge long-term bets, and the market is rewarding them like crazy. See: Oracle's run due to long-term bets on AI (it's certainly not short-term results causing the stock to do that, their short-term growth has been mediocre).
Amazon for two decades repeatedly told investors they were making extremely expensive, long-term investments in build-out (eg their fulfillment build-out era), where the primary payoff would be far into the future. The market bought into the long-term on the basis that it was attached to Bezos at the center (that he'd be there to deliver that long-term result). The same is true about Elon Musk with Tesla: they have endlessly made outlandish long-term proclamation to drive their stock. Tesla: robot super business, self-driving taxi business, et al - these are 10-20-30 year long-term claims by Tesla and the market has aggressively rewarded it. That's because they think Musk will/might be there to guide it to actuality. In most cases investors don't buy in because they know the CEO & team won't be around even seven years from now.
Markets (investors) reward long-term if they can be made to believe in the long-term. The issue is that most companies are not believable on long-term statements, they don't have a leadership that will be around for any long-term delivery. Buffett, Bezos, Musk, Zuckerberg were/are long-term attachments so the market has been willing to buy in on various long-term bets.
Agree on the long term concept, but there’s little comparison between Amazon’s early years and now. Amazon spent money on tangible capital infrastructure that was highly differentiated and long lasting (fulfillment centers, logistics networks). That costs a ton up front but can be used for decades. Folks struggle to compete with Amazon now because that infrastructure is a giant physical logistics moat that’s not easily replicated.
The AI bubble is far from that. Companies are spending tons on GPUs that have limited lifespan, building models that have limited lifespan, using algorithms that are all basically the same, in a space where someone can dump a “good enough” open source model on the market and blow up your business overnight. There’s very little lasting value in what’s being built and the “we’re investing for the long term” arguments don’t hold much water. It’s like saying you’re investing in real estate but then you keep tearing down the building and rebuilding it every 18 months. That just doesn’t work.
There might be some longer term fungible value from some of the baseline infrastructure investments (data centers, electrical upgrades) but those are undifferentiated and highly fungible.