Final warning: the biggest bubble in human history is about to burst.

There's a counterintuitive truth: When a technology becomes as indispensable as air and water, as long as there's no monopoly, then its commercial value.preciselyIt's just as cheap and unprofitable as air and water.

This is true of railways, this is true of electricity, this is the internet,Artificial Intelligence of the FutureAnd it will be the same.

Train tickets that span thousands of kilometers only costhundredFor a few bucks, the electricity that can smelt dozens of kilograms of steel costs less than three drinks, and high-definition video from the other side of the globe is available for a fraction of a penny of traffic. In the Internet age, traffic is as common as tap water, which is why telecommunications companies that make traffic all over the world can never outperform Internet companies that use traffic.

Some people say AI is different; it's a new technology. But let's not forget that 30 years ago, the "Internet" was also a proper cutting-edge technology, 100 years ago, electricity was called a black technology of God's magic, and 200 years ago, train was also high-tech. AI is fundamentally no different from the internet, electricity, railways, or even the steam engine of the past; all rely on massive infrastructure development.

And history.The rulesTell us that all industries and companies at the infrastructure level are doomed to end up as the three highest industries that are heavy in assets, high in risk and high in leverage.

Invariably, they are characterized by extremely large capital expenditures, very low returns on assets, and protracted and desperate return cycles. After the initial frenzied hype, they eventually become mediocre utilities that earn only the average profit margin of society.

In any technological revolution, the bottom "core infrastructure builders" are initially motivated by emotion.Valuation andOnce profitable, it will eventually be pushed back to earth by massive capital expenditures, depreciation of assets, capacity churn, and cyclical laws.

But as Buffett says, the vast majority of people can't wait to get rich slowly.

Too many people are eager to become wealthy in the first second of a race with a win, so they will choose the earliest established new technology infrastructure chain to gamble on most of their wealth. Whenever a disruptive technology first emerges, people quickly fall prey to the infrastructure frenzy for fear of missing out on a ride (FOMO sentiment), and then devote all their energy to the extreme hype about supply chain bottlenecks.One time it wasExceptionally, this is human nature.

If everyone looks closely at the explosive AI-driven rally in global stock markets over the past three years, they will suddenly realize that what Wall Street and China's A-share market have been speculating on in recent years is fundamentally notartificial intelligenceInstead, he took a magnifying glass and groped along the infrastructure assembly line.in"Stirring bottlenecks" - Capital will put anyone who gets stuck in the neck of computing power expansion into the sky.

According to the barrel principle，The computing power chainEach time an old card point is solved, the next physical limit is immediately exposed.。

Just look: including this year, the hype around AI hardware—or rather, its bottlenecks—has been going on for over three years now.Every time everybody feels like itIt's AI's turn.applicationThere was an explosion.The market.They're all still here.Yeah, it'll bypass the hardware.to hypeGet up there.

Just started.What's being fired is wafers and advanced packaging.ofThe bottleneck,2023When the big model first explodedchipThe packaging capacity cannot keep up, the graphics card cannot be delivered, and the money will not be available.fryNvidia and TSMC;

When the packing capacity doubled,The chips can never be bought back on the table, and servers, racks, and switches must keep up, so servers and data centers are fired. Machines piled up, found that there was not enough electricity and that the heat dissipation could not keep up, and then fired up electricity, nuclear power, and refrigeration equipment., even giving rise to the statement: "The ultimate limit of AI is electricity."；

Later, reasoning andAgentThe consumption is increasing, and it must be saved and transmitted quickly,High bandwidthStorage, high-speed interconnection, custom chips, and even the CPU that was once snubbed, have become the object of money chasing.；

Such as chip and memory cobble together, and hit the physical bottleneck of copper cable, so funds are flocking to stir fry 800G, 1.6T optical module and CPO total package optics; When the optical module was also plugged in, and again stuck in the electrical and heat dissipation bottleneck, the money turned around.alsoGo frantically for liquid cooling equipment, transformers and nuclear power plants.

With every new technology in human history, this physical bottleneck and capacity bottleneck quickly became the hottest wealth code for speculators.This is why "shovel stocks" have repeatedly become the main theme over the past three years: while everyone is still debating who will make big money from AI, the shovel sellers have already started collecting revenue from those building AI infrastructure.

200 years ago with the steam engine andRailwaySince the explosion, capital across the West has chased the infrastructure sectors of steel, railroad manufacturing, carriage manufacturing, and railroad laying, and physical and capacity bottlenecks have become the wealth code of all investors.

The "cooked iron crisis" is a prime example: as trains got heavier and faster, people suddenly realised there was a problem - the tracks were made of cooked iron, and the texture was too soft, and some busy lines were getting deformed and cracked every few months and had to be scrapped for replacement. This is a physical bottleneck of the finished iron material, which cannot be changed by process repair.

Capital immediately believed in a narrative logic: the entire society's iron smelting capacity would be used to repeatedly cast and repair these tracks, and iron capacity was destined to run out of supply for a long time. Then came the tightening of familiar supply chains and soaring stock prices, with mills waiting a few years to place orders and iron prices nearly tripling in five years.

Everyone's logic is simple: as long asHumanWhere they exist, the tracks have to be kept being repaired, and iron and steel mills are almost the gold industry that never has to worry about business. On the London Stock Exchange, railroad shares rose by an average of nearly 10 times, and some of the leading companies rose by nearly 20 times. Back then, British speculators didn't even look at financial reports or companies, and when they heard the words "iron" or "cast" in their names, they would snap up a lot of them, which is similar to the underlying logic of today's capital markets fuelling HBM storage, optical modules and transformers along supply chain lists.

A hundred years ago, at the beginning of the electricity revolution, the bottleneck script of the "cooked iron crisis" was also rewritten. At that time, everyone was still focused on upstream power infrastructure-related items, such as Edison generators, copper wires and poles, and capital hyped up all concepts related to power infrastructure.onOh, my god.

Soon，A hard physical constraint completely ignited the market hype: in the Edison DC environment, if you want to transmit electricity over long distances, you must reduce the resistance with copper cables thicker than the waist, otherwise a power station can only supply an area of 1 to 2 kilometers. This led to demand for copper throughout the West at the time.My imagination.The situation has reached a terrifying level: newspaper headlines declared, "Even if all the world's copper mines were combined, they wouldn't be enough to build an electrical grid for the United States," and "Whoever controls copper controls electricity supply." As a result, stocks of copper miners and cable manufacturers skyrocketed overnight.

Capital, which had tasted the punch, went through the electricity supply chain with a magnifying glass, trying to spot more bottlenecks.

Soon a new discovery was made: modern synthetic plastics had not yet been invented, but high-voltage wires, transformers, and generator coils needed high-strength insulation, or they would short-circuit or catch fire. The best insulator that mankind could find at that time was from the Amazon in South America.Natural Palla RubberHowever, this wild natural rubber production capacity is so small that it cannot supply the world's electricity infrastructure needs.

Stock market hype logic once again and today"Stand in the light, exist in the core."Similarly, the market was convinced that without rubber, generators and power plants, no matter how well built, were a pile of scrap iron, and whoever monopolized insulation would strangle the lifeblood of the electrical age.

From 1895 to 1910,Insulating rubber prices have soared by 500%On the London and New York stock exchanges, the share prices of some core insulation companies have increased by 20 to 30 times in just four to five years. At that time, the market gave equally flawless reasons: every light bulb and every electrical appliance of all mankind in the future must be protected by rubber insulation, and the demand was so great that it could not be expected to peak. At that time, the share price was so hot that even a "shielding stock trading market" appeared specifically for speculators to aggressively speculate on the relevant stocks.

Twenty-five years ago, during the dot-com bubble, humans were still repeating their mistakes in the same pit. At the time, Wall Street firmly believed that "Internet traffic is doubling every 100 days," and decided that the future of Internet bandwidth was king, and global capital poured $500 billion into the telecommunications industry in five years, and 39 million miles of optical fiber were laid on the seabed and on land, a total length enough to circle the Earth 1,500 times.

To maintain the myth of a bandwidth shortage,Global Crossing (Global Crossing)andWorldCom Inc.The telecommunications giants even played the trick of "bandwidth reversal": company A spent $100 million on fiber optic capacity of company B. Company B in turn also spent $100 million on company A's capacity, and actually no cash was flowing, but each company reported an additional $100 million in revenue out of thin air.And today.The schemeAlsoThe same thing happened.

At the same time, in order to support the so-called doubling of traffic, all enterprises are frantically snapping up switches,Cisco (Cisco)After waiting more than a decade for orders from giants like Lucent, Cisco's stock hit $80 in March 2000, at one point overtaking Microsoft as the most highly valued company in human history.

But the market economy always shows its charm at these moments: when a threshold set at a certain point generates too much excessive profit. This huge profit itself became the most powerful reward in the world, which would spontaneously mobilize the best wisdom and huge amounts of capital in society to constantly try to smash this threshold completely.Yeah, that's the rule.

After the "cooked iron crisis," capital could no longer bear to give away profits to iron smelters year after year, and funds poured into research and development. Finally, seven years later, in 1856, the English inventorsBessemerAnnouncing his own new patent -The acid furnace steelmaking methodBlowing molten iron directly into the air can quickly burn the impurities, and for the first time in human history, liquid steel cannot be completely solved.low costProblems with volume production.

The toughness and durability of steel tracks are more than 10 times that of finished tracks, and humans quickly replaced the tracks with steel tracks. It was once highly valued in 1853.The iron factoryThe shares of the giants were slashed to the ankles and eventually fell back to where they were on the eve of the 1848 frenzy，95% of traditional iron smelters in Europe and the United States declared bankruptcy.

During the era of the electric revolution, the so-called insurmountable copper cable bottleneck and direct current transmission limitations also forced the emergence of Tesla, a once-in-a-thousand-years inventive genius, six years later. When Tesla discovered alternating current and the transformer he invented, it overcame the stubborn loss problem in Edison DC transmission - the resistance loss naturally decreased as the voltage increased.

whenWestinghouse ElectricAfter GE thoroughly mastered the three-phase AC high-voltage transmission technology, Humans simply use a transformer to raise the voltage to tens of thousands of volts, and the loss on the line will automatically decrease to the point that it can be ignored. There is no need to rely on stacked copper wires to reduce the resistance anymore, and ordinary thin cables can achieve long-distance transmission.

At the same time, the high price of natural rubber also led to a major breakthrough in chemistry: in 1907, chemistsBeclandUsing cheap phenol and formaldehyde, man's first synthetic plastic was synthesized.Phenol resin (commonly known as "electric wood")With extremely inexpensive ceramic insulators, the insulation performance is increased ten times, and the price is only one-tenth that of traditional natural rubber. When these technical bottlenecks were eliminated, laying the grid and building power plants was no longer "high tech," and the entire power industry was ushered in one of the most radical shake-ups in commercial history.

As a surplus of capital flooded in, electricity prices began to avalanche and the industry entered a frenzy of mass bankruptcies. In the end, electricity infrastructure stocks, which were once dominant, became the most boring "dividend stocks" and "bonus stocks" in the secondary market.Old Deng.thigh”，Being saddled with extremely large equipment depreciationpressureThere was little growth in it.

The same story happened in the millennium.InternetDuring the boom years.

along withIntensive wave reuseThe commercialization of the technology took place, and engineers simply attached a sub-waver to both ends of the fiber, which could simultaneously punch 160 different colors of lasers into the same glass wire, and the communication capacity of each old fiber instantly matched that of more than 100 in the past.

By 2002, up to 97.5% of the world's optical fiber was lying on the sea floor and underground, and nobody used it, which became signalless. "Dark fiber”Cross-ocean bandwidth prices plunged 90 percent, and more than 60 telecom giants such as Universal Telecommunications and WorldCom lined up for bankruptcy, wiping out $2 trillion of the industry's market value.

The logic of snapping up the switches necessary for Internet infrastructure seemed correct, but when the Federal Reserve raised interest rates cycle and downstream enterprises collapsed, the "GPU" switches of that era instantly became unrealizable bricks thrown in the hands. At that time, discount flyers for discarded switches were scattered all over the American market; these once-expensive high-tech hardware items had turned into electronic waste within just a few months.Shares of CiscoIt also plummeted from $80 to more than a dozen dollars, a decline.Nearly 90%。

Everyone says that during the California Gold Rush in the American West, the most reliable way to make money was selling shovels. That's how Nvidia earned its nickname as the "shovel seller" of the AI era. But very few people know.The story's about it.In the second half of the story, selling shovels made quick money just a few years before the gold rush, and once the mine was explored or the tools were iterated, the shovels filled the warehouses became scrap. The people who really relied on the gold rush to build a century-old commercial empire were never the first road builders who built roads with heavy assets, but the ecological backbone builders that built those roads with light assets.

During the 19th century gold rush, AmericansHenry WellsandWilliam FargoThey found the U.S. Postal Service unreliable at the time, unable to safely mail gold mined by prospectors back to their hometowns. Consequently, they both transported gold and goods for prospectors using horse-drawn wagons with armed escorts, and also purchased gold directly from mining sites, exchanging it for paper drafts.

No one would have guessed that these two businesses, which depended on the Goldman Sachs, exploded with enormous potential, spawning the famous high-end credit card companiesAmerican Express Co.（American Express）And named after the names of two people.Wells Fargo (United States)Today, the two companies have a combined annual net profit of more than $32 billion and a combining market value of more than $410 billion, while countless mining companies and iron shovelers emerged from the West Gold Rush that year.laterMore than 90% of early bankruptcies disappear.

butWe look at it dialectically,It's like a forest fire that burns out the trees that dominate the skies and shield the sun so that the newer ones below can get a chance to rise. So the capital rush under a frenzied infrastructure is an unstoppable and necessary madness, because the essence of infrastructure is to pay a high premium for the compression of time.

such asThe reason China's high-speed rail, subway systems, and urbanization miracle have compressed two centuries of Western development into just three decades lies in the sufficiently attractive premiums generated by surrounding land development.The truth is simple, there is always a brave man under a reward,If constructing a high-speed railway station cannot boost land values in the surrounding area, most routes in China's high-speed rail network might still be confined to blueprints today.

These massive infrastructure projects, whether capital bets or government borrowing, will be difficult to get off the ground without excess benefits. Without excess infrastructure, you cannot produce economies of scale, new technologies cannot become cheap, and entirely new business models are doomed to fail. And it is those who can truly reap the greatest dividends of the times, and even push the times forward, that use these cheap and universal infrastructures to restructure the ecological complements of human society's "financial flow, information flow, and service flow."

The railway mania of two centuries ago was not without merit; it left behind an efficient and affordable transportation network amid the ruins, binding the entire United States into a unified whole.ofA big market. Using this cheap shipping network, Sears, a world retail pioneer focused on mailed goods, formed the prototype of a modern chain retail industry, a combination of Taobao and Superstores 100 years ago. There is also, of course, the use of railways to open up a national distribution network and create images.Coca ColaThis consuming empire lasted for a century.

Similarly, when the supply of electricity became as scarce as tap water, it was discovered that the electricity revolution really spawned an era that was not the light bulb sellers, as people thought.Hardware makers who laid copper wire and sautéed rubber instead took advantage of the extremely cheap and ubiquitous electricity that created the modern industrial assembly line at Ford, the car-making giant that created modern industrial lines, and the white goods and appliances that freed countless household labour.A trillion-dollar thing.Hollywoodetc.The film and television entertainment industry.

Before the electricity revolution rolled out the grid, because it was so difficult to refine, aluminum was a noble metal more expensive than gold, and Napoleon III used an aluminum fork to show his identity and even to eat, while the second-class nobility had to use gold forks. But Alcoa used extremely cheap electricity to electrolyze aluminum and turn it into a cabbage price, giving rise to modern aviation and modern construction that no longer relied on wood - and the resulting aviation industry alone has grown into a single industryAnnual turnover exceeds $1 trillionIt's a huge thing.

Then there was the Internet bubble 25 years ago, when the 39 million miles of dark fibre that remained on the ocean floor after the telecommunications giant went bankrupt was taken over by later players at the price of cabbage. It's because the cost of traffic has plummeted by 90 percent that the dark fiber ruin has grown.Google, Netflix, Amazon Web Services, as well as China's Taobao, WeChat, and ByteDance.

Before new technology-led infrastructure was built and made cheap, these new industries were almost unimaginable blind spots. Suffice it to say that whether it is railways, electricity or the internet, the destiny of the infrastructure industry is always going in a frenzy.excessiveInvestment, which goes toward deleveraging and collapse in excess, eventually uses its own cheapization to nourish great rising stars.

Returning to the current investment environment, since the AI boom, global capital has consistently revolved around computing power andThe so-called AIThe industrial chain has repeatedly set pricing and pulled each other around, which shows that we are at the critical point in this major infrastructure cycle "prisoner's dilemma."

On the one hand,All of usIn mindallWe know the end of excess investment very well.thenThere is a glut, not to mention that the steel tracks and dark fibres lying on the seabed left by the railways would last decades, whereas today's tens of billions of dollars' worth of computing chips have an iteration cycle of only one to two years. But on the other hand,The world's major economies are issuing debt indiscriminately, and there is too much money.The squeeze on liquidity and the fear of "losing tickets" have forced everyone to remain at the gambling table,Some people want to get rich. Others just want their money to depreciate a little more slowly。

However, when you look at the longer cycle, the more crazy investment is now, the more violent the "air and waterification" process of the underlying technology is accelerated. When funds even use transformers and liquid cooling boards as core technological beliefs to hype, it shows that the drumbeat of "hype bottlenecks" has reached the end of the supply chain, and the real excess profits are never in the gold-swallowing beasts that are hyped.

Now?People's fears of a peak in the cycle are coming.Stock market hits new highs and interest ratesIt rose and increased sharply.As the United States is forced to raise interest rates to combat inflationAI stocks, which are extremely sensitive to capital costs, have once again suffered significant declines globally.

The AI giant AnthropicIn mid-October, a $60 billion chip financing debt codenamed "Project North Star" broke out, with $42 billion of the priority debt having to be guaranteed by chip partner Broadcom, while $18 billion of the subprime debt was guaranteed.Blackstone's $9 billion shareThey were asked to offer a yield of more than 10%. It should be known that the borrowing rate of companies with the same rating (BB +) in the open bond market is only about 7%, and more than 10% is basically the level of high-risk junk bonds.thisThis means that Wall Street is asking for a high premium for the rapid devaluation of computing chips and the risk of default.

The first team in the world,One quartersalesonUp to $16.8 billionofAnthropic, in order to buy a major shareholder of Google's TPU chip, not only can not get a discount rate, but to take the next five years of chip lease as collateral to pay more than 10% of the junk debt interestOh, what a irony this is.The release of this news nearly sent those already walking the tightrope of AI into a state of heightened anxiety.GlobalThe stock market was sent away on the spot.

This is essentially the foundation of AI.facilitiesConstruction is sufferingproblemA clear sign: the market has been awash with cheapness over the past two yearsofMoney, Amazon, Google, Meta and other giants saved more than 20 years of huge cash is not afraid to burn, so the major model companies can almost unrestricted financing, buy cards, refinancing.

But now it's all over.There are signs of nodding against the southern wall: First of allContinued improvements in model capabilities require a multiplying cost of computing power;In additionThe family fortunes of the major corporations have burned to the ground,GoogleSince going public 22 years ago in 2004, even after the 2008 subprime crisis and the 2020 U.S. stock meltdown, there has been no negative free cash flow, but for the first time in the second quarter of this year - $58.55 million in negative freecash flow.。

Without money, they have to go to the market to raise money themselves, and now that the Federal Reserve has resumed interest rate hikes, U.S. bond yields are rising, and Anthropic this year plus the $35 billion it borrowed from Apollo in June, has already taken on $95 billion in chip bonds and $518 billion in long-term computing power procurement commitments in a year.

So now the big model company is stuck in a rut,science and technologyThe giants want to give but don't have the money, the market is rich but expensive. That's it.The world at the momentThe core logic of the technology threadAnd the biggest fundamentals。

I'm by no means a bearThe artificial intelligence industry has only just completed its initial infrastructure phase; truly groundbreaking AI applications have yet to emerge.，It is even hard to imagine now that the value and market trends created by AI in the capital markets are far from over in the long run. But the future is doomed.I'll go through it.StagesdepressionEven a crash.The ultimate success.absoluteThat doesn't mean the road is smooth.

The railway asset binge lasted for four years before the coking iron crisis, and then the turn-iron steelmaking technology crushed the railway demand myth. Before Tesla's alternating current and synthetic plastics were used on a large scale, the early boom in power stocks lasted six years. Before the Internet crisis, the Internet and optical fiber binge lasted for five years.

So this time, the AI infrastructure propped up by "hype around bottlenecks"QuotationHow long will it last?CertainAnd neither will I.Too long.。Where did new technologies break down computing bottlenecks?Now?can't see，butIt will be very soon, and once.Here we are.，NamelyAll-powerfullikeof“creativitydamage”。And when?AIInfrastructure frenzyAfter the crash，futureThose are going to berealIt shines brightly.AIBig MacapplicationNowadays.maybeWhat other small warehouse does it take to start a business?。

We must.rememberIt has been repeatedly verified over the centuries.Iron Law: When a technology is so expensive that only the giants can afford it, itActuallyjustCapital's casino; It was only when it was so cheap that even the street vendors thought it was worthlesscanrealIt's calledHuman beingsnewThe era.

Those people who bet the Internet would change the worldWhat's in my hand?stockfallgo90%，buttheyThe judgment on the industry's prospects is not wrong at all. It's just that the guy who builds the road is broke and the guy who sells the car is wealthy. It's two different things.

The fact that the market proves you are right in the end is not the same thing as whether the market kills you in the middle.

The technological revolution never fails humanity, but it always requires a group of the most ardent gamblers to buy it first.