# Howard Marks - Is It A Bubble (Highlights)  ## Metadata **Review**:: [readwise.io](https://readwise.io/bookreview/56868324) **Source**:: #from/readwise #from/reader **Zettel**:: #zettel/fleeting **Status**:: #x **Authors**:: [[Howard Marks]] **Full Title**:: Is It A Bubble **Category**:: #articles #readwise/articles **Category Icon**:: 📰 **URL**:: [readwise-assets.s3.amazonaws.com](https://readwise-assets.s3.amazonaws.com/media/wisereads/articles/is-it-a-bubble/1056.pdf) **Host**:: [[readwise-assets.s3.amazonaws.com]] **Highlighted**:: [[2025-12-15]] **Created**:: [[2025-12-20]] ## Note Howard Marks argues that AI has generated excessive investor enthusiasm that may form a financial bubble driven by optimism and leverage. He warns that heavy capital spending and debt in AI infrastructure could cause overcapacity, depressed returns, and painful corrections. He emphasizes uncertainty about who will profit from AI and whether competition or winner-take-all dynamics will determine long-term winners. 1. How does Marks differentiate between technological hype and a financial bubble in the context of AI? 2. What risks does he identify from using debt to finance AI infrastructure buildout? 3. Based on the memo, how might AI’s impact on productivity and jobs complicate long-term demand for AI-generated goods and services? ## Highlights - Market bubbles aren't caused directly by technological or financial developments. Rather, they result from the application of excessive optimism to those developments. ([View Highlight](https://read.readwise.io/read/01kcgqtc4x6s34qj6495ybtjd8)) ^966845524 - Newness plays a huge part in this. Because there's no history to restrain the imagination, the future can appear limitless for the new thing. And futures that are perceived to be limitless can justify valuations that go well beyond past norms – leading to asset prices that aren't justified on the basis of predictable earning power. ([View Highlight](https://read.readwise.io/read/01kcgqvsej6vn0gbyvrvpn3vw5)) ^966845588 - In the absence of history, on the other hand, all things seem possible. ([View Highlight](https://read.readwise.io/read/01kcgygky23vn6dpqmhsmf48wc)) ^966863040 - This distinction is very meaningful for Hobart and Huber, and I agree. They say, "not all bubbles destroy wealth and value. Some can be understood as important catalysts for techno-scientific progress." ([View Highlight](https://read.readwise.io/read/01kcgyv69zqsf555zmzkx24nwr)) ^966863677 - On the other hand, "inflection bubbles" based on revolutionary developments accelerate technological progress and create the foundation for a more prosperous future, **and they destroy wealth** . ([View Highlight](https://read.readwise.io/read/01kcgywjzay7pqc6z9de0w0spz)) ^966863713 - A bubble can be a collective delusion, but it can also be an expression of collective vision. That vision becomes a site of coordination for people and capital and for the parallelization of innovation. ([View Highlight](https://read.readwise.io/read/01kcgyz5vqgpmfefrv8m679199)) ^966863813 - The key realization seems to be that if people remained patient, prudent, analytical, and valueinsistent, novel technologies would take many years and perhaps decades to be built out. Instead, the hysteria of the bubble causes the process to be compressed into a very short period – with some of the money going into life-changing investment in the winners but a lot of it being incinerated. ([View Highlight](https://read.readwise.io/read/01kcgz0qf7kb5601gyymxrrgbd)) ^966863864 - A bubble has aspects that are both technological and financial, but the above citations are from the standpoint of people who crave technological progress and are perfectly happy to see investors lose money in its interest. ([View Highlight](https://read.readwise.io/read/01kcgz1jk3f6q6961q7qbfhe97)) ^966863880 #caveat - OpenAI is set to receive billions from tech companies but also sends billions back to the same companies to pay for computing power and other services. ([View Highlight](https://read.readwise.io/read/01kcgzfn7m0tth8f1zqxqr9vsh)) ^966864906 - Nvidia has also made some deals that have raised questions about whether the company is paying itself. It announced that it would invest $100 billion in OpenAI. The start-up receives that money as it buys or leases Nvidia's chips. ([View Highlight](https://read.readwise.io/read/01kcgzg9bwkttbhtqqtb0d0v54)) ^966864936 - A million dollars is a dollar a second for 11.6 days. A billion dollars is a dollar a second for 31.7 years. We get that. But a trillion dollars is a dollar a second for 31,700 years. ([View Highlight](https://read.readwise.io/read/01kcgzjph84vdfamzdaqd3xewb)) ^966865104 - A study by the Massachusetts Institute of Technology and open-source AI start-up Hugging Face found that the total share of downloads of new Chinese-made open models rose to 17 per cent in the past year. The figure surpasses the 15.8 per cent share of downloads from American developers such as Google, Meta and OpenAI – the first time Chinese groups have beaten their American counterparts. ([View Highlight](https://read.readwise.io/read/01kcgzqqbtagtrp4tc7hqsqzzq)) ^966865538 - Who knows if that's right, but we have good reason to expect close to half a trillion in spending next year. Meanwhile, the biggest spenders (Microsoft, Alphabet, Amazon, Meta and Oracle) had only about $350bn in the bank, collectively, as of the end of the third quarter. ([View Highlight](https://read.readwise.io/read/01kch07s0hnhn23e9eqe5vr886)) ^966866611 - Oracle, Meta, and Alphabet have issued 30-year bonds to finance AI investments. ([View Highlight](https://read.readwise.io/read/01kch08sbs8nxzjxf75pnbzdk0)) ^966866666 - Essentially, an SPV is a way to make it look like a company isn't doing the things the SPV is doing and doesn't have the debt the SPV does. ([View Highlight](https://read.readwise.io/read/01kch23dc1m8hnxkhskw6v0w5y)) ^966871842 - But given the amount of debt now flowing into AI data center construction, I think it's unlikely that AI will be the first transformative technology that isn't overbuilt and doesn't incur a brief painful correction. ([View Highlight](https://read.readwise.io/read/01kch2mdt3hjqarwqbbgfea8d6)) ^966873067