No qualifying author-owned investment thesis was confirmed in this post.
The author expresses a preference for CoreWeave as an options play based on the thesis of an AI bubble, but CoreWeave is a private company and not a publicly traded asset.
Comments22
▶ Full Post Text
There has been a lot of news and talks about an AI bubble, and whether or not it is real, the market has priced in the fear and doubts of many. I am wondering how others are making trades, specifically in options.
My main portfolio is in theta decay, but I do dabble in event driven trading, hence why I am interested in this particular topic.
At the same time I do think there is an AI bubble, and it will reach a point where:
\- More money and more data centres don't equate into increase in revenue because models stop getting better. This is linked to the prevailing understanding that there is an upper ceiling to LLMs
\- The crash will start from pure play AI startup who are living in debt and unable to fulfil loan repayments/meet investment demands which will likely cause a shift in where investors want to place their money.
\- The crash is likely to expand to consumer AI platforms, and then to chipmakers and data centres in which case a bailout from the government would be necessary in order to mitigate the full effects of the crash.
As such, I don't think hyperscalers like Google or Amazon will crazily affected, there will be dents but they will recover. I believe the same for NVDA, that the crash will act like some form of market correction, but it will survive, and continue on. I think some of the best options play would therefore be in companies that are playing the middleman like coreweave.
I welcome discourse. Feel free to disagree, but share and justify why you disagree.