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Over the past few months, I’ve been getting more interested in both AI and the stock market. Naturally, I started thinking about how to benefit from that financially. But the more I think it through, the less convinced I am that it actually makes sense.
I keep coming back to a few different scenarios, and strangely they all seem to point to the same outcome: disappointing stock performance for LLM companies like OpenAI, Anthropic, and similar players.
**Scenario 0: The pessimistic view**
Maybe the skeptics are right, and intelligence doesn’t scale the way people expect. We run into hard limits, progress slows down, and the whole space cools off.
Result: the hype fades, IPOs underperform, and valuations slowly decline.
**Scenario 1: Everything works, maybe too well**
Let’s say the opposite happens. Companies like Anthropic or OpenAI make major breakthroughs and get close to something like superintelligence. Productivity increases massively across industries.
Result: goods and services become much cheaper as intelligence gets widely accessible.
The problem is that if everything becomes cheap, margins shrink. In an extreme version, even the way we think about pricing and value could change. So despite huge success, stock returns might still be underwhelming.
**Scenario 2: Strong progress, but competition eats the upside**
AI improves a lot, but in a more gradual way. Companies still compete, protect pricing, and try to behave like normal businesses.
Result: competitors, especially open source and lower cost players, keep catching up and undercutting prices. This is already starting to happen coming from mainly China but it could be anyone geoplitically wise or domestic. Margins get compressed, and strong tech doesn’t translate into strong profits.
No matter how I look at it, I end up in a similar place. Either the tech disappoints, succeeds too much, or succeeds in a way that still doesn’t generate great returns for investors.
I’ve tried to challenge this thinking, including asking LLMs, but most answers felt overly optimistic or didn’t really address the core issue.
So I’m assuming I’m missing something obvious.
What’s the real bull case here? Why would someone still invest in upcoming LLM IPOs given all this?