Dot Com was fueled by falling rate from Jan 1995 to Dec 1998. Credit was essentially free as people expected the rate to continue downwards. Demand for internet infrastructure was infinite as companies build internet for the sake of building internet.

Things changed in 1999 as the 10y yield roared from 4.6% to 6.7% in one year. Internet firms that were losing money suddenly could not sell their shares or issue bonds under 10%. Suddenly building internet only made sense when real consumers would use it. Mass bankruptcy occured about 1 year later.

The same thing is happening to AI right now. META had to sell their shares for $625 when the market price was $700 to investers. ORCL had to offer $116 when the stock was $130 from public market. PC investors demand >10% yield on their bonds. CRWV in particular cannot get any new loan under 15%.

The money that fueled money losing AI is drying up. What will follow is a massive wave of bankruptcy (Character.AI is already bankrupt).…