{"id":253419,"date":"2025-10-31T15:00:09","date_gmt":"2025-10-31T15:00:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/253419\/"},"modified":"2025-10-31T15:00:09","modified_gmt":"2025-10-31T15:00:09","slug":"the-ai-bubble-has-reached-its-fried-chicken-phase","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/253419\/","title":{"rendered":"The AI bubble has reached its \u2018fried chicken\u2019 phase"},"content":{"rendered":"

Stay informed with free updates<\/p>\n

Simply sign up to the Artificial intelligence myFT Digest — delivered directly to your inbox.<\/p>\n

Whenever a bubble bursts, there are some stories from their peaks that morph into endlessly-recounted legends that symbolise how mad people had become.<\/p>\n

The paragon example is the listing of Pets.com<\/a> in February 2000. It was far from the biggest IPO of the era, or the biggest failure. But the fact that it was able even go public so despite de minimis revenues has made it the most popular dotcom punchline. <\/p>\n

Then there are things like strippers with multiple NINJA loans<\/a> in 2007; the land under Tokyo\u2019s Imperial Palace being worth more<\/a> than all of California; a Scottish adventurer inventing an entire country <\/a>to issue bonds, the formation of a company \u201cfor carrying on an undertaking of great advantage, but nobody to know what it is<\/a>\u201d; or 100,000 guilders being paid for a single Semper Augustus tulip bulb.<\/a><\/p>\n

In time, this<\/a> might end up becoming the emblematic stupidity of the AI boom.<\/p>\n

Photos and videos of Nvidia Corp.\u2019s CEO having beers and fried chicken at a local restaurant, Kkanbu Chicken, in Seoul \u2014 with Samsung Electronics Co. Chair Jay Y Lee and Hyundai Motor Co. Executive Chair Chung Euisun \u2014 went viral, and now investors are driving up the stocks that may be a beneficiary.<\/p>\n

While Kkanbu is not publicly listed, shares of rival Kyochon F&B Co. briefly surged as much as 20% on Friday after photos and videos of the gathering circulated widely on social media. Korean poultry processor Cherrybro Co. also soared by the daily limit of 30%, with trading volume about 200 times its average. Neuromeka Co., a Kosdaq-listed company that makes chicken-frying robots, also jumped.<\/p>\n

As Bloomberg points out, this is mostly an indictment of South Korean retail traders<\/a>, who make American degens seem like spartan Swiss bankers. But the phenomenon of anything remotely AI-adjacent rallying hard is widespread \u2014 no matter how tenuous the connection. <\/p>\n

And when there are at least somewhat real links, it\u2019s like rocket fuel for a stock. Just take fuel cell manufacturer Bloom Energy.<\/a> <\/p>\n

The stock had already almost quintupled in 2025 before going on another mind-bending run this month, extending its 12-month gain to 1,166 per cent. At pixel time it is now valued at over $30bn \u2014 as much as H&M and more than United Airlines, ArcelorMittal, KraftHeinz, Vodafone or Fox \u2014 despite forecasted pre-tax profits of $83.5mn this year<\/p>\n

For more evidence that we are in the middle of the \u201cwe\u2019re going to be ruefully laughing at this in the future\u201d stage of the boom just look at the increasingly incestuous relationship between the AI companies themselves. <\/p>\n

Even Morgan Stanley\u2019s analysts have conceded that the AI industry has become \u201cincreasingly circular\u201d, with suppliers funding customers, customers investing in suppliers, and vendor-customer revenue sharing agreements. <\/p>\n

As Morgan Stanley noted, \u201cthe nature and complexity of these types of transactions make it difficult for investors to understand the true economics\u201d:<\/p>\n

\u2022 Suppliers are funding customer operations through equity investments. The supplier funding may allow other vendors that sell to the same customer to take on more debt by shoring up cash flow at their customer. The cascading effect enables further capacity build out. These financing arrangements increase customer purchasing power beyond what their own cash flow profiles may otherwise support.<\/p>\n

\u2022 Heavy customer concentration amplifies both counterparty payment risk and risk to top-line growth, which ultimately depends on the success of AI monetization efforts.<\/p>\n

\u2022 Revenue quality and overall AI demand is clouded by revenue-sharing arrangements among key players, which may allow parties to record the same revenue under US GAAP.<\/p>\n

\u2022 Repurchase agreements may inflate demand by shifting risk back to the supplier.<\/p>\n

\u2022 Investors should also monitor new and innovative funding sources and off-balance sheet transactions, which may further the opacity of risks and rewards.<\/p>\n

Morgan Stanley even produced an Open-AI-focused chart a few weeks ago to illustrate the phenomenon. <\/p>\n

\"\"\"\"\"\"<\/p>\n

Further reading:<\/p>\n

\u2014 How OpenAI put itself at the centre of a $1tn network of deals<\/a> (FT)<\/p>\n","protected":false},"excerpt":{"rendered":"Stay informed with free updates Simply sign up to the Artificial intelligence myFT Digest — delivered directly to…\n","protected":false},"author":2,"featured_media":253420,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[256,254,255,64,63,105],"class_list":{"0":"post-253419","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-artificial-intelligence","10":"tag-artificialintelligence","11":"tag-au","12":"tag-australia","13":"tag-technology"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/253419","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=253419"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/253419\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/253420"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=253419"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=253419"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=253419"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}