Fragile

Market concentration in many levels has been a hot topic: (1) concentration is USD investments, (2) concentartion in US stocks, (3) concentartion in Growth stocks, (4) concentartion in Tech stocks, (5) concentration in Mag7 and AI. The last one, on top of concentration, suffers from inter dependence among the hyper scalers. The chart below quantifies it, and it’s becoming scary: open AI and Anthropic, perhaps the most popular AI agents builders, have combined investment commitments that represent almost half of the revenues of the biggest tech whales in the world. Furthermore, both Open AI and Anthropic have massive annual losses. The money comes from new capital that, so far, has been drinking the kool aid. If you follow the money, it ends up in NVDA, which ends up paying TSMC. The whole system is concentrated and fragile (and leveraged).

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