The AI trade is getting very weird. Investors are now buying record amounts of downside protection on CoreWeave, while the cost of insuring the debt of $AMZN, $GOOGL, $MSFT, $META and $ORCL has risen to the highest level since 2021. But this is the part that really caught my attention: Wall Street is now creating derivatives on COMPUTE. A data-center operator can hedge against the future rental price of Nvidia GPUs falling. Nvidia B300 compute currently rents for about $7.56/hour. A neocloud could buy protection that pays out if that rate drops to $4. Think about how far this has gone. ➡️We started with AI stocks. ➡️Then came massive data-center debt. ➡️Then GPU-backed financing. Now people are literally hedging the future price of compute. I’m still very bullish on AI long term, but this is exactly the sort of thing I watch closely. When an investment boom gets big enough that Wall Street starts building insurance products around the underlying infrastructure itself, you know the amounts of money involved have become enormous. AI isn’t just a stock-market theme anymore. It’s becoming its own financial market.
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