Hyperscaler Bankruptcies Coming - Denninger

 Read the title.

Then read it again.

Then find everything in your portfolio connected to those firms and contemplate protecting against a wipe-out in all of them.

Here's why: China's DeepSeek has popped out with its latest model at 1% of the price of competing models.....

https://market-ticker.org/akcs-www?post=255785 

....Incidentally not even an embargo against Chinese AIs will do anything about this as open models are engaged in the same sort of pricing-level attack so even an attempt at raw protectionism will do exactly nothing.

Anyone who has committed to said CapEx on the premise of a future ROI at even 10% of their original pricing is, in my opinion, absolutely screwed.  I can assure you nobody modeled a 90% crash in pricing say much less a 99% one.

There is no possible way out of the box for these firms; you cannot, no matter what you do, survive a 90% or 99% price whack imposed on you by competitors and survive.  No chance.  Nobody is going to pay ten to one hundred times more for the same thing.

Ever.

The scope of the economic impact headed our way that cannot be evaded has never occurred before and given a roughly 20% increase in margin debt just in the last few months the market impact when this blows has never occurred before either -- except perhaps in 1929 when brokerages allowed 100x leverage.