In the recent midterms, several ballot measures tied AI Data Centers to their expected impact on communities. The results now provide a much more durable metric about AI sentiment than your average poll. Many are concerned about the long-term effects of the rapid expansion by AI hyperscalers.

Nasdaq's NQINTEL index is starting to show the beginnings of a massive correction. We've seen this over the past few months in China's STAR50, Korea's KOSPI, and Japan's Nikkei 225 indexes. And, now it has finally arrived here in the US. Investors are starting to come to grips with the realities of the proposed timelines, and the supply chain complications that make them untenable. Add to that, overwhelming negative public sentiment, which will only further slow down any necessary approvals. And, perhaps we are starting to see the AI Bubble about to pop.

IPO Madness

Anthropic's recent IPO prospectus shows that while they are still showing a net operating loss, they expect Enterprise subscriptions to dig them out of the hole… eventually. However, because of their massive budget and timelines for building new data centers, they won't even attempt to predict when that might be.

Companies like Apple, Meta, Microsoft, Uber, and Walmart have recently made headlines with stories about slashing their budgets for AI Tokens. Smaller companies are also doing the same. Articles have been shared by some of these companies about how to use smaller/cheaper models to parse prompts and extract the core supporting data before handing them off to the much more expensive frontier models for the final pass. This has helped drive massive savings, and will further shrink profits from the Enterprise subscriptions that are core to Anthropic's value proposition.

All of this seems to indicate that their IPO will go off much like SpaceX's before them. An initial rush due to FOMO (Fear Of Missing Out), followed by a sharp correction. And, it's likely something similar will happen if/when OpenAI joins the IPO party.

Should I be worried?

SpaceX used tricks and inside influence to get itself quickly added to the major indexes. This forced many widely used retirement planning ETFs to quickly buy shares. Anthropic will likely have a larger float, as SpaceX only offered up approximately 4% of the company in their IPO which granted them special treatment. However, Anthropic will also have a unique structure. In addition to traditional voting shares, it includes a special class with a single "God Share" that will own 50.1% of the company. This helps limit major decisions about company's direction to the seven original co-founders who will own this share via a separate LLC. So, while Anthropic's IPO shouldn't impact your personal portfolio much (unless you decide to invest), the rest of the industry still matters.

First, I am not a financial planner, and I don't claim to have any grand insight into the market or how to handle your personal finances. However, I have been looking into potentially moving some of my investments from traditional index funds to equal-weight index funds. These indexes weigh each company equally (for example, 0.2% of each) instead of weighing them by market capitalization. This would help to prevent the MANGOS from dragging down my portfolio if (and when) the AI bubble pops.