this post was submitted on 30 Oct 2025
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So I wondered a bit how much it actually affects the economy.
"S&P 500" companies' market cap is about 57 trillion dollars with a P/E ratio of about 30. So openai by itself is dragging down the total s&p 500 earnings by only about 0.5%. The bigger problem is that there are multiple companies like openAI, and a large chunk of the entire economy's valuation is tied to the promise that all the AI companies will somehow become profitable sometime soon.
According to this article written in July, it's a bit more dire than that if you take a step or two back. Basically, openai and their copycats/derivatives are being held up by investments from Microsoft, Google, Amazon, and Meta, who in turn are being held up by investments from Nvidia. If/when the whole chain collapses it'll be more than 0.5% of earnings that disappear.
When you put it that way, I'm actually kind of mad. Most of my retirement is in index funds, so essentially OpenAI just pissed away half a percent of my life savings in the last quarter!
If OpenAI goes down then it will start a domino effect as people lose confidence in AI and AI companies. That's how the bubble pops.
So it ALL depends on the definition of "soon"?
Probably