Our bet on whether the AI market will crash

post by Remmelt (remmelt-ellen), mabramov · 2025-05-08T09:56:15.703Z · LW · GW · 2 comments

Contents

  Why are we doing this bet?
None
2 comments

We made a bet on the AI market crashing by the end of 2026. 

The odds are $5k:$25k with an implied probability of 16.67%. If there is no crash, Remmelt pays Marcus $5,000. If there is a crash, Marcus pays Remmelt $25,000.

An AI market crash will be defined, for the purposes of this bet, as at least 2 out of 3 of the following criteria being met.

Here are our criteria:

1. OpenAI's 2025 or 2026 annual revenue is below $1.6 billion.
2. Anthropic's 2025 or 2026 annual revenue is below $400 million.
3. Nvidia’s data center revenue in any quarter from now to Q4 2026 is below $8.5 billion.^[1]

It’s hard to come up with criteria for what constitutes an AI market crash, as many operationalizations face confounding factors that don’t constitute a crash. These criteria were chosen since these are three of the most prominent AI-related companies and have public and verifiable revenue reporting. 

Remmelt thinks that there is roughly a quarter chance of winning the bet.
Marcus thinks there is a ~4% chance of Remmelt winning the bet, mostly losing due to idiosyncrasies like one of these companies collapsing due to fraud or internal turmoil.
 

Why are we doing this bet?

We both think that AI developments will be more gradual than “AGI 2027” purports.

So what’s the difference in our views?  

Marcus thinks there won’t be a large crash because AI products have found product market fit, will continue to improve gradually over the next couple of years, and users will continue to pay for AI products. He holds a wide probability space for how the next couple of years will play out, with a small possibility of large changes or a winter, but the bulk of the probability mass is on “staying the course” with gradual improvements and new releases over the next 1.5 years. 

Remmelt thinks there will likely be a crash by 2029 [LW(p) · GW(p)], since AI companies are burning too much cash on data centers to run products undergoing commodification. He thinks it’s most plausible though that the crash happens on the investment side, and that model subscription revenues could end up being mostly maintained.

Remmelt is treating this bet as a hedge – if the market crashes, he intends to give winnings to an exceptional movement builder to organise communities to resist weakened AI companies.

Marcus is approaching this bet as an experienced market trader and forecaster, looking to profit and likely donate winnings.

1. ^{^}

   This covers Nvidia revenue items currently under the ‘Data Center’ category, even if renamed or moved to another category.

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