27 Nov 2025

Interesting view by Shay Boloor @StockSavvyShay about why the AI cycle is nothing like the dot-com era.

"Early-2000s fiber ran at roughly 7% utilization because the industry built far ahead of demand that never showed up. The physical layer scaled faster than the software. Today is the inverse. $NVDA clusters inside $MSFT, $AMZN, $GOOGL and $META are running ~80% utilization because every model lab is capacity-constrained. The software layer is scaling far faster than the physical. One cycle had excess supply and no demand. This one has excess demand and not nearly enough supply. That’s the entire difference". ➡️ True. At least for now. But are we sure that capacity utilization will remain as high when hyperscalers would have spent trillions of dollars in additional capacity? What if demand does not pick up as much as supply??? The 7% utilization rate of fiber optics is the one which applied to the end of the cycle, once all fiber optics got built. When the telecom companies started to over-invest, they never assumed that capu would be that low at the end...

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