Chanos: The bulls are willing to pay a premium for their promises, and bears are going to do it. A discount

On 20 July, Jim Chanos, the founder of the Legendary Wall Street, Chanos & Co., stated that the current round of capital investment in infrastructure (AI) had reached an all-time high and that the speed and scale of capital inflows had been recorded, but the economic logic that underpinned it had still not been tested and was worrying. The market is now playing a typical "this dream game" in which investors are willing to pay a premium on the commitments that business depicts, but are less concerned about whether real figures will be met. He warned that hundreds of billions of dollars of capital expenditure, based on short-term spot prices, had been used to underpin 20 years of asset investment decisions, with fundamental time mismatches. The central argument of Chanos is that capital efficiency of super-massive cloud-enders is systematically declining, and this will force operators to make a real strategic shift over the next 12 to 18 months. According to his estimates, in the case of Google, Meta, Amazon, Microsoft and Oracle, the return on incremental investment capital has dropped from 40 per cent about a year and a half ago to about 20 per cent at present; this number is likely to fall further to 10 per cent if capital expenditure continues to increase. Chanos says, “At that point, the business teams of these companies will face the real question of whether we should continue to burn the money or simply buy the national debt?” He expects that this showdown will appear as soon as possible between the end of 2026 and 2027, when it will not be avoided. He summed up his observation of current market pricing logic: in cattle, people were willing to pay a premium for their commitments; in bear, people were willing to make only a realistic discount. We are clearly in the former. Will you go to the latter? I don't know。