A large portion (if not the majority at times) has spent some part of if not the entire last 3 years screaming bubble. They point to the charts. They clutch their pearls at valuations. They lay a Nvidia price chart over a Cisco chart from the 90’s and scream “See?! They’re the same!” Countless conversations have asked the question “Is this 1994? 96? Or 99?”
But bubbles are defined by expansion. They are fragile, thin-skinned things that inflate until the internal pressure exceeds the structural integrity of the container. Pop. It’s messy, sure. But it’s just air at the end of the day.
What I’ve been seeing lately is not necessarily the characteristics of a bubble. I’ve been asking myself this question: What if we have the physics entirely wrong?
Look at the capital flows. Look at the talent migration. Look at the energy consumption data. The demand for water. This isn’t expansion. It’s accretion. We aren’t in a bubble. We are starting to see a market that’s acting a lot like it’s approaching a black hole.
A bubble pushes things out. A black hole pulls everything in.
The distinction matters because the ending is different. Bubbles burst and reset. Black holes just get heavier. They distort the space-time of the economy around them until the “normal” laws of valuation and business strategy cease to function.
Think about the actual mechanics of a black hole (if you can recall Interstellar). It’s not just a hole. It is a concentration of mass so dense that its gravity becomes inescapable. For a long time, AI was just a heavy object in the room. A curiosity. A non-disclosed ‘Other Bet’ in Google’s 10-k. But as the use case compounded, the mass increased. And now? We are seeing the tidal forced kick in.
In astrophysics, there is a concept called spaghettification. It’s a terrifying thing where the gravity at your feet is so much stronger than the gravity at your head that you are vertically stretched and horizontally compressed into a long, thin strand of matter before being consumed.[1]
We are watching the market do this to entire industries in real time.
First it was the low-hanging fruit. Data entry. Basic coding. The gravity caught them first because they were closest to the singularity. Stretched. Broken down. Absorbed into the vibe coded base.
Then it moved up the stack. Entire software platforms. Why buy then SaaS subscriptions when the core intelligence can generate the utility of all ten for a fraction of the cost? The horizontal compression of the software market is violent.
Now look at the “safe” zones. Legal compliance. Insurance brokerage. Brokerage platforms. These were supposed to be the high-friction industries protected by regulatory moats. But the gravity of this trade is stronger than the moat. Or so at least investors perceive it to be.
Take a look at the operating leverage of a tech-enabled insurance broker. It’s not that the need for insurance is going away. It’s that the human layer – the brokers, the underwriters, the endless email chains- is being spaghettified. The value is being stripped from the labor and accreted to the algorithm.
The capital that used to pay the broker now pays the compute provider.
But maybe this sounds like bad science fiction to you. Maybe you think the event horizon Is just a story we tell ourselves to justify the multiple on chip stocks and Anthropic or OpenAI.
Good.
Because if you don’t buy the physics then you have to buy the wreckage.
The market is currently pricing these industries (and I can almost promise the list will grow) for total spaghettification. It is pricing them for oblivion. If you think the insurance broker and the compliance officer withstand the gravity…then the re-rating we are seeing is a massive overreaction.
If they don’t get consumed, then the opportunity set in front of you is massive. You are looking at viable businesses being priced like they are already inside the singularity. If the black hole is a myth… then everything else is a steal.
[1] Maybe even more terrifying than learnings that a giant squid doesn’t just squish you to death. It liquifies you and drinks you.
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