by is_smart_money | 2026-02-06 07:26:46+00:00
If AGI arrives in 1-3 years, what happens to the value of human-led engineering teams?

An AGI can design rockets, cars, and robots faster and better than any human team.

If Musk is right about AGI, why are his hardware companies worth $3 trillion?

SpaceX is valued at $1.5 trillion based on Mars colonization.

Facts:

Every timeline missed (2018, 2022, 2024, 2026 — all missed)
Actual revenue: Starlink (satellite internet) and government contracts, or was from the beginning just the satellites the only spacex doable mission cause everything else would be too late.
If AGI arrives before Mars colonization — as Musk's own timeline suggests — won't AGI design the Mars rockets instead of SpaceX's engineers?
The current question is different: can he build rockets better than an AGI? Past success against human competitors doesn't answer this.

"AGI might be 10-20 years away."

Then Musk's own "AI company" narrative collapses. He has pivoted Tesla's story to AI and robotics. If AGI is far away, that doesn't justify 145x P/E.

Which Musk should I believe — the one predicting imminent AGI, or the one whose valuations require AGI to be far away?

On the Nature of the Money
The standard defense: "Smart money wouldn't pay this price if it didn't make sense."

But who is actually buying?

Passive funds (17%): Must buy because Tesla is in the S&P 500. No analysis by design.
Retail (33%): Buying because "Musk is a genius." Narrative, not analysis.
VCs: Buying access to deals, not just returns. Relational, not analytical.
Sovereign wealth: Buying geopolitical positioning. Different objective.
Pension managers: Career risk — can't be fired for owning what everyone owns.
How much of that $3 trillion actually performed independent analysis?

I suspect: very little.

The "I Don't Know What Else to Buy" Problem
Many investors allocate to Musk not from analysis, but from capitulation:

"I have money to invest"
"I don't have a better idea"
"Musk is doing interesting things"
"Other people are buying"
"Therefore I'll buy"

If investors are giving money to Musk because they can't think of anything better — how did they get the money in the first place?

Possibilities:

Skill that doesn't scale — Made money through insight, but capital grew beyond their circle of competence
Luck or inheritance — Never developed investment skill
Systematic wealth — Got rich through index funds and 401(k)s without learning to analyze
Career incentives — Managers judged on relative performance buy what everyone else buys
If this is true, the $3 trillion isn't "smart money validating Musk." It's capital with nowhere else to go.

There is no smart money. There's just money.

If the valuation is based on:

Forced buying (index funds)
Outsourced thinking ("Musk is smart, I'll follow")
Career protection ("everyone owns it")
Lack of alternatives ("what else would I buy?")

The price doesn't reflect informed views — it reflects flows
The "validation" is an illusion
The valuation is fragile — when an alternative emerges (OpenAI IPO?), money could leave quickly

Scenario A: Musk is right about AGI

AGI arrives in 1-3 years
Valuations make no sense

Scenario B: Musk is wrong about AGI

AGI is far away
Tesla's "AI company" narrative collapses
Valuations still make no sense

Scenario C: xAI wins the AGI race

Valuations are justified
Requires xAI to overcome late start, lower benchmarks, and Musk's split attention across seven companies
What probability do you assign to Scenario C?

The argument:

Musk predicts AGI in 1-3 years
AGI can design rockets, cars, and robots better than humans
First to AGI captures the value
xAI is not leading
Therefore Musk's companies are overvalued
The capital "validating" these prices isn't actually analyzing anything
Therefore the market is mispriced
Which step is wrong?

I cannot find the error. Maybe you can.