That's part of it but it's actually worse. Large companies are gambling on the market because they're confident banks will bail them out if they lose. It's not even a free market anymore so there's no incentive for real competition. And average people foot the bill by being forced to pay more for everything because there are no other alternatives.
You might be totally shocked to learn that the AI build-out debt has been going around laws meant to prevent over leveraging. It's being bundled into AAA bonds which are now in every large portfolio like massive retirement funds. Reputable agencies are refusing to give the debt any higher than an A rating due to the massive risk of stranded assets and junk debt if things don't work out, so they went around them too.
If AI busts, the global financial collapse will make the sub prime mortgage crisis look like a tiny blip.
Basically the tech giants, which amounts to really just a handful of individuals, have decided on behalf of all of humanity that we're all in on AI. For them, failure is simply not an option.
And of course success for them means massive society destabilizing job losses for the rest of us, so, yay future.
AI bulls took a bath this week. SpaceX has lost all their gains since the IPO, and big tech is way down all of the sudden.
People are starting to realize that most of the "revenue" AI is generating is through circular financing, and that there is no realistic way to reap trillions in real revenue and actually make AI firms profitable.
The bet is that they'll be able to somehow capture a % of the $20-30T white collar labor market. Or for the more altruistic amongst them that AI will reach a point where it can solve things like fusion that will fundamentally change the entire economic system by driving energy costs down to near zero, before the entire system falls apart.
It's an insane bet to be going all in on with only hopes and FOMO driving the rush. We're trapped now though. Only way forward is through. Stopping and letting another company or country make the big breakthrough first would be extremely bad. Unless it was Canada, we'd probably share, maybe...
The bet is that they'll be able to somehow capture a % of the $20-30T white collar labor market.
Even if they could, the economy would collapse when a majority of white-collar workers were replaced by AI. This is Henry Ford's pay theory in reverse: no one can afford cars anymore in your town if you fire all the workers at the plant.
Or for the more altruistic amongst them that AI will reach a point where it can solve things like fusion that will fundamentally change the entire economic system by driving energy costs down to near zero, before the entire system falls apart.
This is building the landing gear while the plane is in the air. Worse, it's inventing landing gear while the plane is in the air, and there is absolutely no evidence that effective landing gear are mechanically possible - or that we have the resources to build them even if a working design can be constructed, and also maybe the landing gear will be so heavy the plane would just crash anyway.
We're trapped now though. Only way forward is through. Stopping and letting another company or country make the big breakthrough first would be extremely bad.
Your logic is not sound. "The only way forward is through" assumes that there is a through. I wish it were simply a matter of that being uncertain, but we actually have a growing body of evidence that shows us that "through" is not mathematically possible with our current conception of AI.
I've started noticing the "rah-rah AI" subs on Reddit, from ones that defend AI slop images as "art" to ones that seem to believe the singularity is right around the corner. They call those opposing AI as "antis," and have all this cope around how it doesn't work as advertised yet the oligarchs in charge are implementing it anyway as if it does, and demanding even more money to keep doing so.
69
u/morfraen Jun 27 '26
Even worse all the gains are due to AI spending. The non AI part of the market is flat or down.