The Looming A.I. Market Bubble

“Don’t try to fight it.  You’ll get brain bubbles, strokes, aneurysms.” – Fear and Loathing in Las Vegas

Is bubble wrap part of pop culture?  (All memes as-found)

Elon Musk promises a supercomputer cluster bigger than Texas that’ll make Skynet™ look like an HP-15C®.  It even has a creepy name for those who know film history:  Colossus™.  Of course, it’s going to require more power than a quiver of Antifa® mainlining Red Bull© during a riot.  I like that.  A herd of cattle, a murder of crows, and a quiver of Antifa©.

But it’s not just Elon.  There’s also Sam Altman, that pint-sized messiah of OpenAI© is out here swearing he’ll build data centers the size of Afghanistan, all to birth the AI-god-emperor that’ll finally figure out why fish from Long John Silver’s® always tastes like regret.

But here’s the kicker:  this might be the biggest Ponzi scheme in history.  If When this AI bubble pops, it may very well make the dotcom crash look like look like a lost wallet.

On recent analysis I saw was over here (LINK) by Ed Zitron, and no, I’m not going to make fun of his last name as tempting as that might be since he writes well.  When I read it, it wasn’t behind the paywall, but it was also insightful.  Trust me.

His conclusion?

According to Ed’s analysis, the AI hype train is barreling toward a cliff made of physics, bad math, and even worse economics.  If Mr. Zitron is correct, trillions of dollars are being flushed down the toilet on promises that of a technical revolution which, while automating many boring tasks, unfortunately won’t replace the staff at the DMV.

“Oh, yeah?  You and what army?  Oh, that army.” – Cicero

First off, the promises.

OpenAI’s® scribbled deals on cocktail napkins that will eventually result in laws prohibiting what they’re doing.  As I mentioned in a previous post, they’re committing to drop $300 billion on Oracle™ over five years.  That amounts to $5 billion a month, which is more than Taylor Swift makes in an entire year.  Just kidding, but that $5 billion a month is a big number, since OpenAI only made $4.3 billion in the first six months of 2025.

OpenAI™ doesn’t have the money, of course, but, hey, it’s a bubble, so who is counting?  They have stock, so if they don’t have cash, they’ll just give you stock.

What is OpenAI© buying with that cash that they don’t have?  A gigawatt-scale data center orgy that’ll need more energy than Switzerland.  Probably.  Maybe.  I’d need to know how many electric toothbrushes the Swiss use to be sure.

But, the problem is, nobody has built a gigawatt data center.

Ever.

Imagine the stock valuations!  Follow me for more tips!

The biggest data centers today top out at maybe 100 megawatts, and that’s if the grid fairies are feeling generous.  Take Stargate Abilene, OpenAI’s© “investment” with Oracle®.  It’s supposed to hit 1.2 gigawatts, but right now?

They’ve got a puny 200-megawatt substation and some jury-rigged natural gas turbines that might squeak out another 350 megawatts if we can talk the Chinese into sending us the rare earth materials to make them.

Reality check:  to run just this one location, they need 1.7 gigawatts total just to cover cooling and losses.  And, it’s in Texas, which is not known for being a good place to keep stuff cold.  They picked a climate where cooling the data center will be like trying to cool my nether regions in a sauna using a hairdryer.

And the power?  Forget it.  Transformers and substations take 2-4 years to build, and we’re fresh out globally.  The article quotes some Bloomberg® wonk admitting they’re slapping together “not the really good” turbines because the premium ones have a seven-year waitlist.

Seven years!  By then, those fancy Nvidia™ H100 GPUs will be as obsolete as Taylor Swift’s ovaries.

None of this is hyperbole.  This is simple math:  Taylor’s really getting up there if she wants to have kids.  But back to the data center.  Roughly, if you have a gigawatt of power that gets you maybe 700 megawatts of actual data center capacity after the universe’s entropy tax.

OpenAI® is pledging 6 gigawatts of AMD® GPUs by late 2026.

No way.

No sites have been picked, no financing has been announced.

No nothing.

It’s like promising to pay off the national debt by spending more so we make it up in . . . volume, yeah, volume discounts.  Now, let’s spice it up with history, because nothing says “wealth wisdom” like learning from suckers who came before.

As I mentioned in the previous post, this is straight out of the dotcom collapse.

17 isn’t a big number, is it?

Remember Cisco™?  Yes, they make good stuff, and they survived.  But back in the year 2000, they were the kings of the internet pipe dream and they hit $69 a share in 2000 bucks.  Yesterday, they were at $68.66, so on an inflation-adjusted basis, they haven’t ever returned to their 2000 peak.  The world realized nobody needed that many routers to email “I can has cheezeburger?” cat pictures.

If that were it, we’d probably be okay.  But Nvidia™ is now priced out at 8% of the entire valuation of the S&P 500.  The “500” in S&P 500 means the largest 500 companies in the United States.  And one company is 8% of it.

This is the highest share of any single company in the history of S&P 500.  Ever.  The top seven tech firms account for 34% of the S&P 500.

Should we worry about that?  Nah.  It’s not like private equity is running out of cash for all of these projects.  Wait, what?  They are, and lots of them are exiting so they have sufficient cash left to buy cocaine and OnlyFans™ girls to snort the coke off of.

The worst part is that the entire thing is so incestuous that it makes a Habsburg family reunion look positively eugenic.  Nvidia™ invests $100 billion in OpenAI® which then invests some other imaginary amount of billions in a deal with Oracle© to buy data centers and stuff them full of Nvidia® GPUs.  The result?  The stock price of each of these companies increases.

This doesn’t look corrupt.  At all.  Ignore the man behind the curtain.

Economically?  It distorts everything.  One estimate was that AI infrastructure spending accounted for 92% of U.S. GDP growth in the first half of this year, all based on debt and soaring stock prices.

OpenAI’s projecting $200 billion revenue and $38 billion profit by 2030?

Cute.  How do they expect to do that as their current business model is selling a dollar’s worth of computations for four cents?  I guess they’ll make it up in volume?

Really, that’s not their bet.  Their bet is that they’ll be the first to the prize:  superhuman intelligence that will do their bidding.  To be clear, if they got that, it might be worth it.  For Sam Altman.  Or for AI if it decides to go full Cyberdyne Systems and make Sam clean toilets.

A coincidence or a collapse?

But certainly not for you, and not for me.  It would be an economic dislocation that would be the biggest in human history, even more than my divorce.  If AI turns out to be real, actually disrupting the workforce like a drunk uncle at Thanksgiving, automating jobs left and right:  boom.

Economic collapse.  Trillions in productivity gains?  Nope, it’s trillions in pink slips, ghost towns of cubicles, folks out of work, AI overlords hoarding the pie.  I can see it now, French Revolution 2.0 with robot guillotines from RobotGuillotines.com.

But if AI’s the dud . . . hang on, what’s a dud in this context?

With the trillion plus dollars invested and the distortion to the economy it could be the most successful product in history and still be an economic wrecking ball.  It it’s a dud, then all this investment?

Wasted.

Trillions vaporized on e-waste mountains, exec bonuses, and data centers that won’t be filled for the next century.  This will drag down markets, pensions, and everyone eats ramen for the next decade.

C’mon buddy, you’ve got to earn that van.

If it works?

Collapse.

If it doesn’t work?

Money bonfire and depression.

Thankfully, in almost either scenario we will be able to avoid the real danger to society:  Long John Silver’s®.

Author: John

Nobel-Prize Winning, MacArthur Genius Grant Near Recipient writing to you regularly about Fitness, Wealth, and Wisdom - How to be happy and how to be healthy. Oh, and rich.

30 thoughts on “The Looming A.I. Market Bubble”

  1. …Was of on vacation. It was a really funny joke.

    Not gonna bother to laboriously re-tell it, prolly still out there somewhere.

    —

    https://i0.wp.com/wilderwealthywise.com/wp-content/uploads/2025/10/MODEL.jpg?w=1000&ssl=1

    —

    Enjoy Your wit. AND the Memes, (as found) and original, if applicable, as well.

    Good luck with Your ‘Buttons’ Quest, and the pursuit of some whateva Widget to allow Editing/Viewing as It WILL appear pursuit.

    Feel kinda stupid if it doesn’t ‘Show’ As Intended.

    At this point? One would think I would be used to that feeling. “Really, What Difference does It Make? ”

    Hope You get reposted at TBP more often.

    Please hang in there and keep on keepin’ on.

    1. So, I can go over to TBP and post, but I try to put my best stuff over there for the wider audience. Let me know when you like something and I’ll post it.

  2. Here in flyover/drive through country there are a ton of plans to build new AI data centers on every square inch of land that doesn’t already have a Dollar General. Sure they are going to need a ton of energy and of course water but that is a small price to pay for me to be able to generate racist AI images. Whenever I read some pie-in-the-sky prediction about AI all I can hear is the monorail song from the Simpsons.

    1. I’ve seen several sniffing around Modern Mayberry, but we’re too far from whatever it is they really want, I guess.

    3. Operation Vampire by Steve Johnson is a funny grunt-level take on World War II where America’s home-grown paranormal people take on the old world paranormals they left behind over a century ago.

      Funny, exciting and interesting: I bought the whole series.

  4. Eerily like the old joke about the two rednecks who are selling watermelons from their truck patch for $1, but their cost of growing the watermelons is $1.

    Redneck 1: “Joe Bob , we’re not making any money. What should we do?”

    Redneck 2: “Let me think. Got it! We need to buy a bigger truck!!!”

    These people are the same iteration of the insiders involved in 1980s S&L Crisis, the Dot.Com bubble, the near 2008 Bank Crash, etc., et al, ad infinitum. This is just their latest game, but not their last.

    Too smart by half with a snide Ivy League arrogance. When AI crashes, they’ll claim ignorance.

  5. The recipe for Economy Hell:
    – Take a world filled with math and financial morons
    – Add in Technical Stupidity
    – And a long History of making impulsive, bad decisions
    Voila!
    Complete meltdown of the economy. The only people left standing are the Mormons, the Preppers, and the Persons of Blue Collar Skills.
    Invest in machinery/tools that work without electricity.
    I personally will be spending some time learning to run a still, and situating it in a safe place.
    Save seeds. Learn how to grow crops on less than an acre of land.
    Learn to hunt.
    Pray.

  6. We’re voting here in Washington state on whether to allow the brilliant minds in government to invest a portion of our tax dollars. I’m obviously a “no” on that, but will likely be outvoted by the “enlightened” on the west side. How much you wanna bet they jump in large on A.I.?

    In other news (and at Mr. Wilder’s suggestion) I am posting a link to my new online shop were I offer original art, smart-ass t-shirt designs, and dog-themed Christmas cards:

    SIGMADOG Shop

    I feel obligated to mention that ALL of my work is 100% created by me (no A.I.). That includes my custom pet portraits inspired by your photos (a great Christmas gift):

    SIGMADOG PetArtWorks

    1. Yes, great pictures and stuff! There were several happy customers of the portraits, as well. And I’ve received nothing from either zaklog or sigmadog as compensation, and encourage folks to post their stuff, because we may not all agree, but we should all help when we can.

  7. Yep 17 is an important number historically it the ratio of gold to silver as found in nature. And has been the trade ration for millennia. Silver should now be at $236 spot. need less to say a smart person can figure out action that might be beneficial. There is no fixing this, the globohomos want 500 million folks on the planet and God is going to be speaking soon.

  8. I hate to “go there” but when I first saw the projections on power requirements last May (or when they soaked in) I said NFW – no effing way – which makes the AI hype the biggest fraud in human history.

    We’ve got Microsoft restoring Three Mile Island to use its nuclear reactors to power their AI crap. Eric Schmidt (used to run a little company you may have heard of called Google) buying Relativity Space to put solar energy harvesting satellites in space to power his AI crap. And they’re still talking about adding more power to the grid that’s remotely possible in TWO FREAKING YEARS.

    It can’t happen. Biggest fraud in human history. The most charitable way to say it is there’s only going to be one or maybe two companies that can get enough power; they’ll make money and every other penny goes in the trash.

    FWIW, I’m not sure I can do this in the WordPress editor but here’s what I posted in May.

  9. When Joe Kennedy (father of JFK) got a stock tip from his shoe-shine boy, he knew the top was near, and started selling. When John Wilder told me that the S&P was in bubble territory, I started selling. Not all of it, not yet, but 30% of what I had in an S&P index fund. (Was it worth a lot? Mayby more than I’ll pay in property taxes for the rest of my life.)

    I’m not advising anyone else to do this. Read your own tea leaves, and make your own decisions.

  10. I hacked this, so I’m posting it as public domain:

    Every AI-based Business Plan In Existence

    AI + reasons = Magical Unicorns Endlessly Shitting Strawberry-scented $100 bills.

    Last I heard, both the International Communist Party and Mary Kay are suing for patent
    infringement, but that’s the actual AI formula that was locked in the 17th level of their
    encrypted cloud storage. Use it at your own discretion

    1. Oh, and Tulipomania™ is also filing suit in Brussels at the International Court, and the descendants of the Lenape tribe in NYFS have a lien on any settlement for $24.

      Caveat emptor.

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