AI Bubble and its ripples

[danniel]

AI , even though the technology is here to stay, but the Industry of this technology is probably the biggest corporate grifting bubble us humans have witnessed. 
The most important arguements on why it is a bubble:

1. Money Regulating in Circles
Nvidia(supplier of Chips and GPUs for data centers) announces it will invest  $100 billion in OpenAI.
OpenAI announces it will use that investment to buy Nvidia Chips.
Nvidia considers OpenAI Investment as Net Profit.

Same thing happening with AMD investing in OpenAI,
OpenAI  giving its 10% stocks to AMD.
AMD takes cloud services from Oracle.
Oracle invests in OpenAI.
 

2. All Major AI Companies are seeing a net loss relative to its investments
Chatgpt has recked over hundreds of billions of dollars, as compared to their net earning which is around $20-25 billion. 
They use a lot of 'projection', about their profits, on which they get the investments in the first place.

3. High Expectations, Low Productivity
Businesses and Companies which try to implement AI to boost productivity see almost no productivity growth, relative to no AI + Human work environment.

There are few other arguments which show it is in many ways too similar to the Dot Com Bubble of 1999.
Wild Optimism of Corporate world because of the green numbers on a screen (Tech Bro neuron activation)

There is no actuality to any of their numbers, rather everything is Projected. 
AGI and ASI for example. Dreams which are too far fetched, compared to where we are now. How even the smartest Chatbots have a disclaimer *AI can make mistakes, but it is pushed around as something so perfect that it is causing layoffs at massive rates. (There might be some usefulness to that but that is beyond my sphere of understanding of big businesses.)

Lastly, the Corporate greed and Corruption is one of the biggest reason imo why it is over glorified. Every CEO of Tech Giants has their money lobbied to the current US Administration. Which is why they are spreading it so fast. Without zero Regulations.

For an AI to Run, Generate, and Respond answers takes a lot of energy and space, which is why Data Centers are so rampant. They are so toxic to the environment that they literally make the surrounding environment unhabitual for any and every species.

 

 

 

[danniel]

For a technology which is promised as the new revolution, it is rather rejected because of its nuisance. 
From Google pushing AI Overview in their search results, to Microsoft gushing it in in every single place in Windows OS.

I personally have seen more rejection of it on the Liberal side over the Social Media space, as many claim it to be shadowbanning them and in extreme cases even causing deportation from US (for people who share stuff in support of Gaza).

 https://www.indiatoday.in/world/us-news/story/us-using-ai-to-spy-on-international-students-even-instagram-likes-can-get-deported-visa-f1-mark-rubio-trump-2690421-2025-04-02

https://www.reuters.com/business/media-telecom/meta-use-ai-chats-personalize-content-ads-december-2025-10-01/

There is also no way to disabling AI features from these platforms.


All this pointing out the downsides of AI is for arguing, It is a bubble, and due to the rejection (in the parasocial space) of it, the chances of it being popped is big. (I mean ofc it would pop if its a bubble, but there is some negative sentiment attached it)

[danniel]

The Ripples

1. Immediate economic effects

AI-focused companies would see massive valuation crashes, wiping out trillions in paper wealth. Tech sector layoffs would cascade(which are already pretty worse)including in semiconductor manufacturers, and businesses with bloated AI teams. As a result Data center construction would see halts, stranding billions in infrastructure investment.

2. Labor market disruption

Consequently, people hired for AI roles would flood the job market.
Universities pumping out AI-focused graduates would be pointless (for a while).
The promised productivity revolution wouldn't materialize, but the workforce restructuring would already be done. Offshore AI training and annotation operations in 3rd world countries (like Kenya and Philippines) would collapse, affecting over 6 digits of workers.

3. Infrastructure stranded assets

Similarly to Post Dot Com bubble, billions invested in  data centers, power infrastructure, and specialized chips would become stranded assets. Electricity generation capacity built for AI data centers would sit idle or require expensive repurposing. The environmental impact of the buildout would be a permanent cost with almost 0 benefit.

The "AI washing" - claiming AI capabilities to boost valuations - would trigger lawsuits and regulatory scrutiny similar to post-Enron era. 

4. Geopolitical shifts

China and the US have positioned AI as a national security priority. A bubble pop would force reevaluation of these strategies. Countries that bet heavily on becoming "AI hubs" - UAE, Singapore, various European nations will face economic down trend.

Other effects (which have been witnessed in previous 3 crashes)

Unemployment, inflation (again which is already worse due to tariffs and post covid spending boom), Standard of Living depraves, Mental health will worsen especially for new young adults, as job uncertainty makes your degree and certifications devalue, esp in CS field. Housing Crisis worsens, people are already struggling due to minimum wages being low compared to the house rents



 

[danniel]

The IBM CEO also made a quote
https://aimagazine.com/news/ibms-krishna-questions-financial-viability-of-ai-data-centr

How AGI seems kinda far fetched. (And also we were supposed to be on Mars by 2025 )Doubting all these spendings on AI
It brings another aspect way too similar to Dot Com Bubble,

Once the big players start to doubt, doubt begins to pop up in other investors. And everything starts to trickle down.

And it is made worse when the actual reality hits, how bad the employment rates have been
https://finance.yahoo.com/news/powell-says-u-job-growth-143002852.html

Which creates even more panic, more red  numbers on stocks, and the cycle continues.

Lastly, I am not a financial pundit, these are my opinions and findings which I gathered from reading opinions of various experts and forums and yt videos. 

[Basman]

Calling it "AI" has to be one of the biggest investment grifts in history. 

MLMs as a whole feel like a grift. Its actual value is completely disproportional to the amount being invested in. Where's the morbillion dollars in shitty memes and ChatGPT? They are yet to make an actual profit.

[Basman]

2 hours ago, danniel said:

Universities pumping out AI-focused graduates would be pointless (for a while).

University system is so shameless with these scam degrees. Imagine going into debt for thousands of dollars so you can learn how to vibe code 🌷

[Basman]

Last time I checked it cost Sora about 5 dollars to make one clip to make. But you usually have to make multiple videos beford you get something remotely watchable. Insane expense all for a meme of Michael Jackson stealing nuggies.

We are currently in the venture capital stage, burning through investments like coal.

[Leo Gura]

Yup, Yup, Yup.

[Basman]

I wonder how people's opinion on MLMs will change once they run out of investment capital and have to start making a profit. Suddenly using MLMs come with a significantly greater cost to the user. It's probably one of the reason they are so horny for more investment dollars, so they can extend that period where MLMs provide more value than ever and insert themselves into businesses and daily use as much as possible. Optimize the squeeze.

Edited Monday at 06:15 PM by Basman

[danniel]

@Basman agreed. It feels so weird how much it is being pushed to consumers, even if they do not want to use it, to show their shareholders the big numbers. At the end of the day, i feel like that is what they care about, not how much harm they are doing to the environment or to people's lives, socially and psychologically in some cases, as long as the the number below the company name is green, "it is all fine"

[Ramasta9]

The real danger is the AI replacing human consciousness and natural creative abilities. A lot of people are using it now to do almost everything for them, create music, videos, even comments themselves (you see them all over social media) are 'AI written' and over time this starts to rob the human out of us and our ability to use our consciousness becomes more and more dormant and inactive. Like a muscle that's no longer being exercised.

What this does is sends a "false signal" within consciousness that says: "yes to this", so more of that is then attracted and circulated within the consciousness-field. People are also feeding of feedback they receive from their AI comments and Music or Art which further complicates things.