2 days ago
- The author argues that the multi-trillion-dollar AI capital expenditure boom is unsustainable, driven by reckless spending from hyperscalers on speculative assets, with little to no actual demand outside of subsidized AI labs like OpenAI and Anthropic.
- The BIS annual report confirms that hyperscalers' capex commitments outpace earnings and free cash flow, warning that disappointment in returns could trigger a sudden pullback, leading to a protracted investment bust with knock-on effects on borrowers across the supply chain.
- OpenAI and Anthropic are deeply unprofitable, with massive losses and compute costs, representing the majority of AI revenue (68% or more) and being subsidized by hyperscalers, making the industry's apparent revenue figures misleading.
- Companies like Oracle and CoreWeave have taken on enormous debt to serve AI compute, becoming heavily dependent on OpenAI's ability to pay, creating systemic risk if AI spending slows.
- The author criticizes the industry for selling a product that doesn't deliver: AI products like Copilot, Gemini, Rufus, and Alexa+ are universally disliked, poorly adopted, and fail to generate meaningful returns on investment.
- The narrative of AI being a 'tipping point' is debunked as industry marketing, using flawed metrics (e.g., Exponential View's report) that obscure the reality of massive losses and lack of genuine demand.
- The AI industry engages in a cult-like culture, pressuring workers to adopt tools that increase burnout without real productivity gains, while executives like Sam Altman and Dario Amodei perpetuate a con based on future promises rather than present outcomes.
- The author warns that the bubble's collapse is inevitable due to lack of rational justification for continued capex, with potential catastrophic financial consequences for the global economy, including Japan's SoftBank and major banks.