There is a growing recognition that the inflated AI bubble will experience a large rupture/financial meltdown with disastrous consequences for the world. There is a recognition—except for those profit-chasers, AI companies, and investors whose single-minded obsession leads them to pump ever larger sums of money into the AI bubble.
An opinion piece on Dec. 8 in The Fulcrum, “AI Bubble Warning: Big Tech’s $3 trillion Gamble Could Mirror 2008 Crash” gives insight into some of the bubble’s features.
Author Steven Hill states that four of the largest companies in the world—Google, Amazon, Meta/Facebook, and Microsoft—"are on course to collectively spend around $400 billion on AI this year alone. Morgan Stanley analysts estimate that big tech companies will invest about $3 trillion on AI infrastructure through 2028,” or about $1 trillion per year. Hill asserts about the infrastructure: “They are … mega-investing in gargantuan data centers and server farms that are the backbone of this development.” Most of this infrastructure is non-productive, and will not benefit the real economy, or the population.”
But in order not to burn through their cash-flow, these companies borrow large sums in questionable ways that involve them bringing the bubble into the banking system. Many borrow from “private credit companies,” which are not banks, but which often receive a large amount of their financing from the banks.
