The Biggest Sign of an AI Bubble Is Starting to Appear – Debt

Meta, and others might be shielded from it but there's someone on the other end of these debts, if the SPVs are accruing massive amounts of debt and go bankrupt there are lots of obligations that will go unfulfilled, bringing the whole house down.

It's quacking very similar to other accounting tricks, caham, financial engineering, to hide bad numbers somewhere else. CDSs and CDOs were a different mechanism with the same purpose: hide risk away into overly complex instruments.

“Hey it’s OK that mortgage side business is going belly up but we bought that special insurance.”

“Cool, so who sells that insurance?”

“Um, actually I think we do via our other SPV”

“$&@!”

Not 100% analogy here but similar shenanigans where company A is taking out debt, to build a datacenter, to buy GPUs, to sell services to startup B that Company A gave cash to to buy said services. Startup B has no viable business model and implodes. Company A goes from looking like a genius to a financial nuclear waste dump almost overnight. It’s financial shell games all over again.

I kind of hope you're right. Any "hyped" industry/sector is bound to eventually needing to get back to reality, and focus on things that actually work, rather than spraying and praying prototypes and over-hyping them.

The individuals and companies building real products that actually improve something will stick around, either as they are, or at least as ideas, and most of the interesting stuff tends to happen when the hype dies down, as the builders continue as they were, but all the rest of the riffraff disappears.

There will still be a community and the ideas won't magically disappear, just smaller and more focused, which to me sounds like a much needed improvement over the current state of things.

Scary stuff, at least to someone who doesn't know all that much about market resilience. With what little I know, I'm hoping for a soft pop with slow deflation. But big tech seems to just pump harder right now.

Repositioning in what way?

I don’t think this is likely. We’ve seen VCs overextend into social networks, “sharing economy”, B2BSAAS, machine learning, developer tools, video games and crypto, in the last 15 years, and they have very little to show for it. Something new will come along and they’ll invest in that.

Sometimes literally.

Every time a tech bubble pops, it's an opportunity to upgrade your work-from-home furniture cheap.

I've gotten some nice chairs and even have a nice coffee table that used to grace an office lobby in the old WaMu tower in Seattle.

I guess that makes me a home furnishings vulture.

https://www.whitehouse.gov/presidential-actions/2025/03/esta...

Hard to see this as a bad thing.

I don’t even mean that as cynical— the model is designed to spread risk and let winners emerge, both in company leaders and technology.

That necessarily means periodic culling.

These a feature, not a bug of how the startup ecosystem works.

> The funding ecosystem will be set back years as this wipes out a bunch of VCs and investors.

Once again, a feature. There's too many VCs and too many funds.

> the likes of which we haven’t seen since financial firms imploded in 2008.

Institutional financials firms dwarf VC private capital. This alarmist comment makes it sound like a nuke going off in a Nevada desert is going to kill a major US city.

I think because we hear about AI so much, we tend to exaggerate its importance?

Even if OpenAI folds, the open source stuff is good enough that someone will build a compelling tutor platform in their place. It probably already exists.

If you call it "neural networks" or "large language models" or "machine learning", this would sound absurd. Only by calling it "AI" (with the implication that it will achieve general intelligence) does this sound, for most people, possibly correct.

I'm curious about this. Source?

Yeah, exactly. The current AI investment wave could be a bubble. Or not. If anyone knows, there are millions to be made in the stock market. The answer depends on the actual expectations for those investments and how actual business metrics are tracking them.

But pointing to ambiguous “evidence” just adds noise. If someone screams fire in a movie theater journalist should report if there’s a fire or at least smoke, not write articles showing concern about how flammable all the furniture is

What exactly are you referring to? Their UI seems to have troubles to load the list of conversations since like a week back, otherwise it seems fine? I mean, UX could be a lot better, but I'm experiencing anything I'd describe as "lag".