AI Is About to Crash. Here’s Why.

Is the AI bubble about to crash?

The artificial intelligence industry has attracted trillions of dollars in investment, massive amounts of corporate debt, and some of the highest valuations we’ve ever seen. But what happens when the AI companies behind this boom have to start generating real profits?

In this vlog, I’m taking a critical look at the current AI boom and why I believe the economics behind it may be fundamentally unsustainable.

As an unemployed former Big Tech software engineer with 25 years of experience in the technology industry, I break down why so much of the AI industry’s future depends on one enormous bet: that artificial intelligence will replace human white collar workers at massive scale and generate enough economic value to justify the trillions being invested into AI infrastructure.

But there are some serious problems.

Open source AI models are becoming increasingly competitive. Chinese AI companies are producing powerful models at a fraction of the cost. Local AI models can now run directly on consumer hardware, reducing the need for expensive AI subscriptions. And despite all the hype surrounding AI agents and automation, AI productivity gains may be happening much slower than many industry leaders predicted.

If AI cannot replace millions of white collar jobs every year, where will the profits come from?

I also discuss why I believe the AI industry may be heading toward a major financial reckoning, why AI companies could become increasingly desperate for new investment, and why retail investors should be extremely careful if a wave of massively overvalued AI IPOs arrives.

I believe AI will eventually transform the economy. But I don’t believe today’s AI technology is capable of delivering the enormous profits required to justify today’s valuations and debt levels.

The AI revolution may be real. The AI bubble might not be.

Timestamps:
0:00 Why AI Bubble seems super bubbly?
2:12 Gigantic leveraged bet on replacing human labor
4:22 Reasons why this bet is failing hard
10:06 Conclusion and a piece of advice

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