Is this actually going to collapse anytime soon?
Hey, a long-time lurker and an Ed fan here. I love the financial breakdowns, and I have been listening to the podcast since the entire AI craze started. I have, however, been struggling with doubts about the core assumptions that most financial analysis of AI is built upon, which is the profit as the preliminary driver of this technology and, even if forgotten by the market itself, a key metric on which we can predict its survival.
It's been already years, as we've been waiting for investors to suddenly realize that AI is going nowhere and the investments may be better used elsewhere. As 2026 is coming to an end, this increasingly starts to sound the same way as "we will replace all software engineers in 6 months". Except, software engineers are actually being laid off right now (I am worried about my own SW position too), and at least to some extent these layoffs are attributable to AI (even if to AI spending and not the tech itself).
I feel like we are misinterpreting the situation. This is not about profit anymore, or any pragmatic capitalist goal. Look at the people investing in it and people building it, they are all fucking nutjobs. They will replace us with AI even if it's not doing a better job than us, or doing it cheaper. They seem to be deliberately building a very particular kind of future, that I still cannot figure out. But what I can say for sure, is that the people of Bay Area, the VCs, the US government (be it red or blue corrupt cabinet) are all in on it. The point has never been to automate human labor and make more money. I don't know if they are that stupid to not realize that less employment = less consumers, but I would bet that they all know that. It's an apocalypse cult, and the destruction and havoc they wreck is entirely deliberate.
If my assessment is right, will profit margins matter at the end of the day? We keep hoping the liberal myth of fundamental, natural market forces, that have to be reckoned with at the end of the day. However, market entirely depends on a bunch of agreements, and these agreements can be collectively reconsidered when there is a bigger fish to catch than profit margins. They can bankrupt Anthropic and OpenAI if they go underwater, and investors will simply write off the expenses. Nobody said that the data center investments and loans ever had to be paid off in dividends. It might turn out that they were buying not an AI product, and all of it is just a charity for a world they have been building for themselves.
How can market forces prevail, when every actor is ideologically swayed by AI psychosis? Money don't have the capacity to literally end ever since the gold standard was abolished. Considering the virtual nature of capital in this day and age, I feel like the way we are going now is not as unsustainable as we assume.
Please tell me that it's my depression talking, and I'm fundamentally wrong about this.