r/AIBubble

I wish for the status to no longer be quo. I long for the AI bubble to collapse and take 40% or more of the US market share with it. And I know the consequences would truly be devastating. But this is a hellish, Kafkaesque reality we find ourselves in, an agonizing waking nightmare with no good way out and the systemic reset being the least bad option.

The alternative is to continue until the collapse is bigger and harder than anyone ever envisioned. AI demand cannot grow exponentially to justify the buildout. Private credit is already cracking under the weight of the debts. We’re constantly being told that the amazing tool that was supposed to change the world for the better is instead supposed to replace us and take our connection to each other and the real world away, and we’re just supposed to like and want it.

And yet the public consensus is that we don’t want it. That nobody asked for this “future” we now find ourselves living in. Wealth disparity is now at all time highs and only worsening. The market is decoupled from reality and fully fueled by narrative and algorithms at this point, propped up like a zombie not allowed to collapse. Literal trillionaires are hailed as “geniuses” despite folly after folly, and promising UBI and to fix the world, only to never deliver on those promises.

It’s all just so tiring. It’s not even cynical, it’s just the reality at this point.

Edit; so many people here seem lost. Okay, to try to address the numerous point here, some good, some bad, I'll try to hit as many as I can in one fell swoop. SO, I never said AI was going to go away. AI is here to stay. I said the AI bubble should pop. Those don't mean the same things. It means that the over leveraged, debt-fueled corporate AI economy won't be able to scale to the levels that these companies are telling us. It means that the datacenter overbuild will (and is already starting to) crumble under the weight of the debt and hardware delays. Open source and open weight (not necessarily just local, but yes, also local) will take over. AI is not going away. I hate the corporate, forced, misused, irresponsible version of AI that has been forced upon us. I hate the fact that Google can sit there and tell us to our faces that there will be unlimited demand when that's literally not possible and they're handing hundreds of millions of users free AI that costs them money and runs them into the negatives on cash flow every day.

I hate the fact that so many of you supposedly have brains and yet you'll refuse to look at the actual market data and understand what it means. That you'll ignore that Apollo, Blackrock, Blackstone, and Blue Owl have all already implemented caps and freezes on withdrawals and the private credit sector is already starting its freefall. That Oracle has been downgraded to BBB- (one level above junk) and not only do none of you care, but you don't even know what that means.

Many of you work in the industry? Good for you! Surprise surprise, so do I. I can tell you which optimizer out of AdamW (the classic), Adafactor, Lion, and Muon is best to use for which architecture and why. I can build you an AI model if you like, in PyTorch, JAX, or a custom Rust model using bitwise functions like XNOR popcount. None of that means crap about the overleveraged AI bubble not popping.

These companies have gotten themselves trapped between a rock and a hard place here, doing forced integrations that the MAJORITY of the public never asked for, despite our little pro-AI echo chambers we build on here to tell us otherwise. They're taking all the free usage and forced integrations together with paid and presenting them as aggregated metrics and saying "Look, unlimited demand!". Meanwhile over 90% of these users aren't paying a cent for the paid plans and services, and surprise surprise, Google/Alphabet now has negative free cash flow in the billions. Remember a few weeks ago when Google for no reason tried to integrate Nanobanana into Google Earth, and then immediately had to pull it because, predictably, everyone started generating visual misinformation. It lasted 24 hours, and it was a desperate attempt by Google to shoehorn AI into something else just like they have been with Chrome and Google Search and every other one of their products. And all of this free usage uses their compute. None of you understand that or care. If you understood what it actually meant you just, wouldn't, defend it.

These market bubbles don't pop and deflate overnight. The dot com bubble lasted from about 1995 to 2002, for those who are unaware. It took place over the span of multiple YEARS. It didn't pop and go disaster mode overnight, and that's not what will happen if the AI bubble pops.

But, it is actually possible this bubble won't pop, at least not any time soon. Know why that is? Okay, so, many people don't seem to realize that the market isn't actually a bunch of dudes standing at the Wall Street Exchange shouting sell and buy orders and raising their hands. The market at this point is actually MOSTLY algorithmic, something like 80% algorithmically traded. Mostly by HFT (high frequency trading) algorithms run by large financial institutions. And I mean LAAARGE financial institutions. The kind of institutions that could literally buy your home state. These institutions, roughly about 17 of them, pretty much run the market with these HFT algorithms. And you know what they can do with that? They can use these HFT algorithms and bots to offset selling pressure en masse. Literally just counter market AI panic with, well, AI. So even if the bubble were trying to pop, they would just offset that with their massive resources and algorithmic trading, and keep the market going like a zombie that just can't die.

And this should terrify everyone, anti or pro AI. Because this leads to only two paths. Either the market eventually does collapse and the collapse is bigger and harder than anyone ever expected, and contagion spreads through private credit, crypto, traditional finance, the bond market, and so on and so forth knocking down the entire house of cards we've built over the last couple decades. OR, it continues on and just becomes entirely decoupled from reality, fueled only by narrative and algorithms, run mostly by bots under the guise of actual human investors running the show.

Anyway, I could keep on going, and going, but these are many of the core problems, most of the rebuttals for the asinine denial filling the comment section here. So insane to me that even on r/AIBubble there are so many AI bros. My God. You'd think that if it actually worked like most of you claimed then you wouldn't have to come here and defend anything, or your 12 dashboards you made would have made their first $100 by now. This is sad on so many levels. Wake tf up.

Are we getting back to normal and will we see the bubble pop as we move more towards robotics and hardware? IoT is going to be a thing I guess moving forward. I really think LLMs are dead no more advancements at least for the time being. What does it mean for the markets and for the AI companies though? Who will survive the purge?

I’m seeing more and more appearances by the heads of AI companies who spout all sorts of stories that just strike me as pure marketing.

- An AI that’s ‘run amok’ here

- Appeals to safety

- Grand narratives about everything that can be done, but no results.

What if the CEOs have already realised that (no matter how much data you feed into these machines) no ‘intelligence’ will come out of it? The term ‘artificial intelligence’ is, after all, just a marketing term. ‘A probability-ordered jumble of letters’ simply doesn’t sound as good.

They’re slowly realising that the huge hopes and the massive investment appetites can’t generate as much return as hoped. That in most cases, the computing power exceeds the actual benefit. And now they’re not quite sure what to do with it, and there’s no choice but to keep the narrative of great intelligence alive.

I’m not saying there are no applications; there are already good areas of application. But you can’t make the models exponentially better simply by adding more data points.

I’ve been looking at how some of these companies are valued compared with their actual revenue, and the numbers seem insane. SpaceX is valued at around 80–115× its revenue, Palantir is around 70–80×, and some AI, space, and nuclear companies are even higher. Meanwhile, a normal established company is usually closer to 1–3× revenue.
I definitely think this looks like a bubble, but that doesn’t necessarily mean it will burst anytime soon. There is so much money pouring into AI, and everyone is afraid of missing out on the next huge company. The valuations could keep climbing for years, even if they already seem disconnected from reality.
What do you guys think? Are we in an AI bubble, and if so, how long could it realistically keep going? What do you think would finally cause it to burst?

Who's going to pay for this? I predict a big wave of re-employment in 2028 as companies realize that AI is a 1 to 2% productivity uplift technology like most software advances have been, not a wholesale replacement for human workers.

Seriously guys, If the financial math didn't make sense before this harness release, it is much worse now!!! Those lofty inflated revenue projections are taking a deep dive now. The Future looks very decoupled and I'm loving it!!! Freedom baby!!

Genuinely curious to hear someone who doesn’t think it’s a bubbles thoughts. I’ll outline my reasons for thinking it’s a bubble that will probably burst within the next 18 months below:

1. Demand. Demand has skyrocketed ever since ChatGPT 1 was released, every earnings with a somewhat AI related company said they’d experienced unprecedented demand and popped at least 10 percent overnight. But more recently as LLM providers like Anthropic and OpenAI are starting to need to earn ahead of IPOs they’ve had to change the way they price AI. Moving from a flat fee to a token based measurement as the flat fee could be exploited by partners to make the partnership be a loss to the LLM providers. After the token based model, Uber prolifically blew through its annual ai budget within a year, others also found that ‘token maxing’ wasn’t actually creating productivity but a means for a software engineer to give the illusion of productivity. If the demand drops from its linear rate, many projection across the ai ecosystem are due to stumble or collapse, making the overleveraged parts (like oracle and coreweaver) in danger of being left hanging and unable to pay back their debt which everballoons at high interest rates.

2. Hyperscalers. Hyperscalers are incredibly leveraged in what is essentially just building data centers. They are taking large loans to buy Nvidia chips which power data centers and also data centre shit to build data centers. Now one minor issue is that these companies like Amazon, oracle, Nvidia as well, google don’t really build data centers but that shouldn’t be an issue. The real issue is the slow process of joining the power grid and also the fact that power infrastructure takes ages to build and right now there is unprecedented demand for power. 8 year waiting lists will nullify these companies best efforts to build a data centre on schedule, so there will just be large data centres doing nothing. Now they might try a regulatory strategy where they line up politicians and try to jump the queue, but it is becoming more politically astute to be anti big tech in the US. Some Energy regulators are trying to protect everyday individual consumers, making it harder for data centres to be admitted to the grid. Essentially there is a very tight path that has to be taken to ensure that certain obligations are fulfilled and debts are paid back on time or else huge amounts of cash will burn, and I think there are far too many obstacles in the way that will push these companies off course and away from their obligations.

3. Debt. I’ve mentioned this a lot, but there is a lot of debt going into this, based on the notion that LLMs and AI will be incredibly profitable. I’m not too sure that we have a definitive answer to that we’ll have to wait to see Anthropic IPO and then their following path. The main problem is the circular financing Nvidia is accused of. My theory is that Nvidia partakes in this to keep the bubble afloat, because if more money is not being spent then demand is falling and if demand falls then projections are going to be wrong collapsing future plans and current earnings. In this circular financing realm, the bagholders are the private credit lending, that’s where the money originates from and they receive a small payment back in interest, the debt goes to the hyperscalers and llm makers who trade with each other but all buy off of Nvidia and that’s where the money ends up, so they inject cash into these companies and the companies are able to borrow more based off of better valuations and the cycle continues. But what we are seeing the private credit markets is large amounts of redemption requests. Investors into these private credit funds are getting nervous and want their money back, the fund isn’t obligated to fulfill all of their requests often capped at 5% per quarter but the funds will have to adjust if they want their fund to remain active and possibly have to pullback on lending or charge higher interest rates. Again this will either stop the money flowing or the latter situation will erode future profit projections. Debt is a huge thing in this saga, google and amazon are posting negative cash flows which is pretty insane, they’re going big on this ai and if it fails the companies will almost certainly survive but not atop of the mountain anymore.

4. Chips. Michael Burrys depreciation conspiracy. I’m not an electrical engineer I don’t know how well Nvidia chips perform after a while, but if there is fanciful accounting going on it could collapse projections. One thing I will posit is that if Nvidias chips have such a great performance over a long period of time and don’t depreciate fast, what’s the point of buying new ones, surely this contradicts their future earnings projections based on them releasing new chips which people will buy. If they’re older chips last so long, what’s the point of buying newer chips at an increasing rate. Of course frontier models may need the newest tech to develop but smaller scale ai related tasks can be done with cheaper and older chips if they’re don’t depreciate.

That’s my argument, feel free to criticize it, just split it into four sections that overlap a lot. Most won’t read the full thing, I don’t blame I probably wouldn’t.

These wars over fiat and oil need to end. And they will. Being very deep in enterprise agents I can say I don’t think traditional commerce is going to be around much longer. Agent to agent commerce is expected to hit $1.5 trillion by 2030. No humans involved

Whether the AI can or cannot replace jobs, it is going to lead to layoffs. If it actually can do your job well, we're done; it's time to learn a trade or whatever is the next thing (prompt writer, AI fluffer on reddit, etc.). If the AI can't do your job well, that means that a $600 billion bubble is about to burst and a recession is coming.

I know this is an oversimplification, but I would like to know your opinions on the economic consequences of AI, taking into account the massive investment it's getting.

They, the money-grabbing AI developers, claim every week that their magical product is once again going to have us sitting on the edge of our seats because of the seemingly groundbreaking new possibilities that are supposedly just around the corner. And every time, I’m amazed by the fact that when the moment finally arrives, there is absolutely nothing to be amazed about.

They keep promising and promising… but ultimately, they never deliver. Why? Because they reached their ceiling a long time ago.

Sure, in the beginning everything was new, and you could genuinely marvel at all the possibilities AI was bringing our way. But by now it has become clear that their models have reached the point of diminishing returns. The internet has been scraped dry. There is no longer any upward trajectory.

That’s why all those AI gurus are working so hard to keep the hype alive, making claims about things that are never going to happen. They keep shouting about the next breakthrough, solely to convince greedy investors to pour billions into a hype cycle that is on the verge of bursting.

The end is in sight, and that’s why they’re grabbing whatever scraps are left before the inevitable finally hits.

Now they’re all claiming that their AI garbage needs to be heavily regulated by governments, giving them an excuse to disguise their lack of progress. That way, they don’t have to take responsibility for their false promises or the economic collapse that follows.

But we know better.

I keep seeing the Nvidia/Enron comparison after Michael Burry’s comments. I just don’t see it.
There are fair questions about Nvidia’s valuation and whether we’re spending too much on AI infrastructure. But Enron was fundamentally about hidden debt, questionable accounting and profits that weren’t what investors thought they were.
Nvidia is selling a very real product to customers spending enormous amounts because they need compute.
The bigger question is: **are we actually building too many data centres?**
I think there’s a chance we’re underestimating future demand.
The internet made information available to everyone. AI is starting to make **intelligence available to everyone.**
Think about every student having a personal tutor. Every small business having access to programmers, designers, analysts and accountants. Millions of people becoming 2x, 5x or potentially 10x more productive.
And humans won’t be the only users.
AI agents will work continuously. Robots, cars, factories and software will consume AI without a human sitting there typing prompts.
There are 8 billion humans, but eventually there could be many times that number of AI agents doing work.
People also say AI will become more efficient and therefore need less compute.
Maybe. But bandwidth became cheaper and we didn’t use less internet — we invented Netflix, YouTube, cloud computing and 4K streaming.
If AI becomes 10x cheaper, we may find 100x more uses for it.
That’s why Cisco is a much better bear comparison than Enron. Cisco was a real company selling real infrastructure into a real revolution. The question was whether too much was built too quickly.
That’s a legitimate debate with Nvidia.
But my bet is that **AI is becoming a utility — intelligence on demand.**
Electricity gave us energy on demand.
The internet gave us information on demand.
AI could give us intelligence on demand.
And when humans **and machines** start consuming that intelligence continuously, today’s data-centre buildout may not look so crazy.
**Maybe we’re not near the end of the AI boom. Maybe we’re still at the beginning.**

Bubble is made through speculation, extreme hype and excitement. There is very little speculation when it comes to AI. These companies are printing hundreds of percentage of growth and printing cash, that is not normal and their valuations are not crazy. Some of these companies are pricey and trading at a premium. But not speculative levels. Extreme hype wasn’t really in US markets but was in Koran markets through their chip giants. People went all in and leveraged up and although the run was great, 1/10 people in Korean right now have been liquidated. And it has affected the US markets however even though AI names dropped like rocks the S&P during that time was always around -3% from ATHs. Now it’s making new highs without AI names fully recovering. Excitement, there definitely is excitement on this new technology and how much money has been made. But there is no time in history where companies are printing this much and the people funding it (Hyperscalers) are benefiting from their spending. AWS, Azure, Google Cloud, Meta advertising. Google cloud grew 82% like it’s a start up. It’s truly a once in a lifetime opportunity and I’m sorry for the people missing out.

When everyone is calling a bubble… a real bubble is when everyone is blinded by hype and greed. In 1999 the Nasdaq went up 85% at year end, now that’s insane.

Every day I'm reminded of the Big Short guys saying "now THIS will surely be the last drop". But then the system is so corrupt and fraudulent that it just goes on and on.

The bubble superinflated, then the bonds (= debt) were dumped on new clients, and then everything crashed as people were still openly denying it. So... Where we at now?

How long will the trading market attention shift to physical AI agent? Timing? Or it’s a bit too early be discussed?

I know there are so so many articles about that but its funny how none discusses about what will happen to US.
If ai bubble pops obviously the market will collapse and share value will drop like hell but what does that mean to us?
Is there going to be a mass job loss?
Will people start to starve to death since they will not have money to buy their food?
People becoming homeless?
Massive crime incidents ?
Maybe rebellions all over the world?
What is your opinion on that?