Big Tech’s A.I. Obsession Could Break the Bank

Big tech's AI bet vision or bubble risk? Here's the story. Google, Meta, Microsoft and Amazon are pouring ever more billions of dollars into AI data centers, even as OpenAI fuels the boom with creative circular financing that sends investor cash right back to cloud and chip suppliers. According to the New York Times, the giant's capital spending and OpenAI's complex deals are are raising fresh bubble questions. Microsoft's Amy Hood says demand keeps outpacing capacity. Fed Chair Jerome Powell argues this isn't the 1990s.com today's players have profits and real businesses, and Mark Zuckerberg said he'd rather over build to be ready for superintelligence. OpenAI's Sam Altman adds that revolutions hinge on financial innovation as much as tech. The the upside is historic infrastructure for a new platform shift. The risk is smaller players drowning in debt if AI under delivers and a broader shock if financing cracks. According to Times reporting by Karen Weiss and by Jacqueline Goo and Gabe Metz, the stakes keep rising and so do the price tags. What's the real message here? All the big boys are investing heavily, more and more every day in AI technology. They're going all in on AI and it is creating a massive shift of where our economy invests its resources. Some of it's going to work out if history plays any role in this, but for a lot of companies, it's going to go poof. They will go bankrupt and somebody's going to be left holding the bag. Let's dig a little deeper here. So Mark Zuckerberg, love him or hate him, is often a very shrewd business negotiator. He's, he's basically saying that once we get to super intelligence, where computers and artificial intelligence can really think better, faster, wiser than humans and even collective humans, nothing else is going to matter once we get to that point. Whoever gets there and gets there first is going to kind of dominate the whole world. If you don't get there first, you may be tossed into the dustbin of history as irrelevant. So I think that's that's sort of guiding his philosophy. Let's look at some more of the facts and a little history here. So there's always been massive amounts of money funneled into new technologies. We saw it in railroads in the 1840s and Great Britain. We've seen it in other decades with railroads in Europe and the United States. We saw it with television stations, radio stations. We saw it with automobile manufacturers. People forget how 100 years ago there were a hundred plus automobile manufacturers and about 97 of them, 97% of them went bankrupt. We ended up with about three in the United States. So there's nothing new about a new technology, exciting people, exciting investors, and money really, really piling in. What we haven't figured out yet is how do you do that without causing a bubble and then things bursting and causing a whole lot of carnage for the economy. I have no doubt that somebody's going to win big with AI. It's obviously a hugely important development. Will it completely transform the world? Will we have general artificial intelligence in the last five years? I'm going to leave it to others to make predictions on that. But I have no doubt just based on how I use AI every day, how I use AI to create this show and do so many parts of my life that it's a huge, huge technology, about a billion times more useful than the Metaverse or, or cryptocurrency that got so much hype just a few years ago. But the question is, how many of these businesses are going to make money now? What Jerome Powell is saying, there's an element of truth which is this is different from the dot com boom. The dot com boom. There were so many companies that had never made a penny in their life, but we're just concepts. Pets.com. and people said, oh, you put a.com after your name here, take tens or hundreds of millions of dollars. That was definitely a bubble, but certainly the Internet was real. Certainly Internet commerce was real. Now nobody knew at the time that basically Amazon would be the only one to make money on it. But it doesn't change the fact that Internet commerce was real. The Internet was real, but so many of those companies ended up losing 100% of their investors money. Now this is a little bit different. The scales are much larger. We're not talking about 5 billion or excuse me, $5 million to a couple of 23 year olds who have an interesting idea that they gave you on the back of a napkin. Most of those didn't turn out. Some of them did. Now we're talking about not 5 million in venture capital, we're talking about 500 million and then $500 billion. So if some of those things don't work out, there is going to be massive, massive pain. But the biggest companies spending the most money on AI already have huge cash resource. You look at a company like Apple and Google, they've got huge stockpiles of cash. So if it doesn't work out well, it is unlikely that it's going to really bring them under the way. A pets.com did. Let's look at some more facts here. Google lifted its 2025 capital expenditure plans to at least $91 billion. They're processing 20 times more AI data year over year right now. That's huge growth. Microsoft, Microsoft spent $35 billion last quarter. They've got $400 billion in contracted future sales. OpenAI. OpenAI has committed a quarter of a billion dollars in compute meta raised 2025. They're spending to $70 billion. And Mark Zuckerberg, as I mentioned to you, has basically said you got to do whatever it takes to get ready for superintelligence. Because that's the fear in the minds of a lot of these CEOs that someone gets there ahead of them. So especially if it's two steps ahead of them, Poof. We could see industry, not just company after company, industry after industry go poof. Because super intelligence could be that powerful. Now Sam Altman says something that makes me a little bit nervous. He says, with every great innovation in technology, you innovate the financial model as well. Okay, this is where it gets a little bit dicey. In every great bubble, you often see situations where things only go up and everyone shoeshine boys, not to knock them, housekeepers, people who barely have enough money to pay their expenses are so excited, they're drawn in. They were drawn into the Internet bubble. I know countless people like, oh yeah, I invested all my money in Internet stocks. And the bigger problem when you look back to the 1920s was all the people investing in the stock market on margin, sometimes as little as 20% down, sometimes a little bit 10% down. That was financial innovation. Didn't turn out very well. By the way, Quick plug. I'm in the middle of reading Andrew Ross Sorkin's 1929, which really details this in fascinating, riveting detail. I would urge you to check out that book. So OpenAI's deals loop around. The funding is very circular and has a lot of people scared because the funding loops go to their cloud chip partners. Microsoft, Core Weave, Oracle. It's stoking concerns that there is in fact a bubble. Let's look a little more about the history. As I mentioned, the railroads, massive buildup over investment. Were railroads important? Did they dramatically improve commerce and capitalism in Europe in Britain, in the end, yes. But a lot of people lost a lot of money. So the share prices soared for UK railways in the 1940s and then, poom, it crashed. Automobiles, 1900s to 1920s. Hundreds. Carmakers, as I mentioned, ultimately only about three really made it in the United States. Radio people forget about that. In the 1920s, there was a huge craze. People were investing so much money in radio stations, radio antenna. Most of them folded. TV networks again. We ended up with three. But a lot of people tried and failed. Cable TV in the 1980s and 90s, a lot of players all went in and the big boys survived. But a lot of others were wiped out. And this goes. We see these cycles repeatedly. The Web 2.0 in the mid 2000s, a lot of platforms and other companies sort of came and went. Smartphones and the app boom. There was a time when you just came up with an idea for an app. People, people would give you money. At this point, no, you got to prove that your app actually works. No one's going to give you money for that. And then the crypto cycles. Don't get me started on crypto. I'm not a fan. But we're going to leave that, that debate for another day. So where do we go from here? I can't see the future. And if you're honest with yourself, you can't really see the future. We can all make guesses and I might guess correctly sometimes out of luck, and you might as well. The only thing I know to do is to. Is to try to learn as much as possible about artificial intelligence every single day. To invest not necessarily a lot of money, although I do some, but to invest time really learning this technology, to use it. I'm using artificial intelligence every day. I hope you are as well. We have some workers in the house right now. Where I don't speak their language, they don't speak mine. What do I do? I put pull up my phone and I have chat GPT translated for me in the audio format. It works great. I can't create graphics quickly. The graphic if you're watching on any social media platform and apologies to our podcast listeners, but the graphics you're seeing right now, all created by artificial intelligence. The introductory script of what I read to set up this story created by AI Now I fact check it. I had it based on reputable news sources. I typically use the Wall Street Journal, the New York Times, Associated Press, reputable news organization and give credit as you've heard. But I couldn't do this. I couldn't even do this show without extensively using artificial intelligence every day. That's why, as you'll see in the ads later, you'll see me hyping my own tjwalker AI video interactive clone. Is it the be all and end all? Is it going to make me a fortune? I lose money on it. But that's okay. I'm learning about artificial intelligence and about how people like you and others and myself, how we can interact with artificial intelligence on daily basis. I don't know what else is possible to do other than be in it, learn it, follow the trends, and be ready to act quickly.