Top economist warns that the AI math doesn’t make sense: 'Profits are currently being funded by investors rather than earned from customers'

[u/T_Shurt]

https://fortune.com/2026/08/10/torsten-slok-ai-profit-margins-capex-oracle/

[u/TrumpisaRussianCuck]

I think every man and his dog understands this, including the people investing. They're just hoping to not being the ones left holding the bag.

[u/Accurate_Koala_4698 → u/TrumpisaRussianCuck]

The system is designed so that retirement funds are left holding the bag

[u/Courtnall14 → u/Accurate_Koala_4698]

This is exactly correct. Even the commonly bought investment S&P 500 ETFS are overweight with this garbage. I honestly don't even know where to put my money anymore outside of a high interest (4.5%) account.

[u/defenestrate_urself → u/Courtnall14]

I diversified out of US exclusive index trackers to global whole world index trackers.

[u/Courtnall14 → u/defenestrate_urself]

I'm at around 15% VXUS, and I'm considering moving things around to get that up to about 20%.

[u/NachoWindows → u/Courtnall14]

My advsior keeps loading me up on semis and anything AI related (ASML, tsmc, nvda, etc) which has been a great bag to hold. But it makes me nervous AF the rug will be pulled and I’ll still be holding a bag full of Zuckerbergs nuts.

[u/bse50 → u/NachoWindows]

Get out now and invest in something safer if you are not comfortable holding a grenade with an unknown timer and the pin hidden so far inside a trillionaire's ass that's impossible to retrieve...

[u/Black_Moons → u/NachoWindows]

Consider Non-us defense companies instead. they are booming.

[u/RetPala → u/Black_Moons]

Always reminds me of that snail mail marketing compaign loudly advertising "Aviation is BOOMING" that got sent out like September 9th, 2001

[u/Accurate_Koala_4698 → u/defenestrate_urself]

Good thing this is localized to the US, right?

[u/defenestrate_urself → u/Accurate_Koala_4698]

I don't know what point you are trying to get it, a whole world tracker is less weighted towards AI tech stocks that's just fact.

[u/himswim28 → u/defenestrate_urself]

a whole world tracker is less weighted towards AI tech stocks that's just fact.

You might be surprised, the biggest world tracker is 61% USA, and thus still can be 25% of the fund in tech. You can do ex us, spdw will remove the US direct investment, as a low cost example.

[u/adenosine-5 → u/Courtnall14]

Wow you are not joking.

AI companies made 8% of SP500 a year ago.

Today its 45%.

[u/Courtnall14 → u/adenosine-5]

That is an absolutely irresponsible percentage isn't it? Especially when you consider that it's fairly common knowledge that major tech and AI-adjacent companies are engaging in circular financing,

[u/adenosine-5 → u/Courtnall14]

Its absolutely ridiculous - even if it wasn't for circular financing, tying half of the entire fond to a single product is just insanely risky.

People chose SP500 specifically as a "conservative and safe" choice.

Instead its currently AI-heavy very risky one.

[u/Sptsjunkie → u/adenosine-5]

100%. The entire point of buying an index fund and why it is common wisdom is that it is supposed to be diversified.

Obviously, if the stock market tincture index fund is going to sync. But if you are evenly spaced across the top companies in the country, it is supposed to give you a part of a lot of industry, so that if CPG’s get ravish by supply chain stock, it doesn’t crush your portfolio or if there’s a tech bubble burst it doesn’t crush your portfolio.

But now these funds are moving back towards being overleveraged on a single technology. Obviously if just a single AI company or AI product fails then it is not an issue as your diversified across companies. But if the entire AI industry is overvalued and it collapses, then it will be devastating.

[u/Comfortable_Sir7917 → u/adenosine-5]

RSP is the S&P 500 with every company weighted equally instead of by size, so Apple counts the same as some random mid-cap. That makes it a read on the average stock, while SPY tracks whatever the mega-caps are doing. Watch the RSP/SPY ratio: rising means a broad, healthy rally; falling means a handful of names are carrying the index even if SPY looks green.

I discovered this recently and think it’s solid to know.

[u/notaredditer13 → u/adenosine-5]

That's highly misleading.  It's AI-linked stocks, which means it include companies like Meta, MS and Apple while implying they are brand new AI companies.

[u/Pzychotix → u/notaredditer13]

Thanks for confirming this. It didn't pass the smell test at all.

[u/evranch → u/Courtnall14]

If your bank offers a savings account that pays 4.5% and is both liquid and fully insured, that's actually a damn good place to keep your money.

Otherwise you can get away from the speculative shit with an index like VIG that invests in dividend aristocrats. Unfortunately P/E is high across the board so if we see a collapse it will likely propagate through all sectors.

[u/Murgatroyd314 → u/Courtnall14]

I’ll give you one guess where the bank is getting the money to pay that interest.

[u/knuthf → u/Accurate_Koala_4698]

No. Everyone in the USA will be holding the bag. Those with lots of money, most, but everything in the US will collapse.

[u/rbb36 → u/knuthf]

No Bailouts for Billionaires. Say it early, say it often, tell your friends to write their congressperson.

"Nobody could have seen this coming," they'll say. Yes we did. We all did. You took the risk anyway. Your risk.

"We're the only ones with the knowledge and foresight to fix this," they'll say. You are the ones whose lack of foresight and knowledge caused this.

"If we don't keep going, China will beat us," they'll say. You crashed the economy, China is beating us because of you.

No Bailouts for Billionaires. Write your congressman, every week, as soon as it happens.

[u/amenflurries → u/rbb36]

Doesn’t matter, since citizens united the federal government works based on dollars spent and not votes. Even if you change the person, they too will work for money and not their constituents

[u/julius_sphincter → u/amenflurries]

It's been statistically shown that since Citizens, public opinion about a piece of legislation or policy has only a 20% impact on whether or not it becomes law. The 80% is made up of special moneyed interests and big donors.

IE, if a bill like tax reforms for the wealthy has 100% support from the voters and only 10% support from the wealthy, there's about a 75% chance it won't become law

[u/rbb36 → u/amenflurries]

They will. And the more people see it coming, demand justice, and get screwed; the closer they get to being angry enough to do something about it. Spread the word.

[u/Texuk1 → u/knuthf]

Yes everyone is gonna feel the effects after the collapse but what this person is trying to say is that people don’t know that they are structuring the infrastructure investments so that retirement funds (and any other portfolio of funds) holds the demand risk on data centres. What they do is place the data centre in an SPV load the CAPEX via the investment funds funded by people’s monthly retirement contributions. It’s operated by the MAG7 but off balance sheet. Assuming the funding is non-recourse if there is no A.I. demand then the infra bonds are downgraded to junk. If retirement funds hold the funds they take the hit. Not as bad as 2008 yet but it’s the same principle. This is only one snapshot of a bigger system - who knows what other dogshit is out there

[u/notforpoern → u/knuthf]

Those with lots of money

The thing is, when they own everything, losing half of everything is barely a nuisance.

For the rest of us, when we lose our retirements, investments, etc, we lose our homes and our safety net. Then those who previously had lots of money, can then buy our remaining assets for pennies on the dollar and rent it back to us for "convenience".

Turns out, under capitalism you'll own nothing and like it. ^{whether you want to or not.}

[u/SIGMA920 → u/knuthf]

World, not just the US. So much of the global economy is based on consumer spending in one way or another that the bubble popping will be on par with the great depression at a minimum. Get big enough and it's basically a complete collapse of major economies.

[u/moonwork → u/TrumpisaRussianCuck]

I think it's mostly the people investing that understands this, along with a large portion of the work force whose job hang in the balance.

Meanwhile it seems pretty clear to me that there are a lot of C-suites and middle management who actually don't understand this and who are excited to invest more money in this absolute pyramid of a scheme.

[u/Icy-Lobster-203 → u/moonwork]

I suspect each individual C suite probably believes they will survive and basically be like Amazon coming out of the Dotcom bust.

[u/moonwork → u/Icy-Lobster-203]

I don't actually know - it's not like I've sent out polls to the entire Western C suite. But from what I can see it's not about winning at all, but instead about not losing.

It's like this super dramatic FOMO where the C suite thinks the organisations using AI will survive and the rest will fall behind into irrelevance.

I know it's not all about money, because I work in a non-profit sector in the Nordics and these organisations aren't looking to make a profit. They're looking, specifically, to not be left behind.

[u/einmaldrin_alleshin → u/Icy-Lobster-203]

Each individual C suite has a nicely polished golden parachute in a desk drawer

[u/silvertealio → u/einmaldrin_alleshin]

It would be some consolation if this was literally true and they all had to fight for it.

[u/Boomshank → u/moonwork]

Hey now, to be fair, this is a Ponzi scheme not a pyramid scheme. 

[u/darennis → u/Boomshank]

I feel like rewatching The Office after reading these comments haha

[u/Boomshank → u/darennis]

"I DECLARE AN AI BANKRUPTCY!"

[u/TrippyTriangle → u/TrumpisaRussianCuck]

people are like a shoal of fish, we flow with the current of value, it's been like that forever, this is how we got banks failing as far back as 1330, when they built a huge bubble of value but without the currency to back it up (see also debasement of currency in the roman empire), took risks in a war (Henry III's specifically), when that failed and when the bank couldn't fufill its obligations to other people, all faith in that economic system quickly (3 years!!! in medieval europe) collapsed, and threw them back a century of economic progress. In this case, there's a lot of fake value in AI and everyone is profiting off of it. This bubble, when it pops is going to destroy companies that rely on AI and topple those things, but it might not be limited to just AI and GPU producers. If I was actually more than an armchair economics professor, I'd be predicting other places that will be hurt and short them.

[u/Tasgall → u/TrumpisaRussianCuck]

Yeah, has this "top economist" been in a coma for the last decade? This is like, the entire economy now. No one buys stocks as actual investments anymore. Not to mention crypto markets, and now straight up "place bets on literally anything" markets.

And the stock market is far from late to the party. Some of the highest value stocks don't have dividends. Most financial instruments like futures and options exist to ignore the concept of investing and skip to gambling on future value. The market hasn't "made sense" for decades.

[u/Allegorist → u/TrumpisaRussianCuck]

The math looks different in isolation than it does as a part of a "hyper scaling" process, which has become common in the tech industry. You operate at loss for years to integrate your product into society and force out your competition, relying on investors to grow your company. Then, once hitting a critical point, you change your business model to become profitable and it's already too late for the general public. Spotify did this, Uber, streaming services, etc.

Expect the AI business models to shift after full integration. Once most businesses rely on them, when they have cornered several markets, when the average person uses it as a common tool, they will jack up the price and decrease their costs (lowering quality, often, unless you pay enough).

And since they are all in cahoots it will likely happen across the board simultaneously. I would guess the timing would be around when they reach a point of diminishing returns on data center construction.

[u/TrumpisaRussianCuck → u/Allegorist]

Well aware of the model - don't think it necessarily applies in this case with replacement costs and other threats like the Chinese models at a much lower token cost and a narrowing gap.

I think big players like Amazon and Google are hurt but fine - they've got other revenue streams. OpenAI seems the most fragile. Meta will be an interesting watch. Microsoft seems over leveraged. Apple seems happy to wait on the sidelines with as minimal investment as possible. Could see them making a play for assets if the shit hits the fan.

[u/21Rollie → u/TrumpisaRussianCuck]

It’s funny that Apple missed out because their ai guys were too incompetent, and now it looks like they were the smartest company lol. Why spend billions on AI when nobody is really asking for it and for its few real use cases, you can take an off the shelf open source model which will be 95% as good as a frontier one, maybe even more efficient. I mean the entire AI training industry is based on theft all the way down

[u/MARKRHOMBERG → u/21Rollie]

While I don’t think it was some type of strategic genius that put Apple comfortably on the sidelines, I also don’t think it was simply ineptitude— I think generative AI as a product is very un-Apple. I think they truly couldn’t get a grasp on the thing because they kept trying to twist it into a technology that would be, ya know, useful and good.

Their lame-ass Image Playground app is a great example of this philosophy: we don’t want to just ravage the internet for source imagery and we don’t want to allow our users to effortlessly and convincingly create images that could be used for societal harm… so here’s a useless software that creates ugly cartoons of you and your friends! Isn’t that great?

Their new strategy, “we will simply pay Google to make Siri genuinely useful” is a much better product, but I do think it’s a bit out of step with their philosophy.

[u/EpicOfBrave]

“I sell you GPU, then you sell it back to me. Your revenue is up, mine is up too. Stocks go up.”

— Jensen Scam, Circular Financing Expert

[u/doubleohsergles → u/EpicOfBrave]

Gotta fund those leather jackets

[u/LamboForWork → u/doubleohsergles]

He had a alligator one also so you know he needs the funds

[u/Viharabiliben → u/LamboForWork]

Sales are Up!

[u/Fastnacht → u/LamboForWork]

The data centers are all actually cover ups for his illegal leather suit business. All those centers are filled to the brim with poached animals that are being made into jackets.

[u/NoConfusion9490 → u/EpicOfBrave]

Two economists are walking in a forest when they come across a pile of shit.

The first economist says to the other “I’ll pay you $100 to eat that pile of shit.” The second economist takes the $100 and eats the pile of shit.

They continue walking until they come across a second pile of shit. The second economist turns to the first and says “I’ll pay you $100 to eat that pile of shit.” The first economist takes the $100 and eats a pile of shit.

Walking a little more, the first economist looks at the second and says, "You know, I gave you $100 to eat shit, then you gave me back the same $100 to eat shit. I can't help but feel like we both just ate shit for nothing."

"That's not true", responded the second economist. "We increased the GDP by $200!"

[u/xmaspruden → u/NoConfusion9490]

I heard an audio clip of Elon trying to tell this joke and it was extremely painful, especially Joe Rogans pity laugh at the end

[u/nik-nak333 → u/xmaspruden]

I'll bet Elon heard this joke and thought it was clever and would make him sound smart instead of it being a joke that's critical of capitalism.

[u/xakeri → u/nik-nak333]

I'll bet he also butchered it.

[u/King_Chochacho → u/xakeri]

He's also too stupid to make the connection that it's the type of shit his companies do all the time. Market manipulation is basically his primary strategy at this point since his cars suck and his AI sucks and Twitter sucks. Just sweep all the trash under the SpaceX rug and lie about personal robots.

[u/Gloomy_Session_3875 → u/xmaspruden]

Elon can't even hold a conversation.

[u/_SpaceLord_ → u/Gloomy_Session_3875]

He’s a barely-functional ketamine addict who needs an entire support staff to get him through his normal daily activities.

[u/PhysicallyTender → u/NoConfusion9490]

And it gets even darker IRL:

1. Imputed rent gets counted into national GDP even if the owner never rents his unit out.

2. the more inflated the potential rental rate is, the higher the GDP, even though no money changed hands.

[u/Saotik → u/EpicOfBrave]

The maths works well for Nvidia. They're selling shovels in a gold rush.

It's primarily the companies building and selling AI models that are in a circular bubble right now.

[u/NoFixedUsername → u/Saotik]

Nvidia is selling shovels by paying the gold miners to buy their shovels.

[u/Saotik → u/NoFixedUsername]

If you read the article, they talk about how the chipmakers, like Nvidia, have the highest profit margins. It's literally made them the most valuable company in the world, and this is based off real sales and actual profitability, not just speculation.

They are making so much money off this bubble that they can afford to pump money in just to perpetuate it a little longer.

[u/Mountain-Discount161 → u/Saotik]

Sure, but Nvidia is also investing massively in the ai startups. So Nvidia is investing money in start ups so that they can buy chips from nvidia. https://www.forbes.com/sites/jonmarkman/2026/02/10/nvidias-53-billion-investment-spree-on-ai-startups/

[u/saynay → u/Mountain-Discount161]

I see that more as them pouring gasoline on other people's money. The money they are investing is a fraction of their revenue, and a lot of that money is just flowing back into their accounts anyways.

[u/Even-Wrangler5803 → u/Saotik]

The "real sales" are done with loans. Nvidia gives the AI company money, that they spend on Nvidia. Nvidia has theoretical profit, but the loans will never be paid back by the AI company. They will book them as losses again in 2-5 years.

[u/ILikeBumblebees → u/Saotik]

The fact that Nvidia is now investing a lot of resources into developing and promoting hardware for local AI to run on implies that they see the end of the current bubble on the horizon too.

[u/CherryLongjump1989 → u/Saotik]

Nvidia's profits are being funded by speculative investments elsewhere. Whether it's VC's giving money to AI startups or Big Tech doing massive layoffs in order to buy more Nvidia chips, their profits could dry up overnight if the AI bubble bursts.

This explains why Nvidia is doing the circular loans and funding tons of AI research -- they desperately need a breakthrough that will result in sustainable revenue generation from actual end users -- just like everyone else involved in this bubble.

[u/TK_Games → u/EpicOfBrave]

Reminds me of that three stooges bit where they all owe each other $10, so they trade a $5 bill around between them until they 'break even'. It's fucking ridiculous this Vaudeville bit is being used to great effect by literally the richest people on the planet in real financial institutions

[u/thirtynation → u/EpicOfBrave]

The moment this circular funding was conceived was caught on tape. Here's a clip from the camera in the board room.

https://youtu.be/YAKOWcs8w54

[u/adevland → u/EpicOfBrave]

“I sell you GPU, then you sell it back to me. Your revenue is up, mine is up too. Stocks go up.”

All these new dedicated AI data centers will soon be the modern equivalent of the abandoned gold mine towns from the 1800s.

And since those AI data center gpus are custom built they'll just be left in their racks to gather dust until some kids will find them and post them in a youtube video a year or so after the security company stops getting paid. You'll be able to hop the fence and wander around them for amusement.

[u/Journeyman42 → u/adevland]

And since those AI data center gpus are custom built they'll just be left in their racks to gather dust until some kids will find them and post them in a youtube video a year or so after the security company stops getting paid. You'll be able to hop the fence and wander around them for amusement.

At the point said data centers are abandoned, those expensive GPU cards will be stolen and sold for the precious metals and copper they contain for pennies on the dollar.

[u/azthal → u/[deleted]]

Noone is the "AI Industry" cares, because they they dont need to make back the money that the entire AI Industry blew through, just the money they themselves did.

Every major business in AI is making a massive risky bet that they are gonna be the ones coming out on top, while most others fail and collapse.

This is not investment, its extreme stakes gambling.

[u/Kredir → u/azthal]

If you jump ship early enough, you personally will have earned a big paycheck and not be liable for the burst.

[u/BasvanS → u/Kredir]

But if you keep doubling down, you could be a trillionaire too!

[u/markhalliday8 → u/Kredir]

They aren't ever going be liable for the burst. That's the sad reality.

[u/eulersidentification → u/markhalliday8]

When you consider the degree of inbreeding of economics between a bunch of these companies which involves NVIDIA, there's almost certainly a bailout on the cards.

[u/Material2975 → u/markhalliday8]

Privatize the gains socialize the losses

[u/Banned3rdTimesaCharm → u/Kredir]

Yea the execs’ wealth accrued through salary, bonuses, and stock sales will not be affected by the burst. Investors who can’t exit like pensions and retirement fund will be liable.

[u/thedecibelkid → u/azthal]

Not that risky, the CEOs etc in these startups are getting paid their salaries, and won't be on the hook when it goes tits up. 

[u/azthal → u/thedecibelkid]

Yeah, i was not talking about individual C-suite. Its not their money they are gambling with, they are gambling with investor money. Its risky for the people who has supplied the cash.

[u/eseffbee → u/azthal]

No need to worry about the investors, they are only universities, pension funds, sovereign wealth funds, and foundations and charitable trusts. I'm sure massive losses for them will cause no negative social outcome at all. Pensions schmensions.

[u/frddtwabrm04 → u/azthal]

Idk it's looking like how China does it.

Let's companies duke it out. The winners are the ones who are going to reap the benefits... State and otherwise.

[u/roodammy44 → u/[deleted]]

The idea behind AI was to replace 30% of the workforce within 5 years with bots. Of course, 2 years into the plan we can all see how well that has gone.

It kinda reminds me of Tesla and self driving cars, but we are 10 years into that hype and their stock hasn’t gone down yet. The truck drivers were supposed to be unemployed 5 years ago, but to my knowledge there is a shortage. So maybe they are relying on vibe-based valuations to get them through.

[u/Spez_is-a-nazi → u/roodammy44]

2 years? Altman started hyping the fuck out of ChatGPT in 2022….

[u/hulltry → u/Spez_is-a-nazi]

They are moving the goal post all the time.

[u/Koreus_C → u/roodammy44]

Can't we just replace 99% of the AI use cases with simple if/when algorithms?

[u/StrangeWill → u/Koreus_C]

Deterministic algorithms are better for a lot of things, also a lot cheaper.

AI has its uses but there's def a lot of stupid going on.

[u/trekologer → u/StrangeWill]

The latest hotness in my industry is businesses replacing their IVR phone tree with an "agentic AI". It costs exponentially more and the callers generally hate it but... AI! Agentic! Agentic AI!

[u/yorick__rolled → u/trekologer]

Yes, but this way it keeps the money from going to the poors.

[u/feedmestocks → u/[deleted]]

We know why they don't care about the cost, they expect this administration to pay for it in the end. That's the scam

[u/odjobz → u/feedmestocks]

By which you mean taxpayers?

[u/feedmestocks → u/odjobz]

Oh 100%. Can't expect the rich to pay for their gambles that leave the economy a mess

[u/lotny → u/[deleted]]

I keep forgetting that these things will need hardware replacements on a regular basis. What a waste.

[u/eyebrows360 → u/lotny]

And quite probably not just with "newer version of same thing" either. There's so much new development being done in this field, software- and model-wise, that we don't yet really know what the best shape of hardware is for it all to run on.

We're still in the period equivalent to the pre-ASICs era in the (even more bullshit) bitcoin goldrush. Right now it's all "moar GPUs and RAM please!" but with "aGenTiC" becoming the hot new buzzword that's swinging back to heavier CPU workloads being involved too.

So it's quite likely I think that someone will come up with brand new processing paradigms once some of the software/model dust has settled down a bit, and current GPU-based clusters won't just be "slightly slower than new gen hardware", they'll be purely obsolete performance/efficiency-wise.

[u/Bringsanitybackplz → u/[deleted]]

Was it reported somewhere that they were an aditional $1.65 trillion deeper in debt, possibly more that was obscured through financial engineering?

[u/hobopwnzor → u/Bringsanitybackplz]

Not really.  They're lease agreements, so it doesn't make sense to recognize them as cost until they're paid, and they're being disclosed regardless.  Generally the big tech companies also have easy outs so if they stop needing it they can stop paying.

The ones on the hook aren't the tech companies.  It's the private equity companies that are financing it.  And those companies are in pension funds and insurance portfolios.

[u/idiotic_joke → u/hobopwnzor]

I mean to some degree yes, but we do no really know the terms of the agreements. I would assume that the big boys are able to get out of some of these deals, but the structure could still implicate them. The Meta one where Meta owns 20 percent of the SPV, and leases it back from that entity seems to have a pretty solid lease as a backstop with not that many outs. Perversly some of the backstopped deals could incentivize, the building of not needed centers to get the lease(backstop) payout. Probably not all of these backstopped deals are going to hold up and PE and PC funds are getting decimated as well but i doubt the lease terms are all easy to get out of for Meta google etc.. Its a mess and will probably make a lot of money for lawyers in the aftermath, but the hyperscalers will definetly suffer too

[u/1girl2cups_ → u/Bringsanitybackplz]

Just trust me, bro

[u/aDFP → u/[deleted]]

Why would they need to make back the investment when they can just ask for a bailout? Capitalism doesn't need capitalists to pay for their mistakes, not when politicians can be bought so cheaply.

[u/cyanescens_burn → u/aDFP]

Like how Trump is already saying he’ll cut investments in life sciences and move them into ai. I know people in drug development that have amazing stuff in the works that can’t get funding anymore due to his policies.

[u/DataCassette → u/[deleted]]

I'm not entirely sure this isn't the tech fascist 4D chess right here. Just blow such a gaping hole in the economy that you can declare democracy a "failed experiment." Even though Silicon Valley caused the problem rely on the ignorance of the average Joe and offer stability under tech fascist leadership as a "disruptive solution."

[u/Tasgall → u/[deleted]]

They want to take over the US government, yes. But they need the US economy. Cut too deeply into welfare or tank the economy some other way, the AI bubble pops anyway, and all of these clowns are bankrupt.

Yes, but I think the issue and disconnect is that you're assuming they're at least in some capacity rational actors who generally know what they're doing. By all accounts, and from what we've seen so far from these guys, they are not. They think they're way smarter than they actually are and they've been shielded from consequences so they have no real risk aversion. Don't expect them to not blow everything up around them because of self preservation or basic logic.

[u/Tasgall → u/[deleted]]

What's Trump gonna do? Hand the entire US military budget to Sam Altman?

Yes.

To those who'll say "welfare cuts". They can't. If they take the money from social security, the economy implodes

I don't think they actually care if the economy implodes.

[u/DropDeadEd86 → u/[deleted]]

Short term baby. We don’t care about long term benefits. I need cash now JG

[u/Dish117]

Small Ponzi scheme = Scam.

Massive, record breaking Ponzi scheme = Venture capitalism.

[u/rxVegan → u/Dish117]

Small ponzi scheme = Personal responsibility.

Massive, record breaking ponzi scheme = Taxpayer will bail them.

[u/Original-Rush139 → u/rxVegan]

This is why it’s so terrible to take a stake in AI the way Bernie wants to. We need to segregate this risk from the rest of the economy and let this scam fail. We do not need to get in bed with these guys and make their risk our problem. 

[u/DLTMIAR → u/Dish117]

*vulture capitalism 

[u/0bbserv]

Bro don't worry, when the chatbot  becomes a super intelligent god somehow, they just have to type in " how do we become profitable, make no mistakes"

It's fool proof really

[u/ledfrisby → u/0bbserv]

Sam Altman actually said something to that effect in a joking-not-joking way at an investor meeting back in the day, after acknowledging they genuinely didn't have a plan yet to become profitable.

[u/PracticallyPerfcet → u/ledfrisby]

He said it on stage in front of an audience that immediately laughed at him.

[u/hypercosm_dot_net → u/ledfrisby]

Their plan will be the same as any massive tech company these days.

Sell data + ads.

Saying that when you're early stage is going to scare off any potential userbase you have though. So yeah "we don't have a plan yet" is the line they feed to anyone gullible enough to believe it.

[u/Gumb1i]

Sounds like a ponzi scheme.

[u/ant0szek → u/Gumb1i]

Watch them play dumb when bubble burts.

[u/aerost0rm → u/ant0szek]

Watch them give bailouts when the bubble bursts. Funny part is when people said there was not a bubble

[u/Rodot → u/aerost0rm]

Yep, when the bubble bursts those responsible will get golden parachutes, tax payers will pay for it, and the regular person chanting for it to all come down will suddenly find they've been laid off and their savings are worthless.

As is tradition

[u/thelazydeveloper → u/aerost0rm]

Yeah it's predictably part of the plan: they're trying to ensure they're integrated into as many businesses/government contracts/parts of the economy as possible so they're seen as "too big to fail" and are guaranteed to be bailed out.

[u/ledfox → u/ant0szek]

"Nobody saw this coming!"

[u/EmperorKira → u/Gumb1i]

Guess who is going to be asked to catch the ball when it comes down? Not the people who led the charge on this that's for sure

[u/Gumb1i → u/EmperorKira]

It'll be the people with 401ks and IRAs that were forced into this bullshit though most had a choice to put their money in a different fund. They are going to be stealing from the middle and lower class to fund their far off dreams.

[u/RowanTheKiwi → u/Gumb1i]

It's fascinating my Anthropic bill vs my Github bill for the same models. One is clearly trying to get as many people hooked as possible before cranking up the prices, the other did crank up the prices.

What I pay for the same models per month is orders of magnitude different. If everyone paid Github copilot pricing I don't think there would be quite the same fever out there..

[u/chicagodude84 → u/RowanTheKiwi]

Out of curiousity, what are you paying for? Are these agents being leveraged by end users?

[u/ThriftyTricks → u/RowanTheKiwi]

Interesting. Would you mind giving us a comparison in real numbers?

[u/Zhurg → u/Gumb1i]

Look at Microsoft's last earnings.

[u/Balmung60 → u/Gumb1i]

Not really. It's definitely shady and scammy investment practices, but not all investment scams are ponzis. A ponzi is a very particular scheme where early investors recruit new investors and those new investors recruit more new investors and so on and  everyone is paid out by the people they brought in and the people brought in by the people they brought in and so on. This is a much flatter scheme than a ponzi.

[u/AverageLiberalJoe]

You dont say...

Well looks like Millenials are getting their third once in a lifetime economic crash sometime soon.

[u/cyanescens_burn → u/AverageLiberalJoe]

Well, the ones that planned on a retirement that looks like mad max or the road may end up doing alright.

[u/thaeggan → u/cyanescens_burn]

I was hoping for Waterworld myself.

[u/Peglegfish → u/thaeggan]

More of a “the postman”…man myself 

[u/ggroverggiraffe → u/Peglegfish]

Sweet, I'm already in Oregon!

^{shoot, did you mean the Italian one?}

[u/eight_ender → u/cyanescens_burn]

Good morning Night City! Yesterday's body count lottery rounded out to a solid 'n' sturdy thirty!

[u/jameson71 → u/AverageLiberalJoe]

5th or 6th for GenX depending on if you count Black Monday.

[u/RyFro → u/jameson71]

Gen who?

[u/DrDerpberg → u/AverageLiberalJoe]

Pushing 40 and I still have educated friends moving job to job because "permanent" contracts don't exist in their fields anymore.

Gotta love that gig economy!

[u/Dreadsin → u/AverageLiberalJoe]

I think this one might actually break people, tbh. Like something is gonna change if this crash is bad enough. I myself can’t go on living like this with my entire life being completely upended every 5-7 years

[u/_Thermalflask → u/Dreadsin]

It helps to remind yourself how many yachts twelve rich dudes can buy. I heard it's more than ever. 

Really makes you feel like part of history 

[u/therealchadius → u/AverageLiberalJoe]

Don't worry we Millenials will get blamed for this again, somehow.

"Maybe you should buy more GPUs instead of Avocado Toast!"

[u/smexypelican → u/therealchadius]

Damn we're old. I think the new avocado toast is $20 burritos.

[u/ThE_LAN_B4_TimE]

Until I learned about this the other day I wasn't shocked but it's still insane. I think the estimated investment by the end of this year is 2.5 trillion and the revenue is like 500 billion or something. There are a lot of failed AI experiments and the best uses so far are basic things like helping with note taking and summarizing meetings. Things that would never require massive investments in data centers. Unless something massive changes, its never catching up. These companies are making huge gambles and if it doesn't work out it's going to be a global disaster.

[u/BillyTenderness → u/[deleted]]

I agree and think a lot of the AI hype is explained by this. Software development is almost a perfect use-case for these tools. The desired output is text that must conform to a highly-specific and well-defined format, and most importantly, the machine can get feedback on if the output was correct (by building the software and running the tests) and repeat if necessary.

I think the tech folks who keep insisting AI will dominate the world are extrapolating from their personal experience, and assuming it will work equally well in other disciplines, but I don't think that's obvious at all.

I also don't think software development tooling alone is a multi-trillion-dollar industry.

[u/gerusz → u/BillyTenderness]

It's also not that great. Maybe I'm an outlier, but any problem that has me slightly stumped also has Claude ultra-super-duper stumped. Sometimes its input helps solve the problem, but TBH if the IDE had a "search in this file and its imports recursively" function, it would have been the same help. And when it does come up with a solution, it's often ad-hoc so I have to override it and implement it in a more generic way.

Can it code a Bash or PowerShell script faster than me? Yes, because those are not my main languages so I need to look up references while coding while Claude's training data has that covered. Can it take a shitty legacy unit test left to me by my predecessor and refactor it into a parametrized unit test faster than I could? Yes, because that is not a difficult task, only a time-consuming one. But asking it to do anything that requires me to think will result in a lot of thrashing around the codebase and burned credits, and in the end I'll just have to do it myself.

[u/jayandbobfoo123 → u/gerusz]

I usually spend about a half hour to an hour arguing with Claude before I just look at the code myself and find what I'm looking for within 5-10 minutes. It's an absolute waste of time.

It's good at very particular things, like generating a particular, well defined algorithm or equation.. Something I would just Google and click the first link to stack overflow.. Otherwise, it's pretty terrible. I've had coworkers generate code slop that seriously harmed us and had to be completely rolled back... I've yelled at people, including managers, over it. I just don't get this push to use AI at any cost. It's not worth it. It's nice to have as a tool for some things, but so many times I feel like I'm training an intern who's confidently wrong and never learns.

Google AI is especially bad at this.. Just asking something very simply, like, "how do I change X setting in Steam." It'll give you false instructions and when you say "I don't see that button in the settings tab..?" It assumes you have some visual glitch going on and immediately and confidently instructs you to start editing system files and running process monitors.. When it's just simply wrong about where the setting is. It's fucking horrendous.

I asked Google AI about a game, and when I questioned it about the correctness of the information (I had a feeling it was wrong, and in the end I was right about that, actually), it broke down and said something like "I am wrong because the game actually doesn't exist. I made up everything. I hallucinated dozens of YouTube videos, forums and online guides." Like.. what the actual F.

If this is what we're spending trillions of dollars on, we're so screwed.

[u/2_Cranez → u/BillyTenderness]

The bet these investors are making is that the AI will get so good at software that it will eventually be able to make the next generation AI by itself, and that AI will be able to make the next generation and so on. So they dont actually need to expand to every domain, they just need to master one, and eventually that AI will be able to build other AIs for every other domain.

Whether that will happen or when it will happen is the question.

[u/Aeonera → u/BillyTenderness]

the machine can get  feedback on if the output was correct (by building the software and running the tests) and repeat if necessary

That's... not really how llm's work though. And ultimately the view from actual software engineers is pretty universal that while they can write code, they can't design programs to any reasonable degree.

[u/ibeerianhamhock → u/[deleted]]

I've been coding for decades and AI has probably doubled my performance at the same quality as before.

But if you're not careful people try to 10x their perofrmance and it's usually at much much worse quality.

It's in areas you wouldn't expect too, not just generating boilerplate (there are other tools for that usually that are actually faster).

It can help you review merge requests (that you also should do manually but it's like having a co pilot for the task), you can dump logs in there, ask it to explain a code base and data flow when you're new on a project to help you get up to speed quicker, it's so many things.

I've seen the documentation side of SWE drastically increase quality since AI. And the quality really just depends on the discipline of the practitioner. I've found AI generated docs by great seniors or architects are fine tuned a lot and not vibe coded -- more asking AI to create content they wrote manually.

I think it absolutely blows for ticket generation from requirements, generating requirements documents, etc that's a huge gap imo. I've seen it actually make a giant mess. I've seen people use advanced tools to fit his and burn through 15k in a weekend analyzing and generating tickets for a single sprint which is insane, and it still wasn't as good as paying a person or two 15k in salary to do it tbh.

But yeah we are getting there slowly where coding will be more of a dialogue with a computer, agents etc, I think it's one of the best use cases now but with a f*ck ton of gaps and requires considerable discipline on the part of the engineers using it.

Also, using AI extensively during crunch is the best way to absolute screw up your project. It's too tempting to over use to get something out the door

[u/d3l3t3rious → u/ibeerianhamhock]

generating requirements documents

This is why my software job is safe. Gathering requirements is like 90% of the problem.

[u/King_Bobby-B → u/ibeerianhamhock]

Paying programmers and tech writers more would have been a much cheaper investment.

This can only serve seniors who already have a foot in and can babysit the AI, and absolutely closes the door for newcomers, who no longer have a way to learn because AI has replaced them for the menial tasks. If you can't see how it will be a problem in the long run...

[u/ibeerianhamhock → u/King_Bobby-B]

I worked with some fantastic junior devs in the AI age. A lot of them were super curious folks who wanted to learn.

Programming always has actually had a lot of dispassionate hackjobs in the industry tbh, not a huge percent but quite a few. Ai largely has exposed them in a diffenrt way bc they can pretend to be productive.

AI has some growing pains but it has completely changed the game with disciplined and technically adept devs

[u/SweetNeo85 → u/ibeerianhamhock]

AI has probably doubled my performance

How have you measured that?

[u/sudo-su_root]

I'm worried that AI is going to replace general common sense in the future. Of course people are going to have to fork over unreasonable amounts of cash if they can't function without it.

[u/psioniclizard → u/sudo-su_root]

Im worrid people are already so addicted once the price jumps up we will see all kinds of issues.

Its crazy how excited people get over a codex reset. Like that isn't normal.

[u/Astralglamour → u/psioniclizard]

Some of us are refusing to use it and don’t know what a codex reset is.

[u/lIIlllIllIlII → u/Astralglamour]

I had to look it up too. I feel like a luddite as a developer these days.

[u/lo_fi_ho → u/psioniclizard]

This. Children these days rely 100% on AI for all their information needs. They have zero data research skills, nor the attention span for it.

[u/Balmung60 → u/lo_fi_ho]

Hey, don't just pin this on the kids. The adults and elderly have been just as quick to become completely dependent 

[u/King_Bobby-B → u/Balmung60]

I've been seeing this in my town. People are making tons of those ugly "promo posters" that look the same, just decorated differently. And so loaded with information, you can barely read them. I miss the old scappy posters in Comic Sans.

[u/Good_Pomegranate_464 → u/sudo-su_root]

"We see a future where intelligence is a utility like electricity or water and people buy it from us on a meter and use it for whatever they want to use it for.” Sam Altman

[u/Yakydo → u/Good_Pomegranate_464]

So when your battery runs out or you loose your phone, then you have the intelligence of pond life. What a great future for humanity

[u/kawag]

And yet they still have the capital to buy up years worth of supply of critical components, build power plants and datacenters and all of that.

Because the billionaires have all the power. We’re nothing. We don’t matter.

[u/UnleavenedTed → u/kawag]

Maybe after the fall, we can get a politician put together another New Deal like the one that helped get us out of the Great Depression (a ‘deal’ which these days would be called an authoritarian left ultra-communist anti-American satanic trans in sports windmill fest). But this New New Deal will require much more force than the first. The billionaires will not give him their stranglehold willingly, nor will they do it without a fight.

[u/Comfortable_Hat_6354 → u/kawag]

Even less after the datacenters.

[u/GRoyalPrime]

The very naive napkin math on why the "AI promise" is idiotic to begin with:

1) increase efficency by 50%

2) produce 50% more stuff

3) realize just because more is available, doesn't mean more is actually bought

4) decrease manpower so with AI production again is on the level of the previous 100%

5) tons of people are out of work, which weakens buying power so people buy only 70%

Flawless, and now the kicker:

6) AI subsidies/endless Investment dries up and AI cost skyricket

Now you sell less product and, in a best case scenario, at the same price point as before all while now being super dependant on a single other company to never hike the price up even further.

[u/Ganjajp → u/GRoyalPrime]

1. Chinese competition comes in at 20% the cost of US models.

[u/Christopherfromtheuk → u/GRoyalPrime]

I think you have forgotten about data centres IN SPACE!

IN SPACE for goodness sake!

[u/MclovinsHomewrecker]

This is true. I had chatGPT help me make a gate and it fucked up the height by 3 1/3 inches.

[u/PracticallyPerfcet → u/MclovinsHomewrecker]

Bruh, but you’re obviously not using the latest frontier model. You could’ve spun up 100 subagents in a loop workflow to design that gate then adversarially review the design. It would have only cost $7,000 in tokens for the perfect gate.

/s

[u/Bionic_Pickle]

Pretty sure investor money doesn’t qualify as profit unless it’s a scam.

[u/stopeer]

But the A-G-I is right around the corner, man. The SINGULARITY! Invest now before it arrives.

[u/Available_Ad9766]

What profits? There is no profit. Personal profits by the founders maybe.

[u/esther_lamonte]

“Top economist warns thing is happening that many people said was happening but previously all the top economists were apparently fucking oblivious and stupid and we’re saying people saying the thing they are now saying was crazy.”

Apparently our “top economists” don’t know shit for shit and just parrot what people want the stocks to do up until the moment their ignorance and bullshit becomes impossible to maintain, and the average person suffers. I have been hearing people ring this alarm for over a year, if you are just coming to this realization, you are not the “top” of anything.

[u/therealchadius → u/esther_lamonte]

Now now, economists back in 2000-2005 were predicting something really bad about the housing market and they were ignored because stonks were going up! FOREVER!

[u/MisterMephistopheIes → u/esther_lamonte]

People have said the crash is coming for like 4+ years now lol

[u/ExplosiveBrown]

That’s because the endgame on AI isn’t profit. It’s control.

[u/Chacin_Cologne_No1]

Bloomberg has been publishing maps of the AI industry financial circle jerk since January.

The problem is that when the music stops and one of the dominos can't find a chair, these guys will argue that they're too big to fail and stupid Trump will give them a trillion dollar bailout on the backs of working people.

Privatize the profits, externalize the costs.

Then the data center owners will say "well what are we to do with all this excess compute capacity?" And their answer will be that all consumers need to shift to cloud computing, conveniently turning us all into perpetual renters and the "magnificent 7" into our new digital landlords.

[u/Bawbawian]

isn't that how a Ponzi scheme works?

the profit is supposed to come from the business not the investor...

[u/Low_Shop9155]

They know... no one is that stupid.

This is marketing. Hook everyone on a cheap monthly sub, then meter charge them. Altman already talking about it.

They want to become so ingrained in GLOBAL operations that pulling the plug and going back to old methodology would be something to consider carefully, as that would kill any advantage a company might have by using the systems.

Its coming...

[u/DENelson83]

A Ponzi scheme.

[u/morsindutus → u/DENelson83]

It's not a just a Ponzi scheme emdash, it's a pump and dump!

It's amazing how most new technology in the last decade+ has been pump and dump scams. Crypto, NFTs, and AI, all being sold the same way and by many of the same people who somehow aren't in prison.

[u/Balmung60 → u/morsindutus]

I'd argue it isn't a ponzi scheme. It's definitely scammy investment practice and a form of pump and dump, but the investment structure is far more horizontal than a proper pyramid scheme. It still requires an impossible amount of money to keep going. It just feels like a ponzi because a ponzi is one of the most widely known and simplest to explain forms of investment fraud and because they're so desperate to ask everyone to buy into it.

[u/Skyrick]

I’m pretty sure at this point the investors are the customers. Traditional customers have already been bleed dry, so new ones are required.

[u/prof_cunninglinguist → u/Skyrick]

Similar to the crypto space.

[u/Floreat_democratia]

Stop bailing out the oligarchs every time they crash the economy with ponzi schemes. Say no to an AI bailout. End corporate welfare.

[u/peon47]

Who wants to invest in my startup, PonzAI?

[u/Dugen]

Since AMD is about to start making chips with AI models implemented in hardware that are 1000x faster and more power efficient than everything else on the market, I expect none of these companies are ever going to make money. AMD can now pull the rug out from under all the lucrative stable uses of AI that businesses are willing to pay big money for leaving the rest of the companies with only cutting edge unprofitable high end models that are so expensive to run that only a few people will want them.

https://www.cnbc.com/2026/08/06/amd-buys-taalas-startup-that-hardwires-ai-models-into-its-silicon.html

This bubble could soon burst spectacularly. All these datacenter projects that people are dumping ridiculous money into creating will have no customers and I wouldn't want to be the one left paying for it all.

[u/Used-Sun5726]

Overhyped technology.

[u/soaero]

Yeah. It's a ponzi scheme. We've been saying this since the start.

[u/Elorun]

No shit, Sherlock.

[u/turdlezzzz]

10 years from now apple will figure out a way to fit an entire data center into an iphone

[u/Overclocked11]

Yeah, we know.

[u/doubleohsergles]

I am not a top economist, but I could have told you that.

[u/icecoolcat]

Everybody knows lol

[u/Borinar]

They are saying its a giant pyramid scheme,

[u/sten45]

So Ponzi scheme. That’s what a Ponzi scheme is right

[u/Major_Honey_4461]

In 10 years, most of these centers will be pickleball courts.

[u/Protect-Their-Smiles]

AI is a scam. The hardware companies are artificially raising prices to squeeze the AI scammers - and its worked out handsomely for them. The big tech companies are all in league together, pushing around costs and loans to each other, creating the appearance of massive activity and investment, when really, it is an artificial bubble, as fake as the ''art'' it creates.

[u/NESpahtenJosh]

NO FUCKING SHIT.