this post was submitted on 11 Oct 2025
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'It's going to be really bad': Fears over AI bubble bursting grow in Silicon Valley (www.bbc.com)
submitted 4 days ago* (last edited 4 days ago) by along_the_road@beehaw.org to c/technology@beehaw.org
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[–] MystikIncarnate@lemmy.ca 9 points 2 days ago

As someone who works in tech, I'm surprised it hasn't happened already.

Part of my job is to oversee and arrange in some capacity for licensing of digital products, especially office 365, and I can count the number of people who have a copilot subscription on one hand, out of nearly, if not more than 1000 users across various clients.

I know some are using competing products, mainly chat GPT, and I don't always have visibility to that, but still.... The rate of adoption and the speed at which all of this is being developed and invested into... Does not bode well.

[–] tangentism@beehaw.org 5 points 2 days ago

"It is very hard to time a bubble," Prof Admati told me. "And you can't say with certainty you were in one until after the bubble has burst."

No, we can definitely say with certainty right at this very moment that we're in a bubble.

[–] DragonTypeWyvern@midwest.social 14 points 3 days ago

[–] hayvan@feddit.nl 4 points 2 days ago

Bad for them. Fewer ai buttons shoved to my face, higher availability of GPUs, those ain't bad for me.

[–] cupcakezealot@piefed.blahaj.zone 17 points 3 days ago (1 children)

someone on bsky posted that the gdp of the us only grew 0.1%without ai which basically means the entire us economy is dependent on ai which basically means the whole country is fucked

https://bsky.app/profile/realsporkman.bsky.social/post/3m2np4o5suc2w

[–] Korhaka@sopuli.xyz 2 points 2 days ago

Welcome to most of the western world, stagnation!

Although most of us are stagnating on GDP/capita rather than GDP as a whole and prop up the GDP with immigration.

[–] 14th_cylon@lemmy.zip 99 points 4 days ago (1 children)

Cannot be soon enough

[–] vk6flab@lemmy.radio 17 points 4 days ago (4 children)

It's likely going to take down whole companies if not countries.

[–] sanpo@sopuli.xyz 72 points 4 days ago (3 children)

Countries? Don't be ridiculous.

And any company that made itself so dependent on unproven bullshit kinda deserves it.

[–] HK65@sopuli.xyz 34 points 4 days ago (3 children)

Companies, totally.

The only country it might take down is actually the US, as it might be the spark to start some shit in the current tense environment. I mean that I could see the bubble pop be Franz Ferdinand to a 2 Civil 2 War.

[–] megopie@beehaw.org 12 points 4 days ago (2 children)

I mean, given that 1/3rd of the s&P 500s value is in 7 companies who are all heavily invested in AI compute.

I’m sure that the 10% wealthiest who’s consumption makes up over half of consumer spending won’t drastically cut back their spending if they lose a third of their wealth that’s in index funds.

And I’m sure private equity firms that are also heavily invested won’t start trying to liquidate their other assets at the same time.

No way this could see a massive decrease in consumer spending.

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[–] Evilschnuff@feddit.org 21 points 4 days ago (1 children)

Especially since ai is just treated as outsourcing 2.0

[–] fnrir@lemmy.blahaj.zone 14 points 4 days ago

AI - another indian

[–] teawrecks@sopuli.xyz 7 points 3 days ago

The Mag7 are the 7 giant tech companies currently propped up by the AI bubble. These companies represent upwards of 34% of the marketcap of the S&P500. The other 493 companies are also intimately tied to the success of AI and/or the Mag7. Not just everyone's retirement accounts, but a huge amount of the world is invested in the US S&P500 thinking they're diversified across 500 successful companies.

So to be clear, yes, we're absolutely poised for a worldwide economic recession. I wouldn't be surprised if smaller nations who rely on USD are completely bankrupted, but one thing is for certain: when AI pops, the fallout will not be limited to the US.

[–] tangentism@beehaw.org 1 points 2 days ago

Don't promise me a good time!

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[–] lowleekun@ani.social 63 points 4 days ago (4 children)

I hope that at least some rich people lose it all.

[–] Midnitte@beehaw.org 54 points 4 days ago* (last edited 4 days ago) (1 children)

Vastly more poor people will be affected, and those rich people who aren't will just buy everything up on sale, further hoarding wealth.

[–] lowleekun@ani.social 15 points 4 days ago

You don't have to tell me. What we have to do is eat those fuckers.

We all know the U.S. (put Germany in there too) is fucked beyond repair but revolution or civil war will have to wait until further suffering for the poor i guess. Nothing is going to happen until huge swaths of the middle class can't take it any longer and stop shielding the parasites.

[–] bystander@lemmy.ca 2 points 2 days ago (1 children)

Rich people (top 10-20%) are either financially smart or have financially smart people advising them. They will be well diversified in all asset classes. And will have a lot of liquid capital ready to buy after the bubble bursts. And also keep themselves fat and well fed. The wealth transfers up.

[–] lowleekun@ani.social 1 points 2 days ago

You are of course right as enough market crashes and crisis have shown.

In the end it will have to be too miserable for a large percentage of the population with enough freedom to resist. Sadly governments everywhere are working very hard at mitigating the possibilities of resistance.

[–] ininewcrow@lemmy.ca 10 points 4 days ago

We'd all like to think that but what usually happens is that the ultra wealthy lose a quarter or half their wealth, which makes no difference to anyone because they are so massively wealthy .... everyone else lose everything

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[–] ATS1312@lemmy.dbzer0.com 7 points 2 days ago* (last edited 2 days ago) (1 children)

The only way the AI bubble won't burst will be its complete integration into the military industrial complex and surveillance state, which is already underway.

AI traffic correlation for deanonymizing VPN users, ai tracking of all cellphone users across the US carrier networks, tracking of all people across all security cameras,...

This is just the beginning. And its all propped up by military spending from the US government.

"Data is the new oil" and all that? Is about undermining any 4th amendment right against unreasonable search and seizure. And AI is the latest (glitchy) tool to automate all of this.

But consumer facing side? Yeah, that's gonna burst.

[–] anachronist@midwest.social 10 points 2 days ago (2 children)

LLMs can't do most of those things and traffic analysis and other techniques already can but sometimes lack the data due to data sharing limitations.

You don't need GPUs to do traffic analysis you just need more Five Eyes, TIA, room 641A stuff.

[–] definitemaybe@lemmy.ca 3 points 2 days ago

Exactly right. Parent poster is conflating the investment in "AI" since 2022 (almost exclusively meant to mean LLMs, like ChatGPT) and specialized "AI" systems (almost exclusively "machine learning" systems).

A LLM is just about useless for any sort of surveillance or data analysis tasks. The bigger fear with LLM proliferation is as a propaganda machine, astrotufing the whole Internet with mass LLM-generated bullshit.

[–] ATS1312@lemmy.dbzer0.com 1 points 2 days ago* (last edited 2 days ago)

You don't need GPUs to do traffic analysis you just need more Five Eyes, TIA, room 641A stuff.

Oh, entirely. But that also theoretically benefits from AI: https://www.sciencedirect.com/org/science/article/pii/S1546221824004636

Hence things like: https://mullvad.net/en/vpn/daita

But further? I'd encourage you to explore what Gospel and Lavender are.

[–] bodaciousFern@lemmy.dbzer0.com 7 points 3 days ago (2 children)

So which stock do I short sell - Nvidia, Oracle, or Microsoft?

[–] themagzuz@lemmy.blahaj.zone 5 points 2 days ago

unfortunately you can't really get rich from knowing a bubble will happen. things like shorting, put options, bear certificates, and etfs with inverse leverage either have terrible risk reward ratios (you can basically lose infinite money from shorting, that's what the whole gamestop/amc thing was about) or very bad long-term gains (bear certificates and inverse etfs usually only track day-to-day changes and generally fall in value when the stock they're tracking fluctuates in price).
of course, if you know when the crash is gonna happen, it's a completely different story. then you can buy shorts/puts/etc just before the bubble bursts and laugh yourself to the bank (assuming the firms on the wrong end of those assets haven't gone bankrupt, which is also a very real risk in a situation like this)

[–] definitemaybe@lemmy.ca 6 points 2 days ago

The challenge, as always, is to never underestimate a bubble's capacity to outlast your solvency. I personally know people who have been heading against the housing "bubble" in Canada bursting since 1999. They've spent a lot of money with nothing to show for it, yet, and missed out on housing prices, like, quadrupling? Quintupling?

So, good luck. Buying out-of-market puts might be a safer bet, since you're most likely to "just" lose all your money, with a small chance of a massive payout of it "properly" crashes.

[–] MonkderVierte@lemmy.zip 6 points 3 days ago* (last edited 2 days ago)

Well, how to buffer a few hundred billions going up in hot air?

I honestly think that each stock purchase should require an appropriate deposit.

[–] protist@mander.xyz 37 points 4 days ago (3 children)

Some people aren't mincing their words about it either, calling the deals "circular financing" or even "vendor financing" - where a company invests in or lends to its own customers so they can continue making purchases.

"Yes, the investment loans are unprecedented," Mr Altman told me on Monday.

But, he added, "it's also unprecedented for companies to be growing revenue this fast."

OpenAI's revenue is growing quickly, but it has never turned a profit.

[–] HK65@sopuli.xyz 16 points 4 days ago

The revenue is still less than that of Clash of Clans or Candy Crush. And it is mostly coming from the companies involved in the shell game as well.

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[–] megopie@beehaw.org 25 points 4 days ago* (last edited 4 days ago)

All it takes is openAI or anthropic to run out of cash, then everyone providing them compute suddenly has giant power sucking white elephants that are basically useless for anything else (maybe crypto mining LMAO). And then they all stop buying more chips from Nvidia (you know, the company whose valuation is 8% of most index funds, and 80% of their revenue and all of their revenue growth over the past two years has been from data center sales).

Kinda crazy how 7 companies, all heavily invested in AI cloud compute, in one way or another, make up about a 1/3rd of the S&P 500.

I mean, good thing the AI bubble couldn’t possible pop any other bubbles. I mean, it’s not like nearly a decade of low interest rates could possibly have built any other bubbles in any other sort of asset markets.

[–] Vanilla_PuddinFudge 24 points 4 days ago (2 children)

I wonder what the next grift will be. Maybe big money billionaires will technofy religion.

[–] frank@sopuli.xyz 20 points 3 days ago (8 children)

Nah I'd put money on it being quantum computing. I think quantum has some neat applications, and the tech is cool as hell. But I think it'll be sold like "this is gonna instantly transform business overnight" and people will try to sell quantum computing power

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[–] SpaceCowboy@lemmy.ca 6 points 3 days ago

Given what Peter Thiel's been talking about lately, that's not all that far fetched.

[–] Blackmist@feddit.uk 15 points 3 days ago (1 children)

I'll likely "lose" some money from my index tracker funds when it happens, but bring it on. I know billionaires will lose a lot more than I will.

[–] FragrantGarden@lemmy.today 13 points 3 days ago (1 children)

Not percentage wise though. Their money moves the markets and it'll be them getting out that tanks your index funds. They'll rotate into something else while you wait 8 years to get back to even because AI stocks were 40% of the market and what they run up next is only 5% of your portfolio.

It's got to be near a top, but news like this makes me feel like they're looking to drop the market for one more final push though.

[–] SpaceCowboy@lemmy.ca 8 points 3 days ago (1 children)

Yeah I remember a VC guy during the dot com boom was saying they were just about to invest in another start up (following the same plan they'd been doing for a few at that point) and they got a call form upstairs telling them to pull out. The next day the bubble burst.

These bubbles burst not based on random chance. The big guys know the business isn't sustainable, but if they keep their money in it the shares maintain their value. Then one day they all pull out and pop! The bubble bursts. But they'll make money on that too by shorting everything.

They make money when the stocks go up and they make money when the stocks go down. And they have enough money to make those stocks go up or down.

[–] bodaciousFern@lemmy.dbzer0.com 3 points 3 days ago* (last edited 3 days ago) (1 children)

Just like they did with Elon's jet, we need a live public tracker of Pelosi's stock purchases / sales so we can take the same actions apparently without any legal consequences 🙃

[–] SpaceCowboy@lemmy.ca 5 points 3 days ago

You could do this (there are websites you can find easily) but Pelosi isn't in power anymore and wouldn't be in the loop on Trump's corruption which is way more significant than just knowing which company the government is going to award a big procurement contract to or whatever.

The Trump corruption seems to have gone with crypto shenanigans and you can't track them. We just know that someone made >$100M by doing crypto shorts exactly one minute before Trump posted about more insane tarrifs on China, but there's no way to know who did that and we can't track them. They'll probably make similar amounts of money on the inevitable TACO.

[–] peoplebeproblems@midwest.social 21 points 4 days ago (1 children)

All it takes is one major player to want their payout.

One. I will bet you anything it will be a bank or hedge fund.

[–] megopie@beehaw.org 8 points 4 days ago

Or like, anyone one of the massively cash negative companies with in the bubble being unable to secure more money.

Hey, how’s that deal between SoftBank and OpenAI doing? You know, the one where they get the liquidity they need to keep operating if they convert to a for profit company before the end of the year? Yah? So … they managed to convert to a fire profit company yet? No? Oh, damn, I sure they’ll figure out that incredibly complicated and dubiously legal process by the end of the fiscal year.

[–] plyth@feddit.org 18 points 4 days ago

It's like the original internet bubble. The predictions are right, but not the timeline.

However, it's not decades but years until the predictions will be true.

[–] PunkRockSportsFan@fanaticus.social 10 points 4 days ago

LLM models refuse to follow direct instructions.

Not good enough. Takes more time to deal with that crap than to just do it yourself.

The bubble will burst and the people will feast

[–] melroy@kbin.melroy.org 12 points 4 days ago (6 children)

Please let me know upfront, so I will sell my stocks.

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