Technology

Wat? Capitalism knows exactly how to deal with this situation. People who still have faith in the companies will keep loaning them money or buying their stock or investing in them in other ways, and people who don't have that faith will stop doing those things. Eventually each company will either succeed or run out of believers and die. It's a very common scenario.

edit: answering the people who mentioned bailouts and government loans, as if to invalidate what I'm saying here.

1. Bailouts are infrequent special cases where governments intercede when there's fear that corporate failures might cause widespread unemployment or other economic consequences. The entire AI industry isn't even in that leage - it currently employs around 25-30,000 people. The largest one (OpenAI) only has about 8000. The largest of them could fail without disrupting their industry. This is nothing like a situation that would spur an industry-wide bailout.

2. Same goes for large government loans or loan guarantees. These aren't handed out like candy whenever anyone asks. The scale of the consequences from company failures simply wouldn't justify it.

The overwhelmingly likely scenario if AI companies fail is mergers and acquisitions. There's even a class of investors known as "corporate raiders" who specialize in buying desperate companies and selling off the assets. None of this is new, it's normal business activity that happens all the time, just part of the ecosystem. Believing AI companies are bulletproof because the government will simply hand them money simply isn't supported by history. For a counterexample read up on the dotcom bubble of the late 90s, when tens of thousands of web startups went under without getting bailed out.