"Top Economist" states the bleeding obvious.
this post was submitted on 11 Aug 2026
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He forgot the: Because investors are now the only ones with money to spend.
Ponzi called, he wants his scheme back.
Well the jerk store called, and they're running out of you!
Relax Costanza 😂
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Funny how the "Top Economist" just parroted what Ed Zitron, also quoted on the piece, has been harping on, since... checks notes always.
Edit: Zitron, the name. Not Zitrone, The German word for lemon.
When this is all over the world owes Ed Zitron a massive fucking apology.
Fuck fortune, here's the link to the actual write-up: https://www.apollo.com/wealth/insights-news/insights/daily-spark/in-ai-the-41-percent-depends-on-the-59-percent
Yeah and the biggest issue is covered well here: https://www.notesfromthecircus.com/p/the-house-of-ellison-is-on-the-brink
Essentially: the profits are in the infrastructure end (AI companies paying for parts to build the data centres) not the consumer facing end (the actual models - customer paying AI companies). The money is coming from investors buying in to AI in the hope of winning the supposed arms race to be The One True AI. The whole thing depends on the revenues in the consumer facing end going up to show this is a growing market and make people believe they will eventually reach profit. But the revenues in the consumer facing end are fake and being inflated by circular movements of money including companies like Nvidia paying companies like OpenAI to buy product, or OpenAI paying for product in stock. The revenue inflation is very similar to how Enron inflated it's books its revenue appear higher than it really was.
The brutal reality is: there will not be One True AI to Rule Them All. Instead AI is looking increasingly like a commodity - people will just use the cheapest, simplest tool to do the task, rather than play inflated prices for a swiss army knife AI. And people can host those cheap, simple AIs aleady at home, or on servers in the cloud, or companies can also do the same. The whole US bubble is predicated on spending as much money as possible to stake a claim in a future Google, when it's looking more like it'll be like the fast food sector with razor thin margins. Some of these companies may end up profitable but this is going to be a hell of a lot more competitive and less profitable than the valuations assume.
Expect a very nasty correction.
I literally cannot wait for the correction
It will be interesting, normally you'd expect massive layoffs but companies may be forced to actually re-hire staff due to their over-inflated AI replacement expectations
It's a giant economic bubble in plain view.
Let's not forget that they're literally stealing from anyone who ever made anything in our entire history.
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Soon™
The bubble gonna poof?
Either that, or the rich and corps will go all in. The point was always to replace human labor, just depends how far from that they think we are. People still see a report an AI did something stupid and laugh at the idea of it replacing us, but just 5 years ago we wouldn't have believed the things it can do today.
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The problem with capitalism is that morons can get filthy rich and make poor decisions.
Example 1: US president.
Yeah, look at Zuckerberg, who recently burned billions on his crappy virtual reality project, and is now doing the same with AI.
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Fancy being a top economist and therefore being privy to knowledge that is beyond the capabilities of us mortals. We thought the AI was a profitable business, and it turns out it's a giant scam, who would have thought it?
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The problem is two things are happening at once and they are being conflated. Financially a cannibalising house of cards is being built which is a common artifact of modern capitalism. But in the same process a means is being realistically sought, and openly expressed, to replace the human workforce. This second aspect is unique and when written plainly is far more stark than the more common financial greed fuelled idiocy half.
Nah, I'm sure all the most valuable companies and richest people are pouring more money in to developing AI to replace the human workforce out of the goodness of their hearts.
Once most humans are no longer needed in order for them to have all of their needs and wants met and they are directly in control of all production and everything else they definitely plan to share everything equally and turn Earth into a utopia for all of humanity. Sharing and caring is what the rich and powerful do best.
Machines will see no ultimate difference between the workforce and the owners of production. This course leads to only one destination.
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I feel like everyone knows it's a bubble but that people are expecting it to be like the Dot-com bubble where a small amount of companies succeed, hoping that they invest in those companies.
That's pretty much what is driving the entire AI "boom". It's the Amazon effect.
Amazon, and Netflix to a certain extent as well as a number of other early internet startups, lost money for around 10 years before they started making shit tons. And everybody wants to be on that particular ride. So they are queueing up in every AI line they can find to hedge their bets on one of them being the one that survives and thrives. It doesn't really occur to any of them that all of them could fail. Because "AI is the future". Except there is no plan to monetize any of them. And so far every time one of them introduces a charge, people stop using it.
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Why is it that almost all big financial situations in my lifetime are Ponzi schemes?
This has Ponzi elements, but it's closer to a multi-company Enron in its structure. They're manufacturing fake revenues through circular investments. Nvidia invests in AI companies and increases their value while AI companies use that investment to buy Nvidia cards increasing its value so, so they invest more in AI, so they buy more cards....
Enron did this by making fake companies to generate fake revenue. Right now the tech sector is all working together on this scheme, so none of the companies are fake, but the revenue is.
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What a smart economist that is. 2 years after everybody knew how this scheme works, they came to the same conclusion. Amazing. Now the world will for sure change. Thank you.
'Profits are currently being funded by investors rather than earned from customers'
Which profits?
Ah, now I see the actual quote is: "[...] the AI boom's profits are currently being funded by investors rather than earned from customers." he means the profits of the shovel sellers, not AI profits.
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CEO, "It will pay off because I'm the visionary."
The goal isn’t consumer level profits, the goal is to replace workers, this is the first time capitalists are looking farther than quarterly profits. They’re investing in R&D to replace us, not selling a product. We are not part of the plan.
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Together they're on the hook for over a trillion dollars in lease payments, so far, that haven't started yet. They're counting on turning a profit before they need to start paying that back. That's why they're shoving it down our throats, they either make this shit work or they go down in flames.
I'm betting they go down in flames, base on the absolute shit-show "AI" has turned out to be. They keep claiming they have fixed it, or they will fix it, and then it shits the bed again in some public, spectacular way.
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Investors don’t create profit, they give capital, very different dynamic, I want this bubble to burst so bad
I think AI could have a good tool for specific purposes and also a very lucrative business if only they had not thrown all that money at it.
The extreme investments forced them to roll it out prematurely over a much larger market that it could ever supply in a meaningful way.
They're trying to force a camel through the eye of a needle.
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Investment shouldn't count as earnings. You're literally borrowing the money...
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Fortune is part of this bubble. They helped create it by encouraging top management to ride it... And even here they still do "he said" reporting.
I'm not sure it matters anymore. It's like they've found a way to make it not matter.
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Regardless, fuck AI and its speculators. Onward the Butlerian Jihad.
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