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    Home » Opinion | Is A.I. Actually a Bubble?

    Opinion | Is A.I. Actually a Bubble?

    Team_NationalNewsBriefBy Team_NationalNewsBriefDecember 24, 2025 Opinions No Comments4 Mins Read
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    So let’s talk about the question of a bubble. Tracy, you all have done a bunch of episodes talking to different people about this. Make for me the best case you can, both against the idea of a bubble and then for it. Oh, man. So, against the idea of the bubble is very simple. It’s this idea that we were talking about earlier, which this is basically a winner-takes-all strategy, and if everyone develops the products that they say they’re going to develop, if they develop A.I. models or systems that magically solve every business or person’s problems in the entire world, then perhaps you can justify some of those valuations. It’s not a bubble if magic occurs. That’s right. That’s right. And that’s what a lot of these companies are processing. They’re promising magic. That’s the way they talk about it. So I think there’s a concern as A.I. becomes an even more dominant force in the U.S. economy, if the bubble bursts, or even if the promised revenue and savings doesn’t materialize to the scale that people think it’s going to then you’re going to have an economic impact that potentially feeds on itself, which would be similar to what we saw — again, not to be too pessimistic — but similar to what we saw back in the run up to the great financial crisis. Housing became an incredibly important driver of U.S. economic growth. Everyone was buying houses, houses were being built. We saw the share of housing construction in the U.S. economy go up, and eventually it got so big that housing became the source of wider problems in the U.S. economy. That wasn’t always the case. It used to be that there were problems in the U.S. economy and housing would get hit. What happened was housing got so big that housing became the proximate source of problems in the wider U.S. economy. And the concern now is that we might be on the same path with A.I. So you showed the chart of the circularity of a lot of these businesses. I always think about that “It’s Sunny in Philadelphia” meme of the guy standing in front of the board with all the red strings connecting everyone. Check this out. Take a look at this. It feels very much like that once you start to untangle these relationships. But the other concern is just the opacity of how A.I. is actually getting financed right now. There’s a lot of stuff going on in the private credit market. We don’t see —— Say what the private credit market is. Sure, so the private credit market is where businesses get loans from sometimes banks, but mostly other types of investors. And these loans and bonds are not publicly issued, not publicly traded. So normally if IBM or Microsoft or whoever issues a bond, it would come with a prospectus, there’d be a lot of information available about it online. You could see the terms and people would trade. Anyone can buy it. You would trade it after. Private credit is something much more bespoke. It’s a customized loan between a business and an investor. It’s very hard to get much insight on that particular market for obvious reasons. The clue is in the name. It’s all private. And so I think when it comes to financing, it’s pretty difficult to get a sense of the scale of what’s happening right now, but also to get a sense of who is actually financing what. We hear stories, you hear big investors like big private credit investors like an Apollo, who will say something like, oh, we’re really into data centers at the moment, but it’s hard to get a sense of how much.



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