[LINK] Pluralistic: The real (economic) AI apocalypse is nigh (27 Sep 2025)

[Kim Holburn]

https://pluralistic.net/2025/09/27/econopocalypse/#subprime-intelligence

....

One of those questions came from a young man who said something like "So, you're saying a third of the stock market is tied up in 
seven AI companies that have no way to become profitable and that this is a bubble that's going to burst and take the whole economy 
with it?"

I said, "Yes, that's right."

He said, "OK, but what can we do about that?"

So I re-iterated the book's thesis: that the AI bubble is driven by monopolists who've conquered their markets and have no more 
growth potential, who are desperate to convince investors that they can continue to grow by moving into some other sector, e.g. 
"pivot to video," crypto, blockchain, NFTs, AI, and now "super-intelligence." Further: the topline growth that AI companies are 
selling comes from replacing most workers with AI, and re-tasking the surviving workers as AI babysitters ("humans in the loop"), 
which won't work. Finally: AI cannot do your job, but an AI salesman can 100% convince your boss to fire you and replace you with an 
AI that can't do your job, and when the bubble bursts, the money-hemorrhaging "foundation models" will be shut off and we'll lose 
the AI that can't do your job, and you will be long gone, retrained or retired or "discouraged" and out of the labor market, and no 
one will do your job. AI is the asbestos we are shoveling into the walls of our society and our descendants will be digging it out 
for generations:

The only thing (I said) that we can do about this is to puncture the AI bubble as soon as possible, to halt this before it 
progresses any further and to head off the accumulation of social and economic debt. To do that, we have to take aim at the material 
basis for the AI bubble (creating a growth story by claiming that defective AI can do your job).

"OK," the young man said, "but what can we do about the crash?" He was clearly very worried.

"I don't think there's anything we can do about that. I think it's already locked in. I mean, maybe if we had a different 
government, they'd fund a jobs guarantee to pull us out of it, but I don't think Trump'll do that, so –"

....

That barely scratches the surface of the funny accounting in the AI bubble. Microsoft "invests" in Openai by giving the company free 
access to its servers. Openai reports this as a ten billion dollar investment, then redeems these "tokens" at Microsoft's 
data-centers. Microsoft then books this as ten billion in revenue.

That's par for the course in AI, where it's normal for Nvidia to "invest" tens of billions in a data-center company, which then 
spends that investment buying Nvidia chips. It's the same chunk of money is being energetically passed back and forth between these 
closely related companies, all of which claim it as investment, as an asset, or as revenue (or all three).

...

How much money is the AI industry making? Morgan Stanley says it's $45b/year. But that $45b is based on the AI industry's own 
exceedingly cooked books, where annual revenue is actually annualized revenue, an accounting scam whereby a company chooses its best 
single revenue month and multiplies it by 12, even if that month is a wild outlier:


-- 
Kim Holburn
IT Network & Security Consultant
+61 404072753
mailto:kim at holburn.net  aim://kimholburn
skype://kholburn - PGP Public Key on request