Comment Re:They are asking the wrong question.... (Score 1) 31
The question is not "IF" the AI bubble is going to burst, but "WHEN". It's impossible to keep up these spending levels in the long term, and I am yet to see AI profits outpacing the spending. There are only two kinds of people who believe otherwise: people with zero knowledge of what LLMs really are, or CEOs of AI companies
It is plausible we're in a bubble. And there's some evidence for it. That companies can just add the words "AI" to something to get investment is a serious sign. But the revenue situation, while weird, is not by itself definitive. Anthropic even made a profit in Q2 this year https://aitoolsrecap.com/Blog/anthropic-first-profit-2026-revenue-breakdown . Now, there's enough weird accounting going on, and circularity within the various companies, that interpreting that as a definite, genuine profit is something I'd be hesitant to do, but from all the public information it does look genuine.
There are two, related issues. First, if a "bubble" keeps going on for long enough, it stops being a bubble because society just reorganizes around it. For example, there's a decent argument that the industry was in a bubble since the 1930s (or even earlier) but that we reorganized cities and infrastructure to support it. And then when there was finally, almost a hundred years later, a danger that that bubble was going to pop, as it really had deserved to decades before, we had the auto-bailtouts (which were not just in the US, but also included the UK, Russia, France, Germany, Italy and others). https://en.wikipedia.org/wiki/2008%E2%80%932010_automotive_industry_crisis. There's a related saying which generally comes up in the context of people thinking of short-selling: "Markets can be irrational longer than you can be solvent." Second, even when a bubble does burst, the tech itself may still grow or be highly useful. When the train bubble burst in 1873, it was devastating, but by most major metrics of the industry (amount of track laid down, number of stations, estimated number of people-miles traveled per year) numbers barely dipped or kept going up. Similarly, when the dot-com bubble burst some specific things did get really damaged (with some early fiber optic being just abandoned) but by and large, the internet continued to grow to the point where it ended up more ubiquitous than even boosters in the late 1990s would have predicted. So a bubble bursting doesn't mean that LLM based AI is goes away.