Why the prospect of the AI bubble bursting is terrifying experts

WITH BILLIONS BEING BET ON AI, IT'S STARTING TO LOOK A LOT LIKE A CERTAIN DOT-COM CRASH, SAYS CHRIS BLACKHURST

- CHRIS BLACKHURST

The figures are truly mind-boggling. Google is upping its spend on AI data centres this year from $64 billion to $70bn. Microsoft has spent $35bn on growing Al in three months, an increase of $5bn from what investors were told to expect.

Meta will have committed $70bn by the end of the year, also on Al, double last year’s total. Amazon is likewise promising to be “very aggressive” on expanding its Al presence, putting aside $125bn, with an even higher outlay due in 2026.

The bros are involved in a testosterone-fuelled, power-lifting contest on steroids. Money is seemingly no object in their headlong race to the summit. Or should that be to the bottom?

Google, Microsoft and Amazon say they are driven by not having enough computing capacity to meet customer demand. Meta is matching them, bringing the 2025 bill for just these four alone to $360bn. While they continue to splash hundreds of billions of dollars, fears are rising as to where this is taking them — and the rest of us.

Below these muscular giants is a whole raft of lesser businesses, equally determined to be in the competition. Crucially, they, unlike the super-rich brethren, must frequently resort to borrowing to fund their tech development bills.

That's fine, provided they ultimately succeed and can repay their backers. Fail, though, and catastrophe beckons. Win or lose. That's it. Succeed, and the profits are off the scale, hence the massive downpayment. Fail, and those left nursing the cost are the investors who dreamt of sharing untold riches.

Alarm bells are already ringing