An Economic Bubble is Forming…Just Not for Real Estate

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Jan 13, 2026

A $20 trillion economic ticking time bomb may hinge on the AI industry's success. Major tech companies are betting $527 billion on AI, but opinions are divided on whether this investment is wise. What happens if the AI bubble bursts? It could drive stock market volatility and impact home prices, making the current housing outlook shaky. Plus, are data centers really the answer for real estate growth, or just overhyped? Dive into how all these factors intertwine, influencing investors' strategies and the broader economy.

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INSIGHT

Massive AI CapEx Concentration

Hyperscalers plan to spend roughly $527 billion on AI CapEx in 2026, mostly on data centers.
That spending alone would be the size of Norway's economy and is concentrated in a few massive firms.

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ADVICE

Don't Buy Real Estate Just For Data Centers

Avoid buying property solely because a data center is nearby; data centers create few long-term local jobs.
Treat data center construction as a possible short-term construction boost, not a housing demand driver.

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INSIGHT

Revenue Gap Versus CapEx Expectations

To justify current investments, hyperscalers need about $2 trillion in annual AI revenue by decade's end.
Current end-user AI revenue is under $100 billion, implying a required ~20x revenue increase.

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Defining the AI moment since ChatGPT

00:50 • 5min

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Who are the hyperscalers and what they're spending

06:11 • 4min

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Why data centers don't equal housing booms

10:08 • 57sec

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The revenue gap: $2 trillion needed versus current sales

11:05 • 6min

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Bull case: AI lifts GDP and incumbents can win

17:14 • 5min

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Infrastructure precedent and overspending risks

22:00 • 2min

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Bear case: spending may be wasted

23:57 • 3min

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Valuations, CAPE ratio, and market fragility

27:23 • 2min

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Vendor funding and the house-of-cards concern

28:55 • 6min

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Dave's view: why he leans pessimistic

34:31 • 4min

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Different AI architectures could change outcomes

38:39 • 3min

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Revenue adoption skepticism and stock-market exposure

41:59 • 2min

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How an AI market drop could affect housing

44:20 • 3min

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Institutional rebalancing and real estate flows

47:30 • 2min

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Practical portfolio stance and risk management

• Mentioned in 18 episodes

Start with Strategy

David Meyer

A new economic bubble could be forming, and this time, it isn’t real estate. A $20 trillion ticking time bomb could explode if one thing doesn’t go completely right…the AI industry. And the effects could be felt far beyond the stock market, with real estate taking a hit as well.

The question is: Is the AI bubble close to popping, or are we on the precipice of a new era of economic growth?

Dave researched so you don’t have to, compiling the bullish and bearish arguments for AI. Top tech companies are spending over $500 billion in 2026 alone to make the AI dream come true, but strong counterarguments just might prove that those AI investments won’t pay off.

If the AI bubble bursts within the next few years, what will it do to the stock market? How will it affect home prices? And what is Dave doing right now with his money to protect against the downsides and position himself for the upsides if the AI bubble does finally burst? This is what could happen next.

In This Episode We Cover

A $527 billion bet that top tech companies are making on AI (is it worth it?)

What happens to home prices if over-hyped AI causes a stock market correction or crash

Four strong reasons why the AI bubble will (or won’t) burst

A $20 trillion ticking time bomb for the US economy if the AI industry doesn’t hit its targets

Why 99% of real estate investors are wrong about buying near data centers (be very careful)

And So Much More!

Links from the Show

Join the Future of Real Estate Investing with Fundrise

Join BiggerPockets for FREE

Find an Investor-Friendly Agent in Your Area

BiggerPockets Real Estate 1188 - AI Could Take Your Job, But It Can't Take Your Real Estate

Dave's BiggerPockets Profile

Gita Gopinath’s Big Warning: $35 Trillion Wealth Could be Wiped Out?

Grab Dave’s Book, "Start with Strategy"

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