The Tech Policy Press Podcast What Are the Implications if the AI Boom Turns to Bust?
Nov 12, 2025
This discussion features Ryan Cummings, Chief of Staff at the Stanford Institute for Economic Policy Research; Sarah West, Co-director of the AI Now Institute; and journalist Brian Merchant. They explore whether the AI investment surge indicates a bubble poised to burst. Topics include the financing behind AI developments, potential economic repercussions, and how such a crash could impact narratives around AI and geopolitics. They suggest possible policy responses, including stronger social safety nets and antitrust measures, emphasizing the need for public-interest frameworks.
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Revenue Vs. Massive AI Spending
- Current revenues from AI are real but vastly smaller than the massive CapEx being spent by hyperscalers.
- If expected future profits don't materialize, stock prices already pricing those gains will have to fall sharply.
Debt And Circular Deals Raise Systemic Risk
- New financing structures and debt are spreading AI buildout risk beyond profitable hyperscalers.
- Circular deals (chipmakers financing cloud buildout) increase speculation and expose local utilities and taxpayers to fallout.
Historical Bubble Framework Applies To AI
- Goldfarb and Kirsch's framework flags AI as high-risk because of extreme uncertainty and a coordinating narrative.
- Those factors, plus some pure plays and novice investors, make the conditions ripe for a bubble.
