Organized Money The AI Bubble Everyone Wants To Pop
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Dec 2, 2025 Advait Arun, a senior associate focused on capital markets, and Sarah Meyers-West, co-executive director of the AI Now Institute, delve into the perilous landscape of AI data centers and financing. They unpack the disconnect between massive investments and meager revenue in AI, questioning if the hype will yield productivity gains. The conversation highlights risks in the complex financing behind data centers, potential bubble bursts, and the societal impacts of AI-driven policies. They also explore innovative solutions and necessary policy reforms to navigate this volatile market.
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AI Build-Out Is The Economy's Growth Engine
- The AI data center build-out is currently the primary engine of fixed capital investment in the US economy.
- Advait Arun warns this growth sector concentrates risk even if it isn't identical to 2008's crisis.
Spending Far Outpaces AI Revenue
- Major hyperscalers have spent far more on AI capex than they've reported in AI revenue.
- Advait Arun cites roughly $560B spent versus about $35B in reported AI revenue (2021–2025).
Hyperscalers Rent, Others Build
- Hyperscalers avoid owning long-term data center assets directly to preserve balance sheets and credit ratings.
- They sign long-term take-or-pay leases and let private equity and private credit fund construction instead.