The real (economic) AI apocalypse is nigh

13 snips

Oct 6, 2025

This discussion dives into the looming threat of an AI investment bubble, driven by monopolistic companies. There's a stark warning that this bubble could lead to widespread economic collapse, as many AI firms lack a path to profitability. The flawed narrative that growth will come from replacing workers is also examined. It emphasizes the fragile state of AI supply chains and the unrealistic revenue expectations for these companies. Ultimately, the focus is on practical solutions to mitigate the impending damage of this speculative excess.

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ANECDOTE

Cornell Q&A On The AI Bubble

Cory Doctorow recounts giving a Cornell lecture where a student asked if the AI bubble will collapse and ruin the economy.
The student repeatedly asked “what can we do?” illustrating fear about graduating into economic collapse.

INSIGHT

AI Bubble Driven By Bad Unit Economics

Doctorow argues the AI economic apocalypse is inevitable because major AI firms burn cash and lack profitable unit economics.
He warns investors will stop funding losses and the sector will halt, causing wide economic damage.

INSIGHT

Rising Costs And Circular Accounting

Doctorow highlights that each new AI generation increases costs and each customer worsens losses, calling it 'dogshit unit economics.'
He notes bizarre accounting and money cycling among related firms that mask true financial health.

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The real (economic) AI apocalypse is nigh

A Zimbabwean one hundred trillion dollar bill; the bill's iconography have been replaced with the glaring red eye of HAL 9000 from Stanley Kubrick's '2001: A Space Odyssey' and a stylized, engraving-style portrait of Sam Altman.'

This week on my podcast, I read “The real (economic) AI apocalypse is nigh,” a recent column from my Pluralistic newsletter; about the looming economic crisis threatened by the AI investment bubble:

A week ago, I turned that book into a speech, which I delivered as the annual Nordlander Memorial Lecture at Cornell, where I’m an AD White Professor-at-Large. This was my first-ever speech about AI and I wasn’t sure how it would go over, but thankfully, it went great and sparked a lively Q&A. One of those questions came from a young man who said something like “So, you’re saying a third of the stock market is tied up in seven AI companies that have no way to become profitable and that this is a bubble that’s going to burst and take the whole economy with it?”

I said, “Yes, that’s right.”

He said, “OK, but what can we do about that?”

So I re-iterated the book’s thesis: that the AI bubble is driven by monopolists who’ve conquered their markets and have no more growth potential, who are desperate to convince investors that they can continue to grow by moving into some other sector, e.g. “pivot to video,” crypto, blockchain, NFTs, AI, and now “super-intelligence.” Further: the topline growth that AI companies are selling comes from replacing most workers with AI, and re-tasking the surviving workers as AI babysitters (“humans in the loop”), which won’t work. Finally: AI cannot do your job, but an AI salesman can 100% convince your boss to fire you and replace you with an AI that can’t do your job, and when the bubble bursts, the money-hemorrhaging “foundation models” will be shut off and we’ll lose the AI that can’t do your job, and you will be long gone, retrained or retired or “discouraged” and out of the labor market, and no one will do your job. AI is the asbestos we are shoveling into the walls of our society and our descendants will be digging it out for generations.

The only thing (I said) that we can do about this is to puncture the AI bubble as soon as possible, to halt this before it progresses any further and to head off the accumulation of social and economic debt. To do that, we have to take aim at the material basis for the AI bubble (creating a growth story by claiming that defective AI can do your job).

“OK,” the young man said, “but what can we do about the crash?” He was clearly very worried.

“I don’t think there’s anything we can do about that. I think it’s already locked in. I mean, maybe if we had a different government, they’d fund a jobs guarantee to pull us out of it, but I don’t think Trump’ll do that, so –”

“But what can we do?”

We went through a few rounds of this, with this poor kid just repeating the same question in different tones of voice, like an acting coach demonstrating the five stages of grieving using nothing but inflection. It was an uncomfortable moment, and there was some decidedly nervous chuckling around the room as we pondered the coming AI (economic) apocalypse, and the fate of this kid graduating with mid-six-figure debts into an economy of ashes and rubble.

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(Image: TechCrunch, CC BY 2.0; Cryteria, CC BY 3.0; modified)