Better Offline Monologue: AI Isn't Getting A Bailout
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Dec 4, 2025 Ed Zitron discusses the economic irrelevance of AI and why a bailout for large language models is highly unlikely. He critiques NVIDIA's valuation issues, pointing out that its growth expectations can't be supported by a government bailout. Delving into OpenAI, he asserts its collapse won’t destabilize the economy. Ed also highlights how AI's financial impact is modest compared to Big Tech and examines the risks tied to data centers. He concludes with a critique of doomer narratives that exaggerate AI's importance, fueling its marketing.
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AI Bubble Isn't Systemic
- The AI bubble differs from the 2008 financial crisis because failed AI firms wouldn't collapse the broader economy or wipe out consumer deposits.
- Bailouts targeted systemically necessary institutions, a condition most AI firms do not meet.
NVIDIA Needs Perpetual Growth
- NVIDIA's valuation rests on perpetual hypergrowth expectations that a one-time bailout cannot sustain.
- Any rescue would require continuous, escalating GPU purchases forever, which is impractical.
OpenAI Is Symbolic, Not Systemic
- OpenAI is symbolically huge but economically small relative to major tech firms and not 'too big to fail.'
- Its collapse would chill investment but wouldn't threaten the overall economy.