The Bunker – News without the nonsense The A.I. bubble – What happens when it bursts?
Oct 23, 2025
Ryan Cummings, an economist and former White House adviser, discusses the potential bursting of the A.I. bubble. He explores the current distorted valuations and compares them to the dot-com era. Cummings warns of a potential economic crash and highlights how A.I. might be masking broader economic weaknesses. He emphasizes the significant energy demands of A.I. infrastructure and calls for careful balancing between enthusiasm and skepticism. Finally, he advocates for adaptive policy responses to ensure a smooth transition in this rapidly changing landscape.
AI Snips
Chapters
Transcript
Episode notes
AI Hype Inflates Firm Valuations
- Many firms are being coated with "AI fairy dust" and receive high valuations despite weak AI businesses.
- Markets expect AI profits to arrive much sooner than historically realistic diffusion of new technologies.
Big Tech Profits, Small AI Revenues
- Major AI investors like Microsoft, Google and Amazon show high profits but actual AI revenues remain small today.
- Capital expenditure for AI build-out far exceeds current AI-generated revenues, creating imbalance.
AI Bust More Like Dot‑Com Than 2008
- An AI bust would likely resemble the dot-com correction, not 2008's systemic financial crisis.
- A correction would be narrower and shallower unless broader financial fragilities amplify it.