The Hater's Guide To The AI Bubble
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The AI industry represents a massive bubble built on unsustainable economics, with tech giants spending over $560 billion on AI infrastructure while generating only $35 billion in revenue. NVIDIA's dominance creates a dangerous single point of failure for the US stock market, as 42% of its revenue comes from just five companies buying GPUs. Most AI companies, including OpenAI and Anthropic, operate at massive losses, while products like Cursor achieve growth through unsustainable pricing models they later abandon. Unlike previous infrastructure investments like Amazon Web Services, generative AI lacks clear profitable use cases and represents expensive features rather than foundational infrastructure.
Table of contents
The Hollow "AI Trade"The Magnificent 7's AI Story Is Flawed, With $560 Billion of Capex between 2024 and 2025 Leading to $35 billion of Revenue, And No ProfitThe Fragile Five — Amazon, Google, Microsoft, Meta and Tesla — Are Holding Up The US Stock Market By Funding NVIDIA's Future Growth StoryEd! Amazon Web Services Took Years To Become Profitable! People Said Amazon Would Fail!But Let's Talk About Amazon Web ServicesGenerative AI and Large Language Models Do Not Resemble Amazon Web Services or The Greater Cloud Compute Boom, As Generative AI Is Not InfrastructureCompanies Built On Top Of Large Language Models Don't Make Much Money (In Fact, They're Likely All Deeply Unprofitable)Cursor's $500 Million "Annualized Revenue" Was Earned With A Product It No Longer Offers, And Anthropic/OpenAI Just Raised Their Prices, Increasing Cursor’s Costs DramaticallyThe Generative AI Software As A Service Market Is Small, With Little Room For Growth And No Profits To Be SeenThere Are No Unique Generative AI Companies — And Building A Moat Based On Technology Is Near-ImpossibleEstablished Large Language Models Are A CrutchOpenAI And Anthropic Are Their Customers' Weak PointThe Limited Use Cases Are Because Large Language Models Are All Really SimilarGenerative AI Is Simply Too Expensive To Build A Sustainable Business On Top Of ItCompanies Are Using The Term "Agent" To Deceive Customers and InvestorsBut Really Though, Everybody Is Losing Money On Generative AI, And Nobody's Making A ProfitOpenAI and Anthropic Are The Generative AI Industry, Are Deeply Unstable and Unsustainable, and Are Critical To The AI Trade ContinuingThere Is No Real AI Adoption, Nor Is There Any Significant RevenueYes, Generative AI "Does Something," But AI Is Predominantly Marketed Based On LiesThe AI Trade Is Entirely About GPUs, And Is Incredibly Brittle As A ResultI'm Alarmed!I Don't Like What's Happening7 Comments
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