🔴 The AI Bubble Is Going to Burst. What Then?

Today, it looks as though all the cards are in Sam Altman's hands.

Around OpenAI, a bubble has formed, estimated at between two and three trillion, made up of debts announced, hidden from view or simply unknown, in which several large companies and players have agreed to take part.

Add to that a second-tier debt, that of those who borrow to supply the equipment needed to build the data centers (generators, cement, raw materials) in quantities never imagined before.

And now even our head of state and the European Union are announcing, respectively, €109 billion for France (February 9, 2025) and €200 billion for the European Union (February 11, 2025), to join a game of liar's poker whose rules nobody seems to really understand.

The question one might ask is: when did reason desert us?

Unless we believe that AGI is coming soon, and that within the next three years it will let OpenAI generate more than a hundred billion in revenue.

Otherwise, it's a crash.

In any case, this AGI strategy would imply that part of the information about the real power of AI is not public, and that it is being deliberately hidden by the dominant players. That's possible. The confidential partnerships with Microsoft and the NDAs imposed on partner teams suggest that the AGI strategy rests on information kept secret for competitive and security reasons.

“I feel like the industry is making too big of a jump and is trying to pretend like this is amazing, and it’s not. It will take about a decade to work through all of those issues.”  Andrej Karpathy

The other option is that we are looking at an uncontrolled financial merry-go-round, carried by a narrative that has found a new flame in the millions of enthusiasts of innovation for innovation's sake.

One often wonders whether these same experts don't need to talk about progress to mask their apprehension and their incompetence in the face of the world that is coming. That's possible too.

The bursting of the bubble is now only a matter of time.

Some still project their future onto it; others see that future being born precisely in its bursting, as a chance to rebuild a different kind of technological progress around generative AI.

Europe, for its part, would probably have everything to gain from such a shock. But whatever happens, what is coming, what can reach us, no longer depends on our wishes, nor even on everything we might have wished for.

We might as well get ready.

Here is a note written for one of our clients on the reality of the AI bubble, which I am offering this week to our paying subscribers. (consider becoming a subscriber)

The sovereign Research AI bubble edition

(continued for subscribers)