This cartoon is drawn by new guest artist Jamie Sale, who did a terrific job.
I’d originally written the script so the camera would pan out until we saw that the speaker was in a giant bubble. Then I realized that sends the wrong message, because it implies that the people pushing A.I. are putting themselves at economic risk. But that’s not it at all; they’re gonna be fine.
I mean, no doubt some of them will be downgraded from “inconceivably wealthy” to “stupid rich.” It’ll be a blow to their egos and maybe even their social standing. But at the end of the day, none of them are facing any real risk; their lives will remain secure and comfortable.
It’s the rest of us they’re putting at risk.
So I did a last minute rewrite. Jamie had already done initial sketches of the cartoon, but cheerfully went along with my third-act change of direction.
Hedge fund manager Harris “Kuppy” Kupperman ran the numbers:
Simply put, at the current trajectory, we’re going to hit a wall, and soon. There just isn’t enough revenue and there never can be enough revenue. The world just doesn’t have the ability to pay for this much AI. It isn’t about making the product better or charging more for the product. There just isn’t enough revenue to cover the current capex spend. …
At the end of the day, this AI cycle feels less like a revolution and more like a rerun. I’ve seen this story before—fiber in 2000, shale in 2014, cannabis in 2019. Each time, the technology or product was real, even transformative. But the capital cycle was brutal, the math unforgiving, and the equity holders were ultimately incinerated. AI will be no different. The datacenters will be built, the chips will hum, and some of the capacity will eventually prove mind-blowingly useful. But the investors footing the bill today will regret ever making the investment. That’s how bubbles end—not with a bang of innovation, but with the slow, grinding realization of negative returns, for years into the future. When shareholders finally wake up to the fact that AI isn’t generating cash flow, only burning it, the guillotine will fall—on management, on the stocks, and on the broader market that bet its future on a fantasy.
TRANSCRIPT OF CARTOON
This cartoon has four panels. Each of the panels shows a businessman in a suit grinning as he speaks to us.
PANEL 1
A close up of a businessman grinning. In the background, a bright blue sky with fluffy clouds.
MAN: A.I. Is the defining tech of our time! Microsoft and amazon and facebook and google have spent almost a trillion dollars on A.I.!
PANEL 2
The camera has pulled back a little. We can see the man is holding a bubble blower, bubbles streaming from it.
MAN: Has A.I. made a profit? Not yet, but… Someday we’ll figure out something A.I. can do that actually makes money! It definitely might could happen!
PANEL 3
The man continues grinning, pumping his fist, as the air around him turns gray and forbidding and the bubbles stream out.
MAN: In the meantime, We have to prepare! By spending more billions building more A.I. data centers so we can spend trillions more so that someday A.I. can do… Um…
PANEL 4
We can now see that the man is talking to a huge bubble floating in the air. The bubble has been packed fill with ordinary looking people, shoved in like sardines in a can. They looked panicked and unhappy.
MAN: Anyway, A.I. is certainly possibly maybe not going to pop and take down the whole economy! You’ve got nothing to worry about!
CHICKEN FAT WATCH
“Chicken fat” is old-fashioned cartoonist lingo for little extras in the art.
Panel 2 – In a tiny window in a cloud is a tiny, teeny silhouette of a spy with binoculars.
Panel 3 – One of the bubbles has a mouse in it.
Panel 4 – One of the bubbles has a “for rent” sign.
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