So, Sam Altman sat down with reporters and admitted that parts of the AI world are "kind of bubbly." You don't say. That’s like the captain of the Titanic admitting the ship is "kind of damp." He knows it's tempting to write the bubble story, he says. Tempting? Sam, it’s not tempting; it’s the only story left to write when the numbers stop making any sense at all.
This isn’t just me being a cynic. The warnings are coming from everywhere—the Bank of England, the IMF, even Jamie Dimon. But the real talk is happening right here in Silicon Valley, in hushed tones at first, and now out in the open. I listened to old-school AI entrepreneur Jerry Kaplan talk at the Computer History Museum, and you could feel the air get sucked out of the room. He’s lived through four of these things, and he’s terrified. "When [the bubble] breaks, it's going to be really bad," he said.
He's right. This ain't the dot-com boom, where a few thousand people lost their jobs at Pets.com. We're talking about a sector that supposedly accounts for 80% of the S&P 500's gains this year. We’re talking about a projected $1.5 trillion in global spending. When this thing pops, it’s not just taking the Valley down with it. It’s dragging the rest of us along for the ride.
Let's get down to the dirty part, the thing the VCs and CEOs don't want you to look at too closely: the "financial engineering." That’s the polite term. The less polite term is "circular financing."
Here’s how it works. OpenAI, a private company that has never turned a profit, is at the center of this web. Microsoft pours billions in. Oracle cuts a $300 billion deal. Nvidia, the chipmaker whose stock is basically holding up the entire market, also invests. Then, in a shocking turn of events, OpenAI uses that money to... buy billions of dollars' worth of stuff from Microsoft, Oracle, and Nvidia. It's like a group of friends sitting around a poker table, lending each other chips. The pile in the middle looks huge, but it's the same money just moving in a circle, creating the illusion of massive demand.
Nvidia’s CEO, Jensen Huang, went on TV and said OpenAI isn't required to buy his chips with the money he invests. Right. And I'm not required to laugh at my boss's terrible jokes, but it sure helps my career prospects. Give me a break. This is A tangled web of deals stokes AI bubble fears in Silicon Valley, and it smells exactly like Nortel before it imploded.
They’re building these massive, energy-sucking data centers out in the desert, like the $500 billion Stargate project in Texas. For what? To satisfy a demand that they themselves are manufacturing with borrowed money? What happens when the music stops and investors realize the revenue growth is just an echo of their own cash? We’ll be left with rusting monuments to our own stupidity, leaching toxic waste into the ground.
And just when you think the ambition can't get any more galaxy-brained, OpenAI decides to export this model. They're knocking on Canada's door now, talking about "democratic AI" and helping the country build its "digital sovereignty." This is a bad joke. No, 'bad' doesn't cover it—this is weapons-grade hypocrisy.
OpenAI, an American company with massive contracts with the U.S. Department of Defence, is going to help Canada become less dependent on the U.S.? The country that passed the CLOUD Act, which lets the American government grab any data held by a U.S. company, no matter where in the world it’s stored? Chan Park, OpenAI's policy guy, says there's no tension in this. Offcourse there isn't, Chan. Why would there be tension when you hold all the cards?
Canada's AI Minister, Evan Solomon, is taking the meetings, saying it doesn't represent an "endorsement." But it’s a slippery slope. These companies come in with promises of investment and innovation, and before you know it, your country's entire digital backbone is owned by a foreign entity that answers to a foreign government. The Canadians are right to be worried. They're talking about building their own models with companies like Cohere, and honestly...
They should run, not walk, in that direction. Because what OpenAI is selling isn't sovereignty. It's a subscription to their ecosystem, a gilded cage where the price of admission is your autonomy. But the promise of cheap energy and a slice of the AI pie is a powerful drug. Will they take the bait? And if they do, how long until they realize they've just become another cog in the Valley's magic money-go-round?
Look, I get it. Nobody wants to be the one to call bullshit while the party's still going. The money is flowing, the valuations are soaring, and everyone feels like a genius. But we're not building the future here. We're building a house of cards on a foundation of circular loans and manufactured hype. The real question isn't if it's a bubble. The real question is how many people are going to be left holding the bag when it finally, inevitably, bursts. My guess? It won't be Sam Altman. It'll be the rest of us.
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