Introduction#

Apart from Coding and Cybersecurity, in my free time I find it relaxing and it brings me satisfaction to read and research about the economic landscape as well as educating myself even further in economic terminology, mechanisms and trends.

Here is my first blog post about a report I made talking about my thoughts on the AI landscape and if we are on the road to experiencing an AI bubble.

The “Too Much to Spend” Paradigm#

My analysis suggests we are approaching a critical saturation point. The infrastructure required to sustain current AI growth is hitting physical and economic walls:

The $600 Billion Gap: By late 2025/early 2026, the gap between capital expenditure (Capex) and actual software revenue widened to approximately $600 billion. Energy Constraints: Data centers are now bypassing city grids entirely due to congestion, with power demand in hubs like Northern Virginia expected to nearly quadruple by 2030. Hardware Inflation: The rush for compute power has caused component costs, such as RAM, to skyrocket by 3x-5x.

Systemic Risks: The “Financial Ouroboros”#

Perhaps the most alarming finding is the prevalence of “Circular Financing”—a snake eating its own tail.

Major cloud providers invest billions into AI startups, who then sign contracts to spend that same money back on the provider’s cloud services. This artificially inflates revenue figures. Furthermore, companies like CoreWeave use GPUs as collateral to borrow money to buy more GPUs, creating a fragile bubble susceptible to immediate collapse if hardware values depreciate.

Michael Burry’s Warning: Much like the Lucent Technologies collapse in the dot-com era, we are seeing “Supply-Side Gluttony” where infrastructure is built to satisfy a narrative rather than genuine demand.

Conclusion#

Based on the data, including a projected $176 billion depreciation “impairment bomb” between 2026 and 2028, the report concludes that the market is fragile and overpriced.

We are likely on the road to an AI bubble burst rather than a seamless economic transition.

Download the Full Report#

For the complete analysis on depreciation schedules, the “Impairment Bomb,” and the Lucent Technologies analogy:

Download Report