AI Bubble: NOT Too Big To Fail! Let It Burn | Ed Zitron

**John Johnston** (0:00)
When the time comes, let the AI industry burn. So saying, don't bail it out, let it burn, let it burn down to the ground. He really lets rip. It's a rip snotter, as we say in this part of the world.

**Ed Zitron** (0:14)
It's clear that people are wising up to the problem of generative AI, which is, there's not really a business there. It's genuinely dangerous, and it's dangerous across the board, for Neo Clouds, for hyperscalers, for every associated party of the LLM industry. When data center debt stops being issued, that will be when it's bad time for this industry.

**John Johnston** (0:32)
Hi everyone, JJ here. Welcome back. Well, it's been a couple of weeks since I have featured what Ed Zitron has been saying about the AI bubble on here. So it's time to catch up with him. Now he had this piece on CNBC, and he's put it on his own YouTube channel, not the Better Offliners Podcast channel, but his own channel. And I did look for it on CNBC television on their YouTube channel. It's not there. That's somewhat not surprising. Now you can see him if you're watching on video here. Now that's a man about to annihilate the mainstream financial press with logic, let's say.
But also this is his newsletter, the latest post that he's done. And we're gonna go through that a little bit. It is about a half hour read. There's no way I'm going to go through a lot of it. So this video says Ed Zitron on CNBC, Generative AI doesn't work, and Big Tech is out of hyper growth ideas. So I've noticed that his word, his opinions, his analysis is starting to go mainstream. He's been on Bloomberg as well. So this is pretty interesting. We'll have to see if it plays out the way that Ed says. I know a lot of people that are watching this know Ed, they've seen some videos and his own podcast as well. I always get a lot of comments in favor of Ed. But here, let's look through the table of contents here to give you an idea about what he's saying in this long post. It's a real rant and it's a good read. He really lets rip. It's a rip snorter as we say in this part of the world. Stop pretending this AI is like the.com bubble. So he's not saying it's not a bubble. He's most definitely saying that. He's saying it's a double bubble or the number of bubbles. He says, AI is not too big to fail and you can't bail it out anyway.
And this isn't like 2008 That's the global financial crisis. We're in a stock market and data center speculation bubble, and you can't bail that out. So he backs this up. This is a long piece. He's got links to different things. He backs up what he's saying here. And finally, when the time comes, let the AI industry burn. So saying, don't bail it out.
Let it burn. Let it burn down to the ground. So let's catch up on what he's saying in this blistering clip on CNBC, which they don't seem to have put on, as I said, on the YouTube channel. But it has and it's got nearly 466,000 views, which is good to see. Let's see what it's saying here.

**SPEAKER_3** (3:21)
Thanks for joining us here. So, you know, we don't really know at this point in time, right? What the actual financial picture of these companies look like. Well, they wouldn't be the first with bad financial profiles to to go public.

**Ed Zitron** (3:35)
Well, they'd be the first to be this bad other than WeWork. And even then, this is so much worse than that.

**John Johnston** (3:40)
That's a good start, isn't it? Worse than WeWork.

**Ed Zitron** (3:43)
OpenAI burned $20.9 billion in 2025 That's the relative financials that the FT and I reported.
And the problem with these companies is their margins are getting worse and their costs increase linearly with their revenues. There is no proof that they can improve their margins, no amount of specialist silicon or suppose that Vera Rubens will bring these costs down. And we're at a point now where OpenAI is now potentially pushing their IPO to 2027 because they couldn't get a trillion dollar valuation. It's clear that people are wising up to the problem of generative AI, which is there's not really a business there.

**SPEAKER_3** (4:15)
So that was something that was discussed yesterday on Squawkbox. The comments from Alex Karp, the Palantir CEO.

**John Johnston** (4:21)
Yes, Karp said some things in there. But people said that Alex Karp had a bit of a meltdown. But really, I think it's just the way that he talks. He's pretty unhinged a lot of the time. But he did say something similar to what Ed Zitron's been saying about tokens.