China Is Running The Same Play That Wiped Out The First Wave Of Internet Investors

The US stock market’s heavy reliance on artificial intelligence creates systemic fragility driven by unsustainable debt, lagging revenue, and aggressive geopolitical competition. China is undermining US dominance by using "distillation" to clone frontier models, creating low-cost, open-source alternatives that siphon revenue from US firms. Meanwhile, AI companies face a "game of chicken" as infrastructure costs skyrocket while 95% of corporate projects fail to yield measurable profits. Financial institutions are further compounding this danger by packaging risky AI debt into pension and insurance funds, effectively spreading systemic exposure to retail investors. This environment mirrors the 2008 financial crisis, where high-risk debt and unrealistic growth expectations threaten to trigger a broader economic downturn. Investors must recognize that even if AI is transformational, current valuations and debt-fueled business models remain highly vulnerable to market corrections and regulatory capture.