When the Bubble Bursts (with Matt Scherer), 2026.06.01

The AI industry exhibits classic characteristics of an economic bubble, driven by massive capital expenditure that lacks corresponding revenue growth. Major tech companies are currently committing over $700 billion to AI infrastructure, creating a dangerous gap between investment and actual profitability. This speculative cycle relies on circular debt and fragile hardware dependencies rather than proven commercial applications. Guest Matt Scherer, a fellow at the Open Markets Institute, highlights that unlike previous technological shifts, the current AI boom risks systemic economic damage if these investments fail to yield returns. While industry leaders argue that such cycles are healthy for innovation, the lack of viable business models and the reliance on taxpayer-funded research suggest a looming collapse. Preparing for this downturn requires shifting focus from potential corporate bailouts to repurposing infrastructure for public utility rather than private gain.