Subscribe here: Apple Podcasts | Spotify | YouTube | Overcast | Pocket CastsIn 2026, global spending on artificial intelligence is supposed to reach close to half a trillion dollars. Nvidia, which makes chips for pretty much all of the big AI companies, recently became the first business to be valued at $5 trillion. In the quest for superintelligence, investors have poured hundreds of billions of dollars into building data centers that will eventually demand more power than many major American cities.The investment is based on the promise that AI might one day concoct miracle drugs, program anything, automate everything—inventing out into infinity. But is that day just around the corner? A decade away? And will it ever generate enough profit to make up for this staggering amount of investment?In this episode of Radio Atlantic, we talk to the Atlantic staff writer Charlie Warzel about whether the AI boom is actually a bubble. Does the promise of AI ultimately match the enormous investment? And if not, is the American economy in a new stock-market 1929? A dot-com 2000? A financial-crisis 2008? And if it is, would the Trump White House see the AI giants as too big to fail? What happens to ordinary Americans if the bubble bursts? If it doesn’t—if AI succeeds in paying for itself—does that come at an even greater cost?The following is a transcript of the episode:[Music]Hanna Rosin: The amount of money invested in AI these days is astonishing—almost unfathomable. You might even need AI to truly comprehend it.Recently, Nvidia, which makes chips for pretty much all of the big AI companies, became the first business ever to be valued at $5 trillion. That’s trillion with a t. When I went in to type 5 trillion into my phone calculator just to see what it would look like—’cause, like, that’s what non-trillionaires do for fun—it couldn’t even display the whole number on the screen.Nvidia is part of an elite group in the tech industry called the “Magnificent Seven”: seven companies that make up more than a third of the S&P 500. That’s Alphabet, Amazon, Apple, Meta, Microsoft, and Tesla, all of which have made some pretty hefty investments into AI in the last few years.Charlie Warzel: Honestly, the amount of money and energy that’s being poured into this is staggering. Global spending is projected to hit $375 billion this year. And in 2026, the figure is supposed to go up to close to a half a trillion dollars.Rosin: That’s Charlie Warzel, who covers tech at The Atlantic and who recently wrote about this topic with our colleague Matteo Wong.Warzel: There’s really no way to put in context, without sounding ridiculous or super vague, just how much money is going into this. We’re talking in historic terms.Rosin: Back in 2019—a couple of years before OpenAI launched ChatGPT—its CEO, Sam Altman, spoke to a group of industry observers. He was asked how exactly OpenAI plans to make money as a business. And here’s what he said.Sam Altman (from StrictlyVC): The honest answer’s we have no idea. We have never made any revenue. We have no current plans to make revenue. We have no idea how we may one day generate revenue. We have made a soft promise to investors that once we’ve built this sort of generally intelligent system, basically, we will ask it to figure out a way to generate an investment return for you.(Audience laughs.)Rosin: In the years since, AI has come a long way. It’s crept into our emails, our term papers. It’s made its way into medical-image analysis, large data sets that companies use to make projections, our late-night musings.But one thing it has not done is make money on a scale that even remotely matches these mind-boggling investments. So the obvious questions have started coming up more and more: Is this AI boom actually a bubble?[Music]Rosin: A little over a week ago, an OpenAI investor named Brad Gerstner posed the question on everyone’s mind, about this gap between money going out and coming in.Brad Gerstner (from BG2): How can a company with $13 billion in revenues make $1.4 trillion of spend commitments? And you’ve heard the criticism, Sam.Sam Altman: First of all, we’re doing well more revenue than that. Second of all, Brad, if you wanna sell your shares, I’ll find you a buyer.(Another guest laughs.)Sam Altman: I just—enough.I think there’s a lot of people who would love to buy OpenAI shares. I don’t think you wanna sell, right?Gerstner: Including myself. Including myself.Altman: —people who talk with a lot of breathless concern about our compute stuff or whatever that would be thrilled to buy shares.Rosin: Because of the amount of money we’re talking about here—trillions of dollars in the U.S. economy—even some people who would not be thrilled to buy shares, who have zero interest in investing in this AI boom, might actually have some skin in the game, whether they want to or not.Warzel: These are stocks that are not only a big part of the S&P 500, but they’re also where a lot of retail investors are put in. They’re in a lot of—in basically every index fund.So there’s this way in which the investment is extremely woven into the American economy. And even if you are not thinking that you are investing in the AI boom, if you are in index funds, if you are just sort of doing the passive investing that a lot of people are doing, you are in this boom in some way.Rosin: But what happens if it’s true that that boom is a bubble? And what if that bubble is about to burst?I’m Hanna Rosin. This is Radio Atlantic. A huge amount of the U.S.’s economic growth is fueled by AI. But it’s probably more accurate to say that it’s fueled by the promise of AI: the stories people are telling about how AI can make work and workers more efficient, the promise of superintelligence—all the things that we’ve been seeing in TV and movies for decades.Warzel: Almost everyone is accustomed to some science-fiction image of an ultrasmart computer that is sentient, right? Whether it’s The Terminator—Arnold Schwarzenegger (from The Terminator): I’ll be back.Warzel: —whether it’s Hal from 2001—HAL 9000 (from 2001: A Space Odyssey): I’m sorry, Dave. I’m afraid I can’t do that.Warzel: —there’s all kinds of preconceptions of this technology.Rosin: But as we’ll hear from Charlie, so far, none of the grand promises have really come to pass. And the bubble just keeps getting bigger.Warzel: There’s a recent McKinsey report that’s been sort of passed around in these spheres where people are talking about this that said 80 percent of the companies they surveyed that were using AI discovered that the technology had no real—they said “significant”—impact on their bottom line, right?So there’s this notion that these tools are not yet, at least as they exist now, as transformative as people are saying—and especially as transformative for productivity and efficiency and the stuff that leads to higher revenues. But there’s also these other reasons.The AI boom, in a lot of ways, is a data-center boom. For this technology to grow, for it to get more powerful, for it to serve people better, it needs to have these data centers, which help the large language models process faster, which help them train better. And these data centers are these big warehouses that have to be built, right? There’s tons of square footage. They take a lot of electricity to run.But one of the problems is with this is it’s incredibly money-intensive to build these, right? They’re spending tons of money to build out these data centers. So there’s this notion that there’s never enough, right? We’re going to need to keep building data centers. We’re going to need to increase the amount of power, right? And so what you have, basically, is this really interesting infrastructure problem, on top of what we’re thinking of as a technological problem.And that’s a bit of the reason why people are concerned about the bubble, because it’s not just like we need a bunch of smart people in a room to push the boundaries of this technology, or we need to put a lot of money into software development. This is almost like reverse terraforming the Earth. We need to blanket the Earth in these data centers in order to make this go.Rosin: Right, it’s real estate. Okay, so there’s this huge amount of investment required, but everybody’s kind of known this calculus for a while, so why are there suddenly headlines about it being a bubble? Why did that worry start to intensify in the last few weeks?Warzel: Well, I think a lot of it is seeing the numbers just continue to go up, right? When you start to see things like you have AI expenditures accounting for 92 percent of GDP growth during the first half of 2025, right, that is a pretty wild number.But I think, also, you have this real cultural sentiment right now, that a lot of people lived through the dot-com boom and they see something that maybe feels a little bit similar, right? The internet was this paradigm shift of a technological innovation. It was very clear to people that the internet was going to affect commerce; it was going to change a lot of things. And you had all these companies that came out—the famous Pets.com example, right, as sort of the height of the bubble, which was: People can buy pet food online.The dynamic of the dot-com crash wasn’t that the internet was a fad; it was that all this investment came in, and all these companies were created, and the ecosystem wasn’t yet developed enough to support it, right? People buy dog food online all the time now. Pets.com was an idea ahead of its time.And I think that a lot of people are looking at all this funding, all this money, seeing it kind of rhyme a little bit with the dot-com boom and also thinking, Maybe some of these companies are a little ahead of their time. Is it going to pay out soon enough? Or is there going to be this idea that, This was kind of a hype cycle. There was this hysteria. And that’s where you see this feeling of, Oh, no. We are betting so much. We are putting so many eggs in this basket. What if it doesn’t pay off soon enough?[Music]Warzel: There’s an investor named Harris Kupperman, and he’s very bearish on all of this stuff. And he has said, in order for these companies to break even on what they are spending in 2025 on capital expenditure, they would need to generate $160 billion of revenue. That is to break even on what they’re investing this year in these data centers. The revenues are nowhere near $160 billion in terms of what the generative AI tools are generating.He went out with his blog post, and then a bunch of people who are in the industry, who run data centers, who are other investors in this and know the nuts and bolts of it, they told him his estimate was way off and that the revenue that these tech companies would need to generate to break even on this year’s capital expenditure alone is closer to $320 or $480 billion. That is what these companies need to generate this year in order to break even on what they’ve invested.We’re dealing with a lot of back-of-the-envelope math on all of this, but that gives you a sense of kind of the dizzying numbers that we’re talking about here.Rosin: Okay, Charlie, the more you talk, the less this makes sense. So… (Laughs.) So what’s the plan? When Sam Altman, CEO of OpenAI, was asked about this enormous amount of spending, he got somewhat defensive. So do other CEOs or investors outline the plan? What’s the good-news scenario by which this all works out well?Warzel: I’m really glad that you said the more that I talk, the less sense it makes, because I just wanna say, that is entirely indicative of my experience reporting on this. I come to this—you know, I don’t have an economics and finance background. I write about technology. I have looked into these things and spoken with people, and I come away sort of with this thousand-yard stare.And I think that is a bit of what’s going on here. When people look into this stuff, it’s not that there isn’t maybe some magical save here, right? It’s entirely possible that there are these leaps in this technology, right? The Bloomberg columnist Matt Levine has this great line that says, We are going to create God and then ask it for money, right? That is what these AI companies are sort of saying. (Laughs.)Rosin: Or what Sam Altman said, which was, We’ll just build a superintelligence and then ask it to solve this math problem for us.Warzel: Right. Yeah, that’s the same thing. And that’s why it’s a little staggering, right? No one is blinking when it comes to the money that’s being invested. The lights are all green here in terms of all of these tech companies. People are plowing ahead.This narrative of the AI bubble right now, it definitely exists in media; it definitely exists in the tech analyst space. But Wall Street’s not stopping on this at all. If anything, there’s a FOMO that is happening right now. There is a notion of, We need to get in on this, right? This is a race. Not only is it a race from company to company, but it’s also got these geopolitical components to it, right? There is a desire to, on the American end, to want to beat China.There’s this feeling like, There is no time like the present. The money is too good right now. We’re not going to stop. But when you drill down into it, there’s this notion that, essentially, what’s happening is people are lighting money on fire in the hopes that this thing just continues to turn into the promise that everyone’s hoping.Rosin: After the break, the case for boom, not bubble: how the AI companies say they actually plan to make money.[Break]Rosin: I find it hard to believe that it’s this level of magical thinking, like, that the real answer people have in their heads is superintelligence. What does that mean, and what does it have to do with making money? Even if they did build a superintelligence, how would that be a return on investment?Warzel: It’s a good question. The idea of superintelligence is completely changing the paradigm of what humans are capable of doing, right? It changes the ways that every single hedge fund will be able to do predictive modeling. In terms of scientific discovery, right, if you are a pharmaceutical company, a superintelligence that creates other superintelligences is sort of this exponential amount of research and brainpower that hopefully can come up with a miracle cancer drug that then you can then go out and sell.Rosin: Okay, so that’s real. That’s real—Warzel: There are real ideas here with this. The problem is, right now, we have—you’ve played around with ChatGPT, right? Is that worth rewiring the entire world and global economy around that? I’m not sure, right? And that’s where we get this, I think, real unease and confusion with people.Rosin: Yeah, it does also feel to me that the difference between this and some of the other speculative-technology moments in history is that everyone sees it, and everyone’s talking about it. That was not true of the housing bubble, for example—it was a fairly elite group of people who could see that one coming. But it feels like a lot of people are talking about this, and no one really has an answer.Warzel: I think that the best cases for “We are not in a bubble right now” from the AI industry that I’ve heard—the first is: Everyone says we’re in a bubble, and everyone’s watching it. It’s just what you said, right? There are so many eyes on this thing that how can it get so out of hand, right? This is happening sort of in public, so all the exposure is there. People know what they’re getting into. We’re talking about this all the time. That’s the first one.Rosin: Interesting.Warzel: The second one is the notion that there is this physical component, right, this infrastructural component, this data-center component. There’s only so many construction workers and construction companies. There’s only so many chips. There’s only so much land. You can only get these things up and operating quick enough. And that all of that physical infrastructure will moderate some of the investment and some of the spend, right? This notion that we can’t scale up as fast as the companies want, and that will be a moderating influence. It will allow the technology to sort of meet the expectations a little bit better. The gap will dwindle.But the concern, though, is there are dynamics at play here that are starting to get a little bit weird and complicated in, like, a 2008-financial-crisis way.[Music]Warzel: There’s a couple complicated dynamics. There’s just the notion of the—if the tech stocks fall, right, there’s a lot of exposure there; there’s a lot of contagion in the sense of: Highly leveraged hedge funds are invested in these companies. They could be forced into fire sales, which could cause this vicious cycle with financial damage in pension funds, mutual funds, insurance companies, everyday investors, right? It’s bad news for anyone who’s trying to play it safe.But then there’s this other component that we found in our reporting that, really, it kind of made the hair on the back of my neck stand up a little bit.It’s this notion of debt investing. So, essentially, building these data centers is very expensive, and these tech firms don’t necessarily want to take on that debt, right? They don’t wanna ask for loans to build these data centers because it looks bad on their balance sheets, and they’re worried about shareholder returns.So to get around this, some of these tech companies are partnering with private equity. And they’re doing this financial engineering, right? The private-equity firms will put up money, or they’ll raise money, to build a data center, and then the company, the tech company, will pay the private-equity firm through the rent that they get renting out the data center.So what is happening is you’re having a company repackaging their data-center leases into a financial instrument—basically, a bond that people can sell—and there are examples of this happening. And then they are combining that with others into these securities that are based off of tranches, that are based off of how risky they are in terms of default. And if any of those words sound familiar to anyone listening, it’s because that’s a little bit similar to some of the financial engineering of the 2008 crisis, right, with subprime mortgages.It’s not the same thing. Data centers are not subprime mortgages at all. These tech companies are blue-chip companies that make a lot of money. But there is this really interesting financial-engineering situation that is going on that’s starting to just—it’s getting overly complicated, and it’s getting harder to know where some of this money’s going.What feels telling to me about this is less the idea of tranches and repackaging, and more this idea that the money is not going in a way that is very easy to track.Rosin: Right. But I guess, at the same time, like you said earlier, we’re sort of smarter than we were in 2008, so we can see a lot of these dynamics, and maybe that makes some kind of a difference.One thing that strikes me as possible is a lose-lose situation, where your one option is: AI is a bubble, and it bursts, and we’re in trouble for the reasons you described. The other possibility is that it succeeds in some spectacular way, and then unemployment skyrockets as a result. What do you think about that dilemma?Warzel: I see this a lot. This is the thing that I think about quite a bit, right? It seems to me like you—there aren’t a lot of amazing options at the moment, because the way that I look at this is that the amount of investment is so historic, it is so massive in this technology that the people who are pouring this money into it are expecting something huge, right?Maybe the money’s not rational. Maybe there is this hype. Maybe there is this—it’s just driven by FOMO and all kinds of whatever. But these companies also—they’re not full of idiots, right? They have this notion of what the technology could do sometime down the line. And I think that the only way that these investments make sense is that they are paradigm-shifting for society, in the way that the internet wired us all, connected us all, and sort of weirdened the world. I think that’s what they’re hoping that artificial intelligence does, and we can already see that it has had a disruptive impact, even in its more rudimentary form.So it does frighten me to imagine, What is enough to satisfy that investment? I think it would be a massive amount of job loss—or just of reorganization and kind of chaos.Rosin: Mm-hmm. It sounds like you’re saying it’s chaos either way, like there’s a bubble that brings pain, like the kind of pain we had in the financial crisis, or a true breakthrough that brings disruption and possibly mass unemployment.Warzel: Yes. I think that, absolutely, we are in a position where, if these companies create the thing that is worthy of this much investment, it is going to cause an extreme amount of societal rewiring and probably financial pain. And if they don’t manage to pull it off, I think it’s going to cause an extreme amount of financial pain.Rosin: So pretty much bad either way. But I guess there’s a scenario where we could just live inside the bubble, or this fear of the bubble, for the next 10 years, but it never actually crashes?Warzel: There is a really interesting, I guess, debate or controversy—however you wanna say it—around the notion of, Will these companies be put in a too-big-to-fail bucket? Right?There was an executive at OpenAI who mentioned in an interview something about the United States government “backstopping” the company, right, if there was a bubble. And they had to walk that back. There was this big controversy. They said, No, no, we don’t—we’re not expecting a bailout for no reason. We want the free market to do its thing, etc., etc.But there is this really interesting thought experiment here, right, with this amount of investment, and that’s why I mentioned earlier that there’s these geopolitical stakes. Donald Trump, to the extent that he knows anything about artificial intelligence, knows that he doesn’t want China to have anything resembling a superintelligence before the United States, right?Rosin: Mm-hmm.Warzel: There have been these data-center partnerships through the White House, right, that have been facilitated by that. Donald Trump, one of the first things he did was bring Sam Altman to the White House and announced this Stargate investment partnership, right, with OpenAI.So there is this potential notion of, Maybe these investments can’t be made allowed to fail. Maybe it is seen as this geopolitical imperative, that it becomes very clear that the government’s not going to allow these companies to fail—or change the parameters of it or underwrite some of the losses in some way.And I think that is going to be a very interesting thing, if it ever did come to pass, because these companies have acted like they are building the second coming. And if, all of a sudden, they ended up in a situation where they had to get a bailout, I think there would be an intense cultural backlash to that.[Music]Rosin: Thanks again to Charlie Warzel. Starting Friday, November 14, you can listen to Charlie host his own show. It’s a weekly video podcast called Galaxy Brain, where Charlie is gonna talk to people who know a lot about our hectic information ecosystem. And Charlie is gonna try and give us back our sanity.This episode of Radio Atlantic was produced by Jinae West. It was edited by Kevin Townsend. Rob Smierciak engineered and provided original music. Genevieve Finn fact-checked. Claudine Ebeid is the executive producer of Atlantic audio, and Andrea Valdez is our managing editor.Listeners, if you enjoy the show, you can support our work and the work of all Atlantic journalists when you subscribe to The Atlantic at TheAtlantic.com/listener.I’m Hanna Rosin. Thanks for listening.