AI Bubbles and My Aunt Mildred’s Investing

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The S&P 500, you know, generally ambles along at about 10% a year. Perfectly respectable. Then 2023 happened, and suddenly it was sprinting. Twenty-six percent. Then 25. Now we’re looking at 18 for 2025. My Aunt Mildred, who still believes in penny stocks and gets her financial advice from daytime television, is thrilled. She keeps calling to ask if she should remortgage. I try to explain things, but she mostly just wants to tell me about her cat, Mr. Fluffernutter, and how he “understands” the market. It’s all very…encouraging, I suppose, though a little unnerving.

Apparently, a lot of this has to do with artificial intelligence. The “Magnificent Seven” – these tech giants everyone’s talking about – now make up about a third of the entire S&P 500. It’s like they’re all holding hands and deciding what the market will do. It feels… precarious. Like a Jenga tower built by someone with a slight tremor.

So, naturally, I started worrying. Not about my own investments – I mostly just have a savings account and a growing collection of vintage teacups – but about the whole thing. Is this a bubble? And if so, will it pop before Aunt Mildred buys another thousand shares of whatever questionable company she found on a late-night infomercial?

1. Spending Like There’s No Tomorrow (or Processing Power)

These companies building all the AI infrastructure – Amazon, Microsoft, Alphabet – they’re throwing money around like it’s confetti. Hundreds of billions of dollars. They can afford it, of course. They’re practically printing money themselves. It’s like watching someone build a sandcastle with a bulldozer. Impressive, but also… a little wasteful.

OpenAI, on the other hand, is a different story. They’re planning to spend $600 billion on computing infrastructure by 2030. That’s down from an earlier estimate of $1.4 trillion, which, frankly, is still a terrifying number. They made only $13 billion in revenue last year. It’s like deciding to build a yacht when you’ve only got enough money for a rowboat. A very, very expensive rowboat.

2. A Financial House of Cards (With Nvidia Holding the Deck)

The financing is getting…complicated. It’s all these circular arrangements where companies invest in each other, and then buy things from each other. Nvidia just invested $30 billion in OpenAI, who will then use that money to buy Nvidia’s chips. It’s like a dog chasing its tail. A very profitable tail, admittedly.

Meta, despite being incredibly profitable, is getting in on the act. They’ve got a joint venture with Blue Owl Capital to build a data center, and a $60 billion deal with Advanced Micro Devices to buy chips, with the option to buy 10% of the company later. It feels… precarious. Like someone’s trying to build a tower out of Monopoly money.

If one of these companies stumbles, the whole thing could come tumbling down. And then Aunt Mildred will be calling me, demanding to know why I didn’t warn her.

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3. Shiny Toys and Uncertain Payouts

OpenAI has 900 million weekly active users. That’s a lot of people playing with a digital assistant. But only 3% of them actually pay for the premium version. The rest are happy to use the free version. It’s like giving everyone a free sample of a gourmet cheese, and then being surprised when they don’t buy the whole wheel.

Maybe AI is just a shiny new toy. A distraction. Something to keep us entertained while the robots take over. Or maybe it will revolutionize the economy. It’s hard to say. I suspect the truth lies somewhere in between. Possibly involving a lot of cat videos and questionable investment advice.

The smartest investors, I think, will pay attention to these warning signs. And maybe, just maybe, tell Aunt Mildred to sell those penny stocks.

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2026-03-11 13:52