AI Fever Dream

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The Invesco QQQ Trust, a tracker of the tech-heavy Nasdaq-100, has been doing a little dance, up 117% in the last three years. A neat trick, even for a rigged game. The “Magnificent Seven” – the usual suspects – have been leading the charge, and a whole lot of other companies are betting the farm on artificial intelligence. It’s added up. Too quickly, maybe. The market’s been climbing like a desperate man up a greased pole.

Everyone’s bullish on AI. Long term. That’s what they say. But long term doesn’t pay the rent. Here’s where the cracks are starting to show, three warning signs that this isn’t a revolution, it’s a fever dream.

1. Spending Spree

The hyperscalers – Amazon, Microsoft, Alphabet – they’re throwing money around like it grows on silicon. Hundreds of billions last year, mostly for this AI thing. It’s a surge, a flood. They’re building digital cathedrals, hoping someone will come to pray.

OpenAI, the outfit that unleashed ChatGPT, might find its coffers running low before the decade is out. They’re planning to burn through $1.4 trillion on computing power in the next eight years. A cool trillion. They made $20 billion last year. That’s a pretty big gap, even for a magician.

2. Financial Gymnastics

Even the companies that are actually making money are hitting the capital markets. They need fuel for this fire. And the fuel isn’t cheap. There’s a lot of financial engineering going on, a lot of smoke and mirrors.

Take the $27 billion joint venture between Meta Platforms and Blue Owl Capital. Keeps the debt off Meta’s books. A neat trick, like hiding a body in a crowded room.

There are circular financing arrangements too. One company buys a piece of another, who then uses the money to buy products from the first. It’s a closed loop, a snake eating its own tail. A lot of interconnectedness. If one domino falls, the whole thing could come crashing down.

3. Uncertain Payoff

OpenAI says ChatGPT has 800 million weekly users. Alphabet’s Gemini has 650 million monthly active users. Impressive numbers. But numbers can lie.

Menlo Ventures reckons only 3% of those users are actually paying for premium access. Three percent. That’s a thin slice of the pie. It calls into question whether all this spending will actually deliver a return.

Maybe AI will just be… incremental. A slightly better mousetrap. Not a fundamental shift in civilization. Not a solution to all the world’s problems. The people hoping for miracles, the ones driving up the share prices, they might be in for a rude awakening. The market has a way of humbling even the most optimistic souls. It’s a cold, hard town.

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2026-02-02 15:32