Plain English with Derek Thompson
Everybody Thinks AI Is a Bubble. What If They’re Wrong?
17 Oct 2025
Two weeks ago, in one of our most popular podcasts of the year, the investor and author Paul Kedrosky explained why he thinks AI is a bubble. In the last few days, practically everybody seems to agree.I hate this. I don’t like feeling like my position is the same position as everybody else’s. Conventional wisdoms are often more conventional than wise, and I’ve started to wonder: Is there a bubble of people calling AI a bubble?Today’s guest says yes. Azeem Azhar is an investor and the author of the blog Exponential View. Like Paul, Azeem is a fantastic explainer and storyteller, and I’m satisfied that Plain English has now presented the strongest possible arguments for and against AI being a bubble. If you want to know where I land, you’ll just have to listen to the end of the show. If you have questions, observations, or ideas for future episodes, email us at [email protected]. Host: Derek ThompsonGuest: Azeem AzharProducers: Devon Baroldi and Kaya McMullen Learn more about your ad choices. Visit podcastchoices.com/adchoices
Full Episode
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Today, being wrong about artificial intelligence. Two weeks ago, in one of our most popular podcasts of the year, the investor and author Paul Kudrowski explained why he thinks artificial intelligence is a bubble. And in the last few days, practically everybody I follow and read seems to agree. I hate this. I really hate this.
I don't like feeling like my position on any issue is the same position that everybody else has. It's not just me wanting to not belong to the team that everyone belongs to. It's my deep-seated hunch that conventional wisdoms are often more conventional than wise. And I've recently started to wonder, is there a bubble of people calling AI a bubble? Today's guest says yes.
Azim Azhar is an investor and the author of the wonderful blog, Exponential View. And before I introduce Azim, let's review why everybody seems so sure that AI is a bubble today. Go back to the 1960s. The Apollo program allocated about $300 billion in inflation-adjusted dollars to get America to the moon between the 1960s and the early 1970s.
The AI build-out requires companies to collectively fund a new Apollo program, not every 10 years, but every 10 months. The hyperscalers, the big tech companies, and the frontier labs are collectively spending three to $400 billion every single year to bring artificial intelligence to life. This is the most that any group of companies has ever spent to do just about anything.
The hallmark of a financial bubble is tricky financing. Once you see companies going into debt or devising creative new financial vehicles to build something without a guaranteed return, you should start to be a little bit concerned. I think we're clearly already there.
As Kudrowski explained in our previous episode, these hyperscalers are creating what are sometimes called special purpose vehicles, SPVs, like black boxes into which they throw some money and then some private capital firm throws some money and then that black box goes off and build a data center.
The fact that they're already moving AI infrastructure off their books makes me a little bit itchy about the possibility that they don't want investors to see just how expensive this thing is to build. In September, the company Oracle's stock popped after it announced a future deal with OpenAI worth hundreds of billions of dollars. There was a catch.
Oracle won't be able to finance that deal with its cash flow, with the money it actually makes from its business. It'll have to take on a sensational amount of new debt. JP Morgan's Michael Sembelist, who has been on the show before and is absolutely fantastic, described the deal this way, quote,
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