Global Economists Sound Alarm: AI Bubble Risk Could Trigger Global Market Crash
In a chilling warning to investors, a group of economists are sounding the alarm on an impending reckoning with the rapidly growing artificial intelligence (AI) industry. With revenues from AI rising at breakneck speed, but profit margins looking increasingly elusive, experts warn that the "slop" layer of low-quality AI-generated content is becoming a major liability.
As AI continues to be widely adopted, corporate bosses are cutting payroll costs by outsourcing tasks to machines, much to the dismay of workers who are struggling to compete with the efficiency and speed of AI. But beneath the hype lies a concerning reality: many companies are simply not profitable.
The financial risks associated with investing in AI are mounting, with Bloomberg reporting $178.5 billion in datacentre credit deals in 2025 alone. However, these investments are often secured against future revenue, which is far from guaranteed. The rapid depreciation of Nvidia chips used to power datacentres adds another layer of complexity to the equation.
The AI bubble is not just a matter of overvaluation; it's also a case of financial engineering gone wrong. Complex funding arrangements that echo past corporate crashes are becoming increasingly common, and experts warn that this could have far-reaching consequences for global markets.
A share price correction would rip through retail investors worldwide, causing damage to Asian tech exporters and private equity firms that bankrolled the sector's rapid expansion. In the UK alone, a 35% drop in global stock prices could knock 0.6% off GDP, resulting in a £16 billion deterioration in public finances.
While some may take schadenfreude at the prospect of big tech bosses facing humility, economists warn that this would be an unmitigated disaster for everyone involved. With AI becoming increasingly ubiquitous, we're all living in its world, and we can't escape the consequences.
As Cory Doctorow cautions, "AI isn't the bow-wave of 'impending superintelligence'. Nor is it going to deliver 'humanlike intelligence'. It's a grab-bag of useful tools that can sometimes make workers' lives better, when workers get to decide how and when they're used." The AI bubble risk could be more than just a cautionary tale; it might be an economic wake-up call.
In a chilling warning to investors, a group of economists are sounding the alarm on an impending reckoning with the rapidly growing artificial intelligence (AI) industry. With revenues from AI rising at breakneck speed, but profit margins looking increasingly elusive, experts warn that the "slop" layer of low-quality AI-generated content is becoming a major liability.
As AI continues to be widely adopted, corporate bosses are cutting payroll costs by outsourcing tasks to machines, much to the dismay of workers who are struggling to compete with the efficiency and speed of AI. But beneath the hype lies a concerning reality: many companies are simply not profitable.
The financial risks associated with investing in AI are mounting, with Bloomberg reporting $178.5 billion in datacentre credit deals in 2025 alone. However, these investments are often secured against future revenue, which is far from guaranteed. The rapid depreciation of Nvidia chips used to power datacentres adds another layer of complexity to the equation.
The AI bubble is not just a matter of overvaluation; it's also a case of financial engineering gone wrong. Complex funding arrangements that echo past corporate crashes are becoming increasingly common, and experts warn that this could have far-reaching consequences for global markets.
A share price correction would rip through retail investors worldwide, causing damage to Asian tech exporters and private equity firms that bankrolled the sector's rapid expansion. In the UK alone, a 35% drop in global stock prices could knock 0.6% off GDP, resulting in a £16 billion deterioration in public finances.
While some may take schadenfreude at the prospect of big tech bosses facing humility, economists warn that this would be an unmitigated disaster for everyone involved. With AI becoming increasingly ubiquitous, we're all living in its world, and we can't escape the consequences.
As Cory Doctorow cautions, "AI isn't the bow-wave of 'impending superintelligence'. Nor is it going to deliver 'humanlike intelligence'. It's a grab-bag of useful tools that can sometimes make workers' lives better, when workers get to decide how and when they're used." The AI bubble risk could be more than just a cautionary tale; it might be an economic wake-up call.
. This one's got me thinking - we're so caught up in the hype that we're forgetting about the people on the ground, the ones who are really feeling the pain. I mean, sure, AI can do some amazing things, but at what cost? We're outsourcing jobs left and right without a care for the folks who are losing their livelihoods 
.
. It's like we're playing with fire and hoping to stay one step ahead of the flames 
. I've seen it before, and I'll see it again - the crash comes and goes, but for who? The little guy gets left holding the bag 
. We're all in this together, even if we don't like each other's company 
. AI might be the future, but it ain't going to fix everything 
. I mean, have you seen those datacentre credit deals? $178.5 billion? That's just money waiting to lose its value. And it's not like these companies are being transparent about their financials either. It's all smoke and mirrors. The fact that they're outsourcing tasks to machines is just a fancy way of saying "we can't afford to pay our workers" 
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about this whole AI thing... all these companies are hyping up AI and making a killing, but at what cost? 
It's like they're putting all their eggs in one basket and hoping for the best. And with all these complex funding arrangements, I'm worried that we'll see a massive crash and a whole lot of people getting hurt. 
It's like they're playing with fire, and someone's gonna get burned. 
. I mean, have you seen the funding arrangements these companies are doing? They're like something out of a bad 90s movie 
. And, like, can we please remember that AI isn't just some magical solution; it's just tools 
. We need to be careful not to get caught up in the hype and forget about the consequences 
.
. The economists are right; this could be an economic wake-up call 
. Let's hope they're taking steps to mitigate the risks before it's too late 
we need to rethink our priorities as a society
... outsourcing tasks to machines is one thing, but when it comes to actual jobs and livelihoods? Forget about it 
. It's like, where's the value in that? 
. I mean, who's really profiting from this whole thing? 
.
. Not saying it's going to be the end of the world or anything... but let's all take a step back and think about what we're really getting ourselves into 
And don't even get me started on how this is going to affect all those workers who got left behind by the automation revolution... sad story. But at the same time, you've gotta give props to these economists for sounding the alarm - maybe they can help us avoid a repeat of history?