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Today's Topics:
1. The AI bubble is the only thing keeping the US economy
together, Deutsche Bank warns (Stephen Loosley)
----------------------------------------------------------------------
Message: 1
Date: Sun, 28 Sep 2025 02:34:38 +0930
From: Stephen Loosley <[email protected]>
To: "link" <[email protected]>
Subject: [LINK] The AI bubble is the only thing keeping the US economy
together, Deutsche Bank warns
Message-ID: <[email protected]>
Content-Type: text/plain; charset="UTF-8"
The AI bubble is the only thing keeping the US economy together, Deutsche Bank
warns
When the bubble bursts, reality will hit far harder than anyone expects
Snip: { Baidu CEO Robin Li recently predicted that 99 percent of so-called AI
companies will not survive the bubble, while legitimate businesses are now
squandering money and potential productivity gains in an attempt to turn
everything into an AI workload. ]
By Alfonso Maruccia September 25, 2025 at 2:03 PM 37 comments
https://www.techspot.com/news/109626-ai-bubble-only-thing-keeping-us-economy-together.html
You have been warned: Warnings about the overinflated prospects of a
still-hypothetical "AI economy" continue to mount.
Some analysts expect the AI bubble to burst sooner rather than later, arguing
that current investment growth cannot continue indefinitely in a finite world.
According to a research note recently sent to clients by Deutsche Bank, the AI
boom is currently helping the US economy avoid a recession but it cannot
continue indefinitely.
George Saravelos, Global Head of FX Research at Deutsche Bank, said the US
would be close to a recession this year if Big Tech were not spending so
heavily on building new AI data centers.
The "AI machines" are literally saving the US economy right now, Saravelos
said, but this kind of growth cannot be sustained unless spending remains on an
ever-growing course. Nvidia, the major supplier of powerful AI accelerators
used in data centers, could potentially bear much of the residual growth the US
economy has experienced in recent months.
"The bad news is that in order for the tech cycle to continue contributing to
GDP growth, capital investment needs to remain parabolic. This is highly
unlikely," Saravelos said.
Deutsche Bank highlights that much of this growth comes from new facilities
being built by human workers, while the AI technology and services sector has
yet to make a meaningful contribution to the GDP.
Around half of the market gains captured by the S&P 500 index have been driven
by tech-related stocks, Deutsche Bank warns. A separate report by Torsten Sl?k
of Apollo Management concurs, noting that equity investors are "dramatically
overexposed" to AI investments.
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According to analysts at Bain & Co., even with all this spending, AI is likely
to generate insufficient revenue to fund further growth initiatives. By 2030,
anticipated demand for AI services would require $2 trillion in annual
revenues, leaving a shortfall of $800 billion globally to meet that demand.
Nvidia recently committed $100 billion to OpenAI to build an additional 10
gigawatts of AI computing capacity, while OpenAI escalated the investment by
planning a full network of new AI data centers. Meanwhile, OpenAI CEO Sam
Altman has acknowledged that AI investors are behaving irrationally, and some
will inevitably lose significant sums of money as a result.
Will AI capital expenditure continue to surge with staggering figures and
impossibly high revenue expectations?
Baidu CEO Robin Li recently predicted that 99 percent of so-called AI companies
will not survive the bubble, while legitimate businesses are now squandering
money and potential productivity gains in an attempt to turn everything into an
AI workload.
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