AI is a Bubble and is Billions of Dollars in Debt

Jan 5

Why we oppose a new AI Data Center in Tompkins County: Mini Series Part 1

Revenue Loss & Government Bailout

From an article published in The American Prospect, “OpenAI lost more than $11.5 billion during one quarter in 2025, and wants to spend far more in future years. The potential revenue to make up the gap is not anywhere on the horizon.”

OpenAI CFO Sarah Friar suggested that a government loan guarantee might be necessary to fund the enormous investments needed to keep the company at the cutting edge, highlighting the overvaluation of this industry and the lack of actual funds, creating massive debt for companies and potential tax payer bailouts.

OpenAI CEO Sam Altman and Meta CEO Mark Zuckerberg have both suggested an AI bubble burst is possible.

Investors Dropping AI and Imbalance in US Economic Growth

Palantir chairman Peter Thiel’s hedge fund, Thiel Macro LLC, dropped all its shares in Nvidia, the US-based semiconductor giant that manufactures most of the chips used to power AI, in November 2025. Also in the same month, SoftBank, an investment holding company, sold it’s entire stake in Nvidia for ~$5.8 billion. As recently highlighted by NY Representative Alexandria Ocasio-Cortez, at least 40% of economic growth and 80% of stock gains in 2025 came from only seven tech companies- Microsoft, Google, Amazon, Meta, Tesla, Nvidia, and Apple.

AI Infrastructure Investment Not Proving to be Profitable

In a recent article by The American Prospect, it was highlighted how over-investment in the infrastructure of data centers has not produced the dependable revenue growth and will likely produce an economic problem.

“Oracle (a cloud computing and AI tech company) has borrowed $18 billion to build data centers, with rental profit of just $125 million on low margins. If the current hot demand cools because nobody’s buying AI, there’s little chance that Oracle can pay off the debt.”

IBM CEO says there is “no way” spending trillions on AI data centers will pay off at todays infrastructure rates.

Return on Investment is Looking Less Likely

A report from J.P. Morgan suggests that the AI industry needs to make $650 billion in annual revenue to deliver a 10% return on investments that companies are expected to make through 2030. According to a Yahoo Finance report, the top 10 countries in GlobalData’s AI report by revenue made $112.7 billion in 2025, $537.3 billion below the yearly goal. AI firms are also floating corporate bonds in unprecedented numbers, growing the debt load of the stock market, according to the Wall Street Journal.

We Have the Ability to Slow Down the Current Unregulated AI Boom by Rejecting TeraWulf's Development in Lansing

Why would Lansing, as a municipality, want to accept a project that may do extensive development to our lakefront environment, only to potentially fail soon after? It is our duty to be informed about these big-picture topics related to AI and make the right decision for our community and for our lake. Follow along this week for more of our mini series.