I don't think the root is shareholders. These numbers are getting absurdly high, and so it's predictably being driven by commercial banks and debt. And lo and behold, the US monetary supply is skyrocketing out of control - up ~6% in a year, more than a trillion dollars, driven primarily by commercial lending. [1] As the bubble starts to shake all we need is for them to start packing the debt in asset backed packages and we're good to go, or at least as good to go as 2008 was.

[1] - https://fred.stlouisfed.org/series/M2SL

As much as I dislike it, is there really any alternative?

It’s not like we have any other industry doing well (or could be made to do very well with such an investment that would also pay off).

Maybe a few trillion could allow us to overtake China as the world’s leader in battery technology and manufacturing…

But it would take more time, effort, and a lot of logistics. The payoff from AI is much sooner…

It’s the same in every bubble, there is a term for it that I can’t remember.

If you’re a Japanese company making spanners in 1988 and you’re not speculating in land while all your competitors are, your profits are going to look terrible in comparison and the board will probably try and fire the leadership and replace them with people who’ll speculate in land.

This is part of the reason bubbles can go on for so long - there’s often a point where a lot of people sort of know it’s a bubble and it will end in tears, but they’re still incentivised to participate

> If you or your retirement is a shareholder in one of these companies, you'd rather they return $100 billion to you with boring buybacks or dividends than put it in an exciting AI investment that returns $1-$10 billion.

If you’re a retireer yeah you just want a steady dividend (or buyback).

But i mean for a 401k that won’t be spent from for 20+ years you absolutely want business to be investing into themselves. Otherwise go buy gold.

I think the way many of these companies see it is that the downside risk to not investing is that some of their verticals move into irrelevancy.

E.g., if Google doesn’t invest in AI then AI will kill their search engine business. A lot of us don’t love the Google search AI Overview but now they’re competing directly with ChatGPT, and they’re essentially not a search monopoly anymore.

One way to look at a bust AI investment is the destroyed value of the stock like you mentioned, but perhaps that’s somewhat hindsight-biased? Perhaps the reality for some companies is that if they sit on their hands and do nothing they lose 40% of their company value and if they spend a ton of money on AI they lose 20% of their company value. Of course we don’t know the outcome yet.

> If you or your retirement is a shareholder in one of these companies, you'd rather they return $100 billion to you with boring buybacks or dividends than put it in an exciting AI investment that returns $1-$10 billion. Even though it didn't end up completely worthless, it's still a bad investment.

As a shareholder I'd rather them take the $100bn and invest it in growing the business further and generating $200bn. That's the more likely outcome anyway.

But then they wouldn't be infinite growth tech giants. They'd be value investing.

> increasing the value returned to the people doing the actual work that created the profit in the first place

Tangentially reminds me of the Costco Hot Dog story. [0] We know that companies rather increase prices for consumers to have better balance sheets, than changing product strategies, and for sure we know actual workers get the shortest end of the stick.

[0] - https://en.wikipedia.org/wiki/Costco_hot_dog#Cultural_impact

Or hand out money to investors as dividends was they way public companies used to handle profits.

> I cynically suspect there's an expectation of a bailout, and that it may have even been engineered.

History supports that conclusion even without cynicism. There are insurance loopholes ready to be (re)used as in 2008 AIG case (humorously, AIG isn't AGI).

AIG got bailed out and repaid the money by raising insurance costs and general inflation for everyone. That's commonly passed as a success story (without mentioning the source of repayment funds, of course).

By latest count there are $1.5 Trills invested in AI-related assets owned by life insurance companies which are in turn owned by private equity, mostly dark portfolios there.

As you might expect, almost every state guarantees the funds of life insurance companies, purportedly to protect policy holders, so the states would make any life insurer whole in case of losses... poof, 1.5 Trills will soon to move into the pockets of some VIPs [1]. We're going to learn about the other bailout pathways soon enough.

[1] https://prospect.org/2026/08/03/ai-bailout-could-be-baked-in...

That bailout was unpopular in 2008.

That was with a US government that was significantly less indebted than it is now, both in real terms and as a percentage of annual GDP. The crude birth rate is about 30% lower than it was in 2007. The generation that was coming of age at the time is the first in American history to have a lower quality of living than their parents.

IMHO, unless there is some massive geographic and societal divider that stands between the likes of Sam, Dario, et al. and the rest of the country at the time of any sort of collapse, they'd be far, far better off just taking the losses and not bothering American society again. It won't be pretty if they come asking for a handout.