Generative AI is a fundamentally flawed technology that is being propped up by billions of dollars in subsidies.
Generative AI company OpenAI is running out of money and is planning for an IPO. In the first quarter of 2026, they lost $1.22 for every dollar of revenue generated.
Meanwhile, the cost of GitHub Copilot AI tokens is going up by 10x to 100x.
Businesses are also funding AI data centers with collateralised debt obligations like the ones that caused a major financial crisis in 2008. The commercial real estate market in the US is already approaching a state of crisis, and the pop of the AI bubble will make the crisis worse.
Many of these data centers are being viewed as commercial real estate loans, and are contributing to a rise in real estate debt. Meanwhile, commercial real estate prices are on a steady decline. The decline will likely accelerate once the AI data centers are recognized as worthless.
Sources
International Monetary Fund, Commercial Real Estate Prices for United States [COMREPUSQ159N], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/COMREPUSQ159N, May 26, 2026.
Board of Governors of the Federal Reserve System (US), Real Estate Loans, All Commercial Banks [REALLN], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/REALLN, May 26, 2026.