So Sam Altman, the high priest of the new AI religion, sat down with reporters and basically said, "I know it's tempting to write the bubble story."
You're damn right it's tempting, Sam. It’s like watching a guy build a skyscraper out of Jenga blocks and then hearing him say, "I know it's tempting to think this might fall over." We’re not tempted; we’re just staring at the obvious, wondering when to run for cover. He even admitted parts of the industry are "kind of bubbly." That’s the understatement of the century. It’s like calling a tsunami "a bit damp."
The thing is, this isn't your grandfather's tech bubble. Veteran entrepreneur Jerry Kaplan, a guy who's seen four of these things come and go, is practically screaming from the rooftops at the Computer History Museum. I can just picture him, standing under the dim museum lighting, the ghosts of failed startups like Go Corporation swirling around him, warning a packed room that this time is different. The sheer magnitude of the money involved makes the dot-com bust look like a minor fender bender. When this thing goes, he says, "it's going to be really bad," and it won't just be Silicon Valley VCs losing their shirts. It'll drag the whole economy down with it.
But the real story, the one you won't hear in the glossy press releases, isn't just about over-enthusiastic investors. The latest `news about artificial intelligence` isn't about breakthroughs anymore; it's about the plumbing. Or more accurately, the creative accounting that’s propping up the whole facade.
They’re calling it "financial engineering," which is a polite way of saying "a self-licking ice cream cone." Let's break down this tangled web, shall we?
OpenAI, the darling of the moment, needs a mind-boggling amount of computing power. That power comes from chips made by Nvidia. So, what happens? Microsoft and Oracle dump billions into OpenAI. Then Nvidia, whose entire business model now seems to be "sell shovels for the AI gold rush," also invests in OpenAI. With that money, OpenAI then turns around and... buys billions in chips from Nvidia and its rival AMD. To make it even more circular, Nvidia also has a stake in a company called CoreWeave, which—you guessed it—supplies OpenAI with the infrastructure it needs to run those very chips.
It’s like a poker game where the house gives every player a massive loan, but the only thing they’re allowed to buy with it are more chips from the house. Everyone's stack gets bigger, the valuation of the casino goes to the moon, and nobody seems to notice that no new money has actually entered the game. It's just moving in a circle. A tangled web of deals stokes AI bubble fears in Silicon Valley
When confronted, Nvidia's CEO Jensen Huang trotted out the most predictable PR line imaginable, claiming OpenAI can "use it to do anything they like." Give me a break. This is vendor financing, plain and simple. It’s a trick as old as capitalism itself, designed to inflate demand and make your revenue numbers look spectacular. It’s the kind of thing that makes old-timers whisper the cursed name "Nortel," the Canadian telecom giant that imploded after loaning money to its own customers to buy its gear.
This whole setup is a bad idea. No, "bad" doesn't cover it—this is a five-alarm dumpster fire of financial gimmickry. If the demand for `what is artificial intelligence` is so organic and earth-shattering, why does the supply side have to bankroll the demand side? It just ain't adding up.
Just when you think the audacity has peaked, OpenAI rolls out its next act: a world tour. They're now knocking on national doors, offering to build the glorious infrastructure of the future right on your sovereign soil. First stop: Canada. One of the world's biggest AI companies wants a deal with Canada. Is sovereignty the trade-off?
Their pitch is a masterpiece of corporate doublespeak. OpenAI's policy guy, Chan Park, talks about "democratic AI" and helping Canada achieve "digital sovereignty." They want to build their massive, energy-guzzling data centers up north, powered by Canada's cheap electricity, and they’re framing it as a gift. It’s a Trojan horse, and it’s not even a very well-disguised one.
Here’s the part they don't put in the brochure. OpenAI is an American company. American companies are subject to American laws, most notably the CLOUD Act. This lovely piece of legislation gives the US government the power to demand data from any US-based company, regardless of where in the world that data is physically stored. On a server in Toronto? Doesn't matter. Washington wants it, they get it.
Microsoft executives already admitted to the French government that they "cannot guarantee" data sovereignty to EU countries for this very reason. So, what makes Canada think they'll get a different deal? Does Ottawa really believe a company holding a $200 million contract with the US Department of Defence is going to put Canadian privacy ahead of a subpoena from its own government? Offcourse not.
The whole concept of "digital sovereignty" becomes a joke when the keys to the kingdom are held by a foreign entity that's legally obligated to hand them over to its home government. But Canadian politicians, wary of being left behind, are taking the meetings. They're listening to the pitch, probably nodding along as Mr. Park talks about "Canadian values," and honestly...
Then again, maybe I'm the crazy one. Maybe this time is different. Maybe these circular investments are just a new, brilliant form of synergistic capitalism and not a house of cards. Maybe a US defense contractor really is the best guardian for another country's digital independence.
But I doubt it. We’re watching a bubble being inflated with borrowed money and PR hot air, all while the architects of the thing are telling us not to worry about the wobbling. They're building data centers in deserts that, as Jerry Kaplan warns, will one day be "rusting away and leaching bad things into the environment," with no one left to hold accountable. It’s a mad dash for growth at any cost, and the bill hasn't come due yet.
At the end of the day, this isn't about technology anymore. It's a high-stakes financial play, a global confidence game where the valuations are fueled by the investors' own money cycling through the system. They aren't just selling AI; they're selling a story about the future. And as long as everyone keeps buying the story, the price keeps going up. But it's just that—a story. And we're getting dangerously close to the last page.
