Let’s Talk About the AI Bubble

Follow me on LinkedIn: https://www.linkedin.com/in/leo-cui-ph-d-cfa-59531439/ I am a venture capital investor at FoundersX Ventures, an AI and deep-tech VC fund based in Menlo Park, Cambridge and NYC. I previously did my Ph.D. at Harvard, postdoc at MIT. 📊 Want the infographics from this video? Join the channel membership for downloadable infographics, ad-free videos, early access, and the ability to propose research topics. Do we have an AI bubble? In the second quarter alone, Meta spent about $31 billion on data centers, servers and equipment. Alphabet spent about $45 billion. Then you open ChatGPT or Claude, ask it to rewrite an email that sounds too harsh, and a few seconds later you have something better. It’s useful. So how can something this useful be a bubble? Well — the internet was useful too. The people who said it would change the world were right. That didn’t mean the companies they backed would survive, or that the prices they paid made sense. So this video pulls apart three things that usually get blurred together: the value a customer gets, the profit a provider earns, and the return an investor makes. They can move in completely different directions. Along the way, five questions. By the end you’ll have a way to judge the next headline yourself. 🎯 You’ll learn: Why the most instructive dot-com mistakes were in the plumbing, not the startups The Level 3 CEO who predicted traffic would double every three to four months when it actually grew about twofold a year — and why traffic didn’t have to stop growing to ruin investors How fiber capacity went from 20 to 400 gigabits per second between 1996 and 2000, right as the industry laid more of it Global Crossing: cables that kept carrying traffic under new owners while the original shareholders lost everything Why today’s spenders are genuinely different — and why money buys time rather than guaranteeing a return The study of 5,179 support agents: 14% more issues resolved per hour, 34% for the newest agents Why a great result on one task doesn’t become a great result for the business, and why saved time isn’t saved cash The survey of ~6,000 executives: seven in ten firms using AI, nine in ten reporting no productivity or employment effect yet The developer trial where people took 19% longer while believing they were 20% faster — and why the 2026 follow-up couldn’t settle it Why Epoch AI’s ~47% per quarter price decline cuts both ways, with the arithmetic laid out The open-model question: if a downloadable model can do the job, why pay a provider — and why “downloadable” doesn’t mean free Harbor Coffee: a worked example where the customer saves money and the provider loses it Microsoft’s January disclosure that about 45% of its $625 billion backlog was tied to one customer OpenAI’s 2025 accounts: ~$13B revenue against a ~$21B operating loss, versus Anthropic’s positive adjusted operating income Meta’s quarter: ~$31.9B from operations, ~$31.1B of capex, under $1B of free cash flow, and $25B borrowed Why Cisco’s stock was still down more than three-quarters five years after March 2000 while the business did fine How $77 billion of Alphabet’s $112 billion net income came from paper gains on investments ⏱️ CHAPTERS 0:00 Three Things That Get Blurred Together 1:27 What the Dot-Com Bust Actually Taught Us 3:40 Question 1: Are Customers Getting Real Value? 5:50 Question 2: Efficiency — Less Computing, or More? 7:53 Question 3: Who Gets to Charge For It? 9:37 Question 4: Following the Money 12:23 Question 5: What the Price Already Assumes 13:43 Two Versions of the Same Chain 16:14 Five Signals to Watch 17:47 So, Is It a Bubble? The most useful thing about running the optimistic and pessimistic chains side by side: the same technological progress appears in both. Cheaper models, better tools, wider adoption. What differs is demand, margins and timing. This video is part of my ongoing series breaking down the economics behind the AI build-out, for investors and builders who want to understand what is actually happening under the hood. ⚠️ Disclaimer: This video is for educational and informational purposes only and is not financial advice. Nothing here is a market prediction — it’s a map of where to look. I am a venture capital investor at FoundersX Ventures, and my fund may hold positions in companies or sectors discussed. Always do your own research before making any investment decision. Some infographics in this video are AI-generated and may contain errors; corrections will be pinned in the comments. 👍 If this was useful, subscribe and turn on the bell — I publish deep dives like this every week. #AIBubble #AI #Investing #DotComBubble #AICapex #Meta #Alphabet #Microsoft #OpenAI #Anthropic #Nvidia #DataCenters #StockMarket #Valuation #TechExplained