AI Is a Bubble

Welcome to This Week’s Leyendecker View

To be free, you have to have discipline, you have to have faith, you have to have character.
-AI George Washington on Glenn Beck

FAVORITE READS OF THE WEEK

We’re already at war with China
They know it, we don’t.

Finland has critical thinking down
It’s part of their schooling. Really, it is.

How mid-market investors use AI
It’s evolutionary, not revolutionary.

THINKING OUT LOUD

AI Is a Bubble
And this might be OK

How do we know it’s a bubble? Because the New York Times says it’s not. Okay, maybe it’s a bubble because tech investors have flooded the market with capital. There’s over $2 trillion in capex and start-up investments set for 2026. This seems incomprehensible. All these big tech companies and investors are in an arms race, fearing being left behind.

It’s like the arms race between the US and Russia that caused the Soviet Union to collapse. And it’s similar to the late 1990s, when massive, speculative investment poured into building fiber optic networks globally, leading to huge overcapacity and a major market crash in the 2000-2002 period.

Like the fiber bubble, the trillions of dollars invested in AI infrastructure may prove to be short-term overkill. But also like the fiber bubble, longer term, AI could turn into an enormous productivity tool. Many workers will leverage AI to become more productive, with some workers’ productivity exploding. Growing productivity has historically led to a growing economy.

That said, the full potential of AI will take several years to materialize.

Consider that Microsoft’s first operating system was released in 1981. The PC revolution that became the internet revolution didn’t really coalesce until 17 years later, when Windows 98 was introduced. Windows 98 seamlessly merged the PC with the World Wide Web, making browsing feel natural. Then, three years later in 2001, Windows XP unified the consumer and corporate worlds. That’s 20 years from seed planted to a reasonably mature market.

Will it take 20 years for all these AI investments to become mature and ubiquitous, or has the speed of “progress” increased? We don’t yet know. What once took 20 years may take far fewer.

We also don’t yet know if some parts of the AI bubble will end like the metaverse hype. The metaverse was once going to become the new world in which we would all live. So sure this was our future that Mark Zuckerberg changed Facebook’s name to Meta. Nobody chose to live in Mark Zuckerberg’s metaverse, so now he’s winding it down. Now Zuckerberg is going all in on AI. Time to change the company name again?

A massive consulting opportunity exists in helping companies figure out how to use AI to improve performance, but there’s no one yet with the “been there, done that” experience. It’s too early in the game. 

For now, we can expect a ton of AI “apps” to show up that will hit the corporate market. There will be CRM applications, HR administration applications, HR recruiting applications, logistics applications, manufacturing applications, procurement applications, and on and on.

Of course, the major enterprise resource planning (ERP) providers will try to integrate AI into their various systems. But for many companies, the ERP experience has proved to be a classic overpromise, under deliver experience. Will the ERP AI pitch persuade companies to buy in today? Or will companies wait to see which early AI ERP tools crack the code?

In the consumer space, we can expect many AI apps that will make our lives better or more efficient.  There could be AI job search apps, AI interviewing apps, AI shopping apps, AI investing apps, AI dating apps, AI marriage counseling apps, AI self-esteem-boosting apps, AI fantasy sports apps, AI cooking apps, AI health apps (as well as devices), maybe even AI “pet-interaction” apps.

Both the corporate and consumer markets will be inundated with all manner of “pick me, pick me!” AI “tools,” many of which will end up on the garbage heap of technology history.

We are living through the gold rush of AI infrastructure development. As with all gold rush periods, the likelihood is great that we will overbuild. But if AI eventually proves to increase our productivity, then all of that infrastructure will eventually be useful. How long it takes for that to happen and the strength of the AI gold rush companies’ balance sheets will determine the winners and losers.

In the end, will this latest technology gold rush produce more jobs than it destroys? Or, like the last 40 years, will we be forced to remain dependent on fiscal and monetary stimulus to keep our economic wheels on the tracks, our citizens comfortable, and our voters from becoming revolutionaries? What about all the displaced workers? Check out “The Luddite Prophecy” for a clue.

THE RANDOMS

The horrific murders of Rob Reiner and his wife Michele remind us that tragedy can strike places we would never expect. There is only rhyme and reason until there is not.

Why has the reaction to the mass murder at a Hanukkah celebration in Australia been to tighten up gun laws and not to improve immigration and assimilation policies for people whom evil can weaponize?

Why did mainstream news appear to ignore that the Australian Bondi attack was carried out by Islamic extremists with potential ties to ISIS? Have we become so scared of them that they will soon control us? They already seem to be controlling the UK.

Ford’s decision to exit most of its EV business could be the death knell to the US EV market. Used EV prices may plummet. Buyers of new EVs may evaporate. One more mass psychosis destroyed.

Tax incentives to buy EVs started in 2008. If after 17 years, these vehicles could not become cost competitive with ICE vehicles, then this tells us something.

The financial system is likely still under the influence of the enormous amount of capital injected during Covid. Maybe we need to think of that money as economic fertilizer. It’s going to take a good while for that fertilizer’s power to run out. It may have helped our garden grow, but it caused weeds to grow, too. If we put too much weed killer on those weeds, we could kill the whole garden.

If AI is going to reduce employment, what’s all the fuss over low birth rates and immigration policies?

ECONOMIC NEWS

Economy

Inflation falls a bit
Unemployment rises
The pizza economic indicator
The transportation stocks economic indicator
Has the Fed made the wrong move?

Labor

McKinsey to cut thousands of jobs
Who are your “glue” employees?
AI to make super performers more super
Four for-sure AI jobs coming

Health Care

Disabled vets are getting scammed
The problem with health insurance
Obamacare’s subsidy cliff

The Lone Star

Giant warehouse coming to Laredo
A coffee empire is being built in Houston
Boat builder kicks off in Austin

BUSINESS

Finance

NASDAQ seeks a 23-hour trading day
PayPal wants to be a bank
JPM has a crypto angle
Has private equity gone too far?

Real Estate

Google threatens Zillow’s dominance
Blackstone may have bought too much real estate
Let’s learn about housing from the Twin Cities

Tech

Toilets are the next smart watch
Maybe a world of robots isn’t coming
Data centers in space?

AI

OpenAI is in obvious trouble
Disney lets OpenAI use its characters
Investors pile into AI drug discovery

Energy

Coal demand sets record
Ford takes huge write-down from EVs
EU scraps combustion engine ban
California’s gasoline problems deepen

THE NATION

Politics

What makes Congresspeople great investors
Trump worried about midterms
DC police chief manipulated crime data
Trump supports tiny affordable cars

Policy

Trump lowers pot regulation
Trump announces Venezuela ship blockade
Trump creates “US Tech Force”
Critical minerals smelter coming to Tennessee

Trade

US puts UK tech investment deal on ice
UK and Korea strike a trade deal
US and Mexico strike water deal

Culture

The book age is coming to a close
US mass killings at two-decade low
Student loan delinquencies explode
The most popular Alexa questions in 2025

GEOPOLITICS

Global

Japan builds a rare earth supply chain
US and Belarus normalize relations
Chile elects a conservative president

Europe

Germany wants a divorce from China
German government suffers cyber attack
Eurozone industry extends gains
VW’s first plant closure in its 80+ year history

Ukraine

Putin is not interested in a deal
Ukraine claims submarine drone attack
US offers Ukraine security guarantees
Europe follows suit
Ukraine drops NATO membership demands

Middle East

Iran’s silent revolution
Iran back to no good
Iran’s president says it’s an unfixable country
Israel and Egypt sign big gas deal
Americans ambushed in Syria

China

Hong Kong opposition party disbands
First investment decline in 3 decades
Chinese billionaires planting “baby seeds” in US
China going big on fusion
China is handcuffing global economies

War Creep

US to sell arms to Taiwan
Russia and China worry about Japan
China assists Russian drone-making
The US Army has a next-gen nuclear reactor

MAKING A BETTER YOU

Mind
Get more quiet time.

Be thankful, not resentful
Why is music pleasurable?
Live better to die well

Body
Get more outside time.

How AI is changing health and fitness
Eat dark chocolate, stay young
Breaking down the accuracy of wearables

FUN STUFF

Let your hair down, baby! Even if you’re all alone.

The Extraordinary

3-year-old becomes rated chess player
The man who still lives in a cave
2025 drone photo winners

Music That Found Us

Billy Strings Tiny Desk concert
Aware, concert of the future?
Iberian jazz fusion radio

Worth a Watch

The holiday blockbuster Zootopia 2.
Sydney Sweeney as The Housemaid?
Big screen candy, Avatar: Fire and Ash

The Yum Yums

Google is making recipe writers extinct
Top 25 NY Times recipes of 2025
The 25 best diners in America
Super New Year’s Eve recipes

PARTING THOUGHTS

Either the great nations of Europe are our partners in protecting the Western civilization that we inherited from them, or they are not. But we cannot pretend that we are partners while those nations allow the EU’s unelected, undemocratic, and unrepresentative bureaucracy in Brussels to pursue policies of civilizational suicide.
– Deputy Secretary of State Christopher Landau

IN CASE YOU MISSED IT

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December 12, 205

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December 10, 2025

A Cure for the News Blues
December 5, 2025