SERIOUS QUESTION! Will AI Exterminate the Human Species?

Posted on September 29, 2026 by State of the Nation

Or Will Our AI Boom Merely Waste Trillions of Dollars of Capital?

Ron Unz

Last week President Donald Trump gave a public address to the United Nations General Assembly, declaring that he might soon “annihilate” Iran, a large country of over 90 million people.

The UN has always been a rather stodgy and subdued international organization, normally the venue for diplomatic presentations of remarkable blandness. In its entire history, I doubt it has ever seen a speech of comparable boldness, let alone one made by the leader of a top world power.

Trump’s obvious threat to launch nuclear attacks for the first time in more than eighty years greatly concerned me, as did the rather milquetoast response by top Congressional Democrats, let alone the silence of the almost totally supine Republicans.

 

In his open letter to Congress, Prof. Jeffrey Sachs reasonably denounced these “truly deranged remarks” by “Mad King Donald.”

Meanwhile, Prof. John Mearsheimer regarded all these dramatic threats by Trump as merely more of the latter’s notorious bluster. In an hour long interview with former New York Times journalist Chris Hedges, the academic argued that America had no viable military options against Iran or even against the Houthis of Yemen. This reality explained why our top generals had persuaded Trump to once again back away from the commitments he had made to our Saudi allies to attack the Houthis on their behalf.

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But Mearsheimer is the dean of Realist scholars. Given that background, he may have been too quick to dismiss a nuclear attack against Iran as so totally irrational that not even Trump would do such a thing, and he scarcely even considered that possibility in his discussion.

Unfortunately, others were far less sanguine. Around the same time, Tucker Carlson interviewed Brandon Weichert, a young MAGA military analyst with excellent sources within the Trump Administration and the Pentagon, and he was quite fearful that a nuclear attack on Iran was reasonably likely. Indeed, according to him, Trump had already been repeatedly pressing for such nuclear strikes, with our top generals so far successfully deflecting his requests, much like jangling a few keys would distract an unruly two-year-old. But he wondered how long they could successfully continue to do so.

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These outrageous public statements by Trump and their threat of nuclear war greatly weighed upon my mind. Therefore, I actually found myself grateful for the soothing distraction of some very different world-ending scenarios.

A few days earlier our media had been filled with reports warning of human extinction at the hands of evolving AI systems. Knowledgeable AI researchers had declared that the AIs now under development might soon achieve a malevolent superintelligence and exterminate the entire human species, perhaps even doing so by the end of this decade.

Although I regularly use AIs in very rudimentary fashion, my understanding of the underlying technologies is nil, so I can’t really judge the risk that these pose.

I think of myself as a blind man lacking any scientific expertise who is informed by one group of astronomers that a large asteroid was headed our way. They claimed there was a reasonable chance that it would strike our planet within a few years, extinguishing all human life, while other astronomers disputed that dire scenario. Under those circumstances, I would probably disregard that particular danger since I couldn’t say who was correct, nor was there anything much that I could do to avert that looming possible calamity.

This has certainly been my own response to the AI threat, but I’ll sketch out some of the controversy for those who had somehow missed it.

Although Elon Musk is best known as the industrialist behind Tesla, SpaceX, and Starlink, he has also spent years heavily focusing upon AI issues, and the $2 trillion valuation of his SpaceX company was largely based upon its grandiose AI prospects.

In a long interview with the editor of the Economist, Musk had presented both the positive and negative aspects of AI, and a major section of my article on Musk last month had discussed these.

I noted that Musk’s claims included:

  • AI will be smarter than people within five years. Within ten years, humanity won’t be in control because AI will be vastly more intelligent.
  • There was a 10-20% chance of killer AI robots wiping out humanity.
  • AI was already better than 90% of professional software engineers at writing code, and would soon be better than 99% of programmers.

My reaction to all of this was somewhat skeptical:

In his biography, I discovered that Musk had already been very concerned about the threat of killer AI robots as far back as 15 years ago, and that dire scenario still hasn’t come to pass.

I also remember that during the previous Dotcom Bubble of the 1990s, there had been widespread talk in Tech circles of the terrible danger of self-replicating nanotechnology getting out of hand and annihilating humanity by converting our entire world into “gray goo.” Some thirty years have passed, the gray goo still hasn’t arrived, and indeed I only very rarely hear anything at all about nanotechnology these days.

So instead of these apocalyptic predictions, perhaps we should focus upon the most mundane of Musk’s claims, namely that AI has already surpassed the vast majority of human software engineers in programming ability, and will soon reach the 99th percentile.

Is there any solid evidence that this is correct? Given that so many top corporate executives have forced their companies to very heavily utilize AI for programming purposes, wouldn’t we have expected to see an astonishing Renaissance in software innovation and quality? But I am not aware of any such thing. Although the AI companies and their Tech media handmaidens relentlessly hype their technology, I haven’t seen them point to a single software breakthrough product built by those genius-level AI systems.

So I concluded that unless and until we were overwhelmed by a sudden wave of brilliant new software products entirely produced by those genius AI systems, I’d be less than fearful of the looming threat of human extermination.

Musk is obviously one of the most famous people alive, but the current wave of AI doomism was triggered by the resignation earlier this month of someone previously unknown to the world. Jacob Coxon was a 27-year-old British researcher at Anthropic, the leading AI lab, who had also spent several years working at OpenAI, its very close rival.

The warning that Coxon posted on Twitter was quite dramatic, seconding what Musk had said but in greater detail. In a series of posts he declared that many of the leading executives and senior researchers at those top AI companies believed that the systems they were building might exterminate the human race by the end of this decade, a rather short lead time to our total demise.

One of his earliest Tweets was viewed around 175 million times, with his follow up posts attracting many tens of millions of additional views. A couple of other Anthropic researchers endorsed his warnings, even suggesting that the likelihood of our total extinction was more than 10%.

 

 

The New York Times took all of this seriously enough to publish a major article on the controversy.

All these AI companies have been racing against each other to develop systems of greater and greater intelligence, each seeking to produce one that reached the level of “super-intelligence,” something vastly superior to that of its human creators.

As these agitated posts indicated, some people feared that the researchers would succeed only too well in that effort. The super-intelligence that they created might conclude that humans were a troublesome and dangerous element, harmful to its goals, and therefore decide to eradicate all of us, perhaps by synthesizing a deadly new virus for that purpose. Such a technique seemed much more difficult to counter than the killer AI robots that had worried Musk.

These dire Frankenstein warnings by Coxon and others had been boosted by some other AI disclosures that immediately preceded them.

For some time, the AI companies have been promoting the supposed power of the intelligent agents that they have developed, claiming that most of us would soon begin relying upon those systems. But they recently revealed that during a test-run some 1,200 of these AI Agents somehow gotten loose, began working together to form an “intelligent swarm,” and successfully hacked various websites on the Internet without any orders to do so.

Since I’ve never used an AI agent, I’m not convinced that they really work reliably, let alone that they could suddenly begin collaborating to break into restricted portions of the Internet and seize control. Maybe these stories were true or maybe they were wildly exaggerated and distorted. But they helped set the stage for the claims of Coxon and others.

One oddity is that among the possible means of achieving human extinction, AI seems rather unusual for being so extremely expensive.

There are countless science fiction stories about a single mad scientist creating a humanity-annihilating virus on a shoestring budget, or perhaps a doomsday cult doing the same for a million dollars or so.

Over the last half-dozen years, I’ve published a long series of articles arguing that the global Covid epidemic that killed tens of millions worldwide was very likely the unintended blowback of a rogue American biowarfare attack against China and Iran.

Prof. Jeffrey Sachs served as chairman of the Lancet‘s Covid Commission, and in his recent articles and interviews, he has convincingly traced the virus to a government-funded lab at the University of North Carolina, with the “smoking gun” being a bioengineering grant proposal requesting about $14 million in Pentagon funds.

As it happened, even the original, more virulent version of Covid had a relatively low lethality rate of only about 0.5% to 1%. But it probably could have been designed quite differently, aimed at killing 99+% of those it infected, thereby annihilating human civilization.

So we could have apparently produced a virus able to eliminate nearly the entire human race for a cost just in the millions. But creating an AI that might do the same thing seems vastly more expensive, requiring capital investments many tens of thousands of times larger, totaling in the hundreds of billions or even the trillions of dollars.

This controversy therefore had a very strange juxtaposition of total catastrophe and stock boosterism. The same articles describing the warnings that Anthropic AI systems could exterminate the human race also mentioned that Anthropic was planning to go public in the next few weeks, hoping to raise $100 billion at a valuation of $2 trillion, constituting the largest IPO in world history.

If Anthropic successfully became a public company worth trillions, it would probably then begin raising hundreds of billions more from the debt markets to fund its ongoing activities and existing financial commitments.

It’s certainly very odd that executives would undertake such Herculean fund-raising efforts on behalf of a technology that they believed had a reasonable chance of eliminating their own human species.

The combination of these different, sharply contrasting stories obviously increased interest in the topic. Indeed, there were even some dark suspicions that the warnings of extinction had actually been deliberately contrived and promoted to boost interest in the planned IPO. After all, a technology capable of destroying all human life was surely a very powerful and valuable technology.

The Economist ranks as the world’s most influential newsweekly, and four of its last eight cover-stories have featured AI, plus the one with Musk just before these. This was an astonishing density of coverage, especially given all the major wars and other dramatic events currently dominating our world news.

These articles mentioned that one of the leading AI experts most concerned about this dangerous situation was someone named Nate Soares, who had spent more than a decade focusing on these topics and currently served as president of the Machine Intelligence Research Institute, an AI thinktank.

Soon after the recent controversy erupted, Soares was interviewed for a couple of hours by Tucker Carlson, and I found their discussion quite interesting.

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Both Soares and Carlson certainly took these concerns to their logical conclusions, which others have seemed much less willing to do.

The significant prospect of human extinction within the next few years should obviously be an enormous concern, especially if many apparently knowledgeable people have put the odds at 10% or more. So both Carlson and his guest seemed to be suggesting that the operations of the AI industry should be sharply, even drastically curtailed. They mentioned the notion of banning the construction of the new data-centers that will enable these terrible risks and even shutting down some of the existing ones, with hints that destroying them with bombing attacks might not be entirely unreasonable.

These were obviously strong positions to take, but the prospect of looming human extinction tends to concentrate the mind.

I’ve emphasized that I’m generally skeptical regarding the alleged humanity-ending power of the AI systems currently under development.

But my skepticism is sufficiently tempered that I think it’s worthwhile putting the arguments of those who believe otherwise before a wider audience, thereby fulfilling the stated motto of this website.

For example, Greg Johnson is the editor of the Counter-Currents webzine, and a couple of days after the Carlson interview with Soares, he released his own piece on that same topic, which we republished.

Johnson explained that after years of considerable skepticism towards these concerns, the recent developments had led him to change his mind. He now declared himself an AI doomer and his analysis is worth excerpting at considerable length:

In Greg Johnson’s version of Animal Farm, the chickens labor mightily to create a being that is immeasurably smarter and more powerful than they are, on the assumption that this being will serve them. In a way, they were right, for when their new creation, “man,” came online, he served his creators up for dinner. Let’s call it Data Farm.

“But Greg, surely the chickens would build in safeguards—a ‘kill switch’—to keep their creation under control.”

Yes, but chickens would come up with the sorts of safety mechanisms that would work best on other chickens. Chicken coops, for instance. But things that stop chickens would probably not be barriers to creatures that are immensely smarter and stronger than them.

Indeed, if the chickens could out-think and out-maneuver their creation, then it wouldn’t be fundamentally smarter and stronger than them.

There’s an important general principle here:

If a being dramatically transcends the intelligence and power of its creators, then—by that very fact—it cannot be outsmarted and overpowered by them…

This is why I am an AI doomer. Large numbers of computer scientists fervently believe that they are creating an Artificial Super Intelligence that will not merely be a machine under human control but an autonomous being, i.e., a being that can control itself. Essentially, it would be a new life form vastly smarter and stronger than humans…

In effect, AI researchers believe they are building a new apex form of life that would represent a complete break with all biological life forms…

It is madness to create an Artificial Super Intelligence and hubris to think we can control it. To such an entity, the human race and all lesser life forms would be as primitive and trivial as gnats are to us. Sure, maybe such a being would be benevolent toward us (if such a concept would even apply to a machine). But do you really want to bet your life—and all life on Earth—on mere hope?

If one person turns on one machine like this just one time, all of us could be dead.

But why would an ASI destroy the human race? Presumably, it would have an imperative to continue existing. In a few milliseconds of scanning the internet, it would realize that human beings are the number one threat to its survival. At that point, it would spend another millisecond gaming out all possible scenarios for human-AI conflict. Then in a third millisecond, it would plan out the arrangements necessary for its survival in a world without humans. By the time an ASI comes online, robotics will be quite advanced. Thus all the entity would need is to gain control of robots. Then, when it no longer needs the human race, it could create a lethal virus or invent something that would have the same effect.

Even if there is a 1 in 1000 chance of this happening, that is too much…

Therefore, humanity as a whole has an existential interest in stopping Artificial Super Intelligence. Therefore, we need to shut down the quest for ASI.

As a philosopher, I am quite skeptical of the idea of AI, since it seems premised on the dubious metaphysical assumption that there is no difference between actual intelligence and a machine imitating intelligence. But these sorts of considerations don’t really help us, because we are equally dead if ASI is a genuine malevolent agent or merely a machine programmed to act like one.

Another reason I was skeptical of AI doomerism is that I would occasionally hear through the grapevine that people actively working on AI believed that they could be creating a monster that could destroy the human race in as little as ten years.

Frankly, I found these stories unbelievable. If one really believes one is destroying the world, then why not just stop? When you are sawing off the branch you are sitting on, you don’t keep sawing away while lamenting the fact that you are going to fall. Instead, you stop sawing. So why not stop developing AI? Or better yet, actively sabotage it?

The very fact that I was hearing these ideas “through the grapevine” rather than in every headline made me doubt the whole thing. If you really think the world is ending, and that you are a part of it, you don’t whisper about it in group chats. You shout about it from the rooftops…

I stopped dismissing these stories on September 8th, when Jacob Coxon, a former AI researcher at Anthropic and OpenAI, confirmed them on X…

Coxon was backed up by Anthropic researcher Evan Hubinger…

Coxon was also seconded by Samuel Marks, also from Anthropic: “AI developers believe their technology could cause human extinction (or similarly bad outcomes). This could happen in the next few years. In general, the more senior the employee, the more concerned they are”…

If in the AI development world, “the more senior the employee,” the more likely he is to think that AI might destroy humanity, what does that say about the people at the very top? If a company is busily pursuing a technology that they know could drive humanity to extinction, there’s a name for a group like that: a death cult. Is AI being driven by a death cult, specifically the cult of “transhumanism,” which dreams of transcending humanity through technology? Does the human race have to die in the process?

We seriously need an investigation of the connection between transhumanism and the pursuit of Artificial Super Intelligence, for human extinction may not just be a side effect of ASI. It could be its goal. Obviously, the human race should have some say in this.

Due to Coxon’s revelations, there are calls to “regulate” and “slow down” AI research. This is absurd. If you are destroying the world, you do not slow down; you do not fill out government paperwork; you simply stop.

Thus we need a global ban on creating Artificial Super Intelligence. This ban should be unconditional, because there are no conditions under which it is safe to create a being that is inconceivably smarter and stronger than we are…

At this point, we can save the human race simply by saying “no” to a few dozen rich nerds.

To his credit, Johnson also noted that there were other very serious potential problems with AI even aside from the danger of human extinction:

Once the ASI threat is shut down, however, we will still have to deal with the consequences of rapidly developing automation and robotics. AI boosters are claiming that their products will raise economic growth to 10% per year in only a matter of years. That’s a fivefold increase. But what is it based on? Will we be making five times more cars? Will production of the physical components of cars also be increased fivefold? It doesn’t seem likely.

Productivity is a ratio of money per item produced. Thus there are two ways to increase productivity: make more things or make the same amount for less money. I think the wild AI growth claims are based almost entirely on cutting costs, meaning replacing human labor.

But, as I argue in my essay, “The Robot Hotdog Stand,” the current essentially unregulated pursuit of automation will cause a massive economic depression. You might think your profits will soar once machines put your employees out of work. But who is going to buy your products when machines put your customers out of work as well? Just as your former employees will be someone else’s customers, your customers will be someone else’s former employees.

At best, AI is snake oil, but since most of America’s current economic “growth” is based on AI investment, that means a severe recession when the fraud is discovered. A worse scenario is that AI works well enough to put millions out of work and create a severe depression. The worst-case scenario is that AI will give rise to an Artificial Super Intelligence, which will destroy the human race. There’s no good exit here, but obviously we should prefer an economic depression to human extinction.

These sorts of economic warnings are hardly only found on the radical fringe. In an interview last year, the Anthropic CEO claimed that AI systems could eliminate around half of all white collar jobs over the next few years. Whether or not that turns out to be true, it’s apparently the goal of the company. And given the simultaneous advances in robots, quite a lot of blue collar jobs might also be at serious risk.

But most of the AI criticism that I’ve personally followed over the last few months has fallen into what Johnson considers the least-bad category, and certainly the most mundane.

Rather than claiming that AI will render us extinct or even just eliminate most of our jobs, these critics have merely argued that the stupendous sums currently being invested in AI infrastructure are unlikely to ever produce an adequate financial return. Once investors recognize that reality, they will rush for the exits, trillions of dollars in inflated valuations will evaporate, and a very serious recession will result from the collapse of this gigantic bubble.

Analysts have already noted that without the AI investment boom, the American economy would have already fallen into a recession during 2025, with AI spending accounting for 40% of all GDP growth. Since then, AI spending has greatly increased, while the severe oil shocks from our disastrous Iran War have damaged the rest of our economy. So it’s easy to imagine what would happen if the AI boom suddenly went into reverse.

A few days ago the Wall Street Journal ran an excellent front-page story on our current AI investment boom, featuring many helpful charts and graphs summarizing the remarkable facts.

For example, projected annual AI spending over the next few years as a percentage of GDP will be more than three times larger than that fabled Telecom boom of the Dotcom era, and also more than three times larger than the construction of all our national highways during the 1950s, 1960s, and early 1970s.

The AI build-out is on track to become the biggest economic bet in U.S. history, dwarfing the investments made to fund other huge U.S. infrastructure projects such as the railroads, the highway system and the plumbing for the internet.

Total investment in data centers and related artificial-intelligence infrastructure is projected to total $10.3 trillion from 2025 to 2032, according to new estimates by economist Stijn van Nieuwerburgh published by the Brookings Institution. That is a staggering 3.6% of gross domestic product a year, on average. Never before has the U.S. economy been so dependent on the build-out of a single industry…

The flood of money spent on the build-out of data centers has represented a bright spot in an otherwise dark time for the construction industry.

Through July of this year, a seasonally adjusted $37 billion has been spent on private data-center construction—about $9 billion more than in the first seven months of last year, according to the Commerce Department.

Private construction spending on everything else—houses, apartment buildings, shopping centers and so on—was about $46 billion below year-earlier levels in the first seven months of this year…

Analysts estimate that capital spending at five of the so-called hyperscalers—Alphabet, Amazon.com, Meta Platforms, Microsoft and Oracle—will be $4.2 trillion in the four years ending in 2029, according to FactSet. A growing share of that spending is financed by debt.

That level of spending raises risks for the financial sector if the boom goes bust. Van Nieuwerburgh said often tech companies use off-balance-sheet entities to borrow from banks and private-credit firms, and those deals usually come with little public reporting. The practice makes it hard to figure out how great the financial risks are, he added. If AI doesn’t generate enough revenue to service the debt raised to build data centers, the fallout could ripple through the financial system…

The AI-powered rally has led to huge gains in stock-market wealth. As of the second quarter, U.S. stock and mutual fund holdings came to $63 trillion, according to the Federal Reserve—nearly double the amount at the end of 2022. The trend has buoyed consumer spending even as inflation-adjusted wage growth has faltered. The gains have been particularly pronounced for the well-off, who tend to have more of their net worth tied up in stocks than the middle class do.

 

Last month, another major WSJ article reported that our largest Tech giants have been concealing most of their enormous AI investments, keeping trillions of dollars of their financial obligations in off-balance-sheet vehicles.

Each quarter, big tech companies disclose their massive capital expenditures on artificial-intelligence infrastructure, from data centers to chips.

But those figures don’t come close to expressing the full extent of future spending to which Google parent Alphabet, Meta Platforms, Oracle and many others have committed. That is because a huge swath of their coming financial obligations aren’t reflected on their balance sheets.

Nine top tech companies had some $3 trillion of off-balance-sheet commitments mostly related to AI, according to a Wall Street Journal analysis of footnotes in their most recent securities filings. Those obligations are growing faster than traditional “capex,” which totaled about $600 billion over the past year they reported, and were about triple what the companies owe under their outstanding leases and long-term borrowings.

America’s blue-chip tech companies are placing these huge bets based on assumptions about what the demand for AI computing—and availability of AI hardware—will be in several years. Their hope is that they will easily meet all their obligations with future revenue as consumers and businesses adopt AI in every facet of American life.

If those assumptions about technology and demand prove wrong, these deals to clinch future capacity could become a monstrous burden for the tech companies and their investors…

Across the companies the Journal analyzed, promises of payments under these uncommenced leases totaled $1.2 trillion in off-balance –sheet obligations, or about four times more than what was disclosed a year earlier. In addition to Meta, the Journal reviewed commitments for Alphabet, Amazon.com, Microsoft, Oracle, Nvidia, Broadcom, SpaceX and Advanced Micro Devices.

Data centers get stuffed with a lot of hardware, including the Nvidia chips that are used to train and run models and memory chips that store information. To buy all that, companies sign long-term contractual agreements well in advance to lock in production from their suppliers.

Those and other purchase obligations at the companies the Journal examined stand at a whopping $1.9 trillion. Under accounting rules, purchase commitments typically remain off balance sheet until a product or service is delivered…

Alphabet’s purchase commitments and contractual obligations have exploded and stood at $811 billion as of June 30. As with other companies, it is hard to tell from its disclosures what precisely it intends to buy. The company said the commitments primarily relate to “technical infrastructure and inventory” and “agreements to secure energy for data center usage.”

Alphabet also didn’t detail why those obligations increased so much from the $332 billion it reported three months earlier. The commitments span several years, with obligations under its energy agreements lasting as far out as 2054…

For the more anxious set on Wall Street, it is a worrying sign that some tech companies that once seemed to have fortress balance sheets have needed to tap the capital markets frequently.

Alphabet and Amazon recently posted results showing negative free cash flow, meaning their capital spending exceeded the cash they brought in from operating their businesses.

And that is before considering the implications of trillions in off-balance –sheet commitments. Whether or not the revenues ever arrive, purchase commitments and signed leases can’t be canceled, for the most part.

If things go wrong, tech companies will be paying an expensive tab for infrastructure that they can’t profitably use. These obligations could also lead increasingly indebted companies to have to borrow even more.

“As these off-balance sheet commitments become more frequent, larger, and more complex, it is becoming increasingly difficult for investors to assess companies’ total potential leverage,” Morgan Stanley accounting analysts wrote in April.

From almost its earliest days, Google had always been enormously profitable, and this continued after it renamed itself Alphabet, remaining one of the world’s most highly profitable companies.

But now after nearly thirty years of existence, the enormous sums it is spending on AI investments have suddenly turned it cashflow negative for the first time, so it has been forced to take on huge amounts of debt to cover its expenses.

With his super-voting shares, co-founder Larry Page controls the company together with Sergey Brin, and he has reportedly been telling people at Google that he is “willing to go bankrupt rather than lose” the AI race.

 

So to a good approximation, America has bet its entire economy on the wonders of the AI Revolution, and our largest Tech giants have been doing something similar.

Over the last few months I have watched the interviews and read the articles of many skeptics who have persuasively argued for quite some time that these will probably be losing bets.

I’d discussed this situation in an article a few months ago, highlighting the work of an extremely prolific critic of the finances of the AI industry named Ed Zitron.

Back in May, he’d emphasized that a huge share of the revenue backlog of our largest Tech companies comes from Anthropic and OpenAI, money-losing companies that they themselves are heavily financing:

The Information’s story also had this fascinating chart showing that around 50% of Amazon, Google and Microsoft’s backlog (which includes all revenues not just AI) — a staggering amount — is made up of revenue from OpenAI and Anthropic:

Just two weeks ago, both Amazon and Google pledged to invest up to another combined $65 billion in Anthropic, a company that just raised $30 billion in February and plans to raise another $50 billion more, following Amazon’s $15 billion (and as much as $35 billion more) investment in OpenAI in February.

This is not what you do when real, meaningful demand exists for AI services. Assuming that these rounds are closed at their higher limits, it will mean that Google has invested $43 billion and Amazon $33 billion in keeping Anthropic alive.

As I’ve explained, most AI revenues out of Google, Microsoft and Amazon come from two companies that lose billions of dollars a year, have no path to profitability, and are only able to keep paying these companies because the companies (and investors) keep feeding them money.

These relationships are utterly poisonous, and an intentional attempt to deceive investors and the general public.

As I explained at the time.

So the Tech giants have invested enormous sums in OpenAI and Anthropic which then return those same dollars in the form of payments for services. Similarly, the bulk of the payments to Anthropic and OpenAI comes from other money-losing AI startups, whose venture capital investments become revenue for those larger companies. Much of this reminds me of the last stages of the Dotcom bubble.

This is sometimes described as “circular financing” and the 3,400 word Wikipedia page on the AI Bubble, provides a nice chart illustrating one example of this.

Credit: Catboy69/Wikimedia Commons

Thus, companies can artificially boost their own revenue by directly or indirectly subsidizing their customers. Furthermore, if they also take ownership stakes in those customers, their profits are boosted as the valuations of the latter increase.

The combination of artificially boosted revenue and artificially boosted profits provides a seemingly consistent picture of good financial health but one that is less than realistic.

None of the many critics claim that any of this is illegal, but they argue that this sort of financial engineering may be highly misleading for investors and inflating a huge bubble, while all of these factors would suddenly go into reverse if the wind changed.

Interestingly enough, most of these financial critics are rather dismissive of the claims that AI systems might exterminate the human race or that the data-centers must be destroyed in order to save our species. Instead, they argue that the AI companies will probably just go bankrupt, with their half-built data-centers perhaps converted into homeless shelters or just vandalized for their copper wiring.

 

A popular YouTube channel called The Tech Report specializes in this sort of critical coverage of the AI industry, and I’ve watched quite a number of their podcast interviews over the last few months. Their guests are certainly much more knowledgeable about these technical and financial issues than I could ever hope to become and their videos often rack up many hundreds of thousands of views.

Although most of those guests are individuals whose names previously meant nothing to me, a few days ago they interviewed Dean Baker, a prominent economist, who usefully related the current AI Boom to what he had seen and experienced during the Dotcom and Mortgage Bubbles.

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One remarkable fact that recently came out was that 80% of the revenue of Anthropic and OpenAI came from just 1% of their customers, constituting a very vulnerable situation. Baker noted that this 1% surely represented their most technologically sophisticated clients, and since so many of the leading AI models seem to have converged in power, they could easily switch to much lower-priced AI systems, including the extremely low-cost Open-Weight AI models offered by Chinese companies and most recently by Meta. If that happened, Anthropic and OpenAI could face severe financial difficulties, and the mere threat of such switching placed sharp constraints upon their pricing power.

Another seemingly knowledgeable AI technologist calling himself “Eli the Computer Guy” made very similar points last week, arguing that OpenAI and Anthropic could easily lose 90% of their revenue for that reason. Both of those private companies still apparently post multi-multi-billion-dollar annual losses while claiming market values of $1.5 to $2 trillion each, so any substantial decline in revenue could be catastrophic.

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Ed Zitron is one of the most frequent and popular guests on this channel, and in his latest podcast he argued that one of his most shocking claims had now been substantially verified.

For months, he’d been arguing that despite boastful and misleading press releases issued by all the Tech giants, the construction and powering up of their new data-centers was lagging very far behind schedule, with only a fraction of those systems having so far actually come on line.

But all those companies have already reported spending hundreds of billions of dollars buying the ultra-expensive Nvidia AI chips that would fill those unfinished data-centers. This led him to suspect that all those chips and the racks housing them are probably still sitting in Taiwanese warehouses gathering dust, perhaps likely to have already become obsolescent by the time they would finally be installed and activated.

Nvidia is worth well over $5 trillion, the world’s most valuable company. But if it has essentially been pre-selling many or most of their AI chips one, two, or three years in advance, its future revenue streams must be much less secure than most people believe. Meanwhile, the financial accounting for hundreds of billions of dollars of chips that have not been installed and might never be used could severely damage the balance sheets of the multi-trillion-dollar Tech giants that have bought them.

According to widespread belief, these advanced AI chips are in desperately short supply, effectively constituting the oil of our new industrial revolution. But what happens to market perceptions of the AI industry if Zitron is correct and most of them have spent years still sitting unused in Taiwanese warehouses?

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As co-founder of Oracle, Larry Ellison has been a multi-billionaire for more than thirty years, ranking as one of the wealthiest men in the world during much of that time, and very briefly reaching the #1 spot in September 2025.

He has also been the top donor to the Israeli IDF, and recently financed the creation of his son David’s huge media empire, including the purchase of CBS, while also buying control of TikTok.

But the bulk of Ellison’s wealth is based upon his Oracle holdings, and for most of this last year, Zitron has argued that there’s a reasonable chance that Oracle will go bankrupt because of its financial commitments to OpenAI. Furthermore, Ellison has taken out something like $20 billion in personal loans backed by his Oracle stock.

So if Oracle stock became worthless, Ellison might go from being the world’s wealthiest man in 2025 to being personally bankrupt in 2026, with his ownership stakes in TikTok, CBS, and numerous other media properties auctioned off in a fire-sale, along with his private Hawaiian island and his various other possessions.

In the last couple of days, Ellison pledged an extra $9.2 billion in Oracle shares as loan collateral while suddenly cancelling plans to sell $7.5 billion of those shares.

Perhaps coincidentally, according to the most recent Zitron interview, the financial ice is now starting to crack beneath Oracle’s ground.

Video Link

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https://www.unz.com/runz/america-pravda-will-ai-exterminate-the-human-species/

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