AI Is a Bubble Only If You Refuse to Define AI

Ed Zitron was recently on Bloomberg discussing the AI bubble. The interview starts off strong with the interviewer asking “What are the AI bulls getting wrong?”. Zitron says, “People are conflating a semiconductor rally with an underlying successful business, which doesn’t really exist.”

Let’s first align on terminology. I have no idea what people mean when they say “AI bubble”. Does AI mean semiconductors, CPUs, RAM, neoclouds, energy providers, photonics companies, hyperscalers, networking companies, private companies like Anthropic, etc?

In fairness to Zitron, he primarily talks about Anthropic, OpenAI, and hyperscalers. He references Apple as a good example of a company that isn’t spending on AI. The general sentiment of the interview is that “AI”, whatever that means, is a bubble. I couldn’t disagree more. If his point is more nuanced than this, and I missed it in the interview, please correct the record in the comments.

In short, his point are the following:

• the ROI on AI can’t be measured and it might be negative
  • Uber's COO says it's getting harder to justify the money spent on AI tokenmaxxing
• Frontier labs are burning cash
• Some AI infrastructure companies are overlevered
  • “There will be a lot of losers in this because we don’t know if GPU compute is margin positive” (minute 4:50)
    • Coreweave is burning billions in capex and their customers are Nvidia, OpenAI, Microsoft

Where we agree

• ROI on AI is hard to measure
• Anthropic and OpenAI are losing money and they don’t have a clear path to profitability
• There will be winners and losers
  • Couldn’t agree more. Some companies are over-leveraged.
    • “As of December 2025, CoreWeave's gross EBITDA leverage, excluding leases, was 7.0x with lease-adjusted gross leverage at 7.7x.” (Fitch)
  • Some companies have the right ideas but are simply too early
    • Poet, POET -2.33%↓ has almost a $3 bln market cap and AI data centers are still relying on pluggables, active electrical cables, and conventional optics while the industry has not yet standardized around deeper photonic integration like optical interposers, co-packaged optics, or optical I/O.

Where our opinions diverge

An enormous amount of money is still going to be made by investors

AI is still going to transform the way we live, and some companies are going to make incredible sums of money. If you’re a passive investor and you want to stop the analysis at the 30,000 feet view, then that’s okay, and I’d agree with everything Zitron said.

Let’s dig into these points in greater detail. I’ll start each section with a quote from Zitron and then we’ll work through it.

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