The Lehman Bros. moment of the AI bubble is coming, says this critic warning of fallout for tech stocks and the entire market

Ed Zitron is sounding an alarm that echoes through the halls of finance. In a recent analysis, the public relations founder suggests the artificial intelligence sector sits on a bubble prone to a total collapse. He compares the potential fallout of an OpenAI failure to the bankruptcy of Lehman Brothers, describing a scenario where loss-making subscriptions and heavy reliance on venture capital cause a market-wide shock.

Zitron points to the massive compute costs required to maintain current models as a primary driver of instability. With billions earmarked for infrastructure and data center debt, the financial burden on the companies at the center of this trend is immense. He argues that many firms are currently masking their long-term viability by relying on heavy funding from hyperscalers who provide the illusion of demand.

If this collapse occurs, the impact on the broader stock market could be severe. Debt associated with data centers would likely struggle, leaving companies like Oracle exposed to significant losses from wasted capital expenditures. The resulting contraction would force a reset for startups that have leaned on high-cost AI models to justify their valuation to investors.

Contrasting this view, some veterans of the financial industry remain optimistic. Howard Marks of Oaktree Capital Management recently noted a shift in his own outlook. He highlights the autonomy and adaptive capacity of newer models as features that set this technology apart from past innovations. While the market remains split between those fearing a bubble and those betting on long-term potential, the uncertainty surrounding AI spending continues to dictate trading sentiment.