I am definitely a layperson when it comes to this type of analysis, but I do have concerns about an AI bubble — one that you imply without fully exploring.
Your closing question about whether the transition will be orderly or chaotic is the one that keeps me up at night. Because the chaos risk isn't just at the infrastructure financing level. It's in the consumer foundation underneath it.
The capex buildout assumes continuous revenue growth. That revenue ultimately depends on users who can afford expanding metered usage bills now being passed through at API rates. But those users — businesses and consumers — are already stretched. Consumers are carrying grocery balances on credit cards. Business margins are compressing under tariffs. The subsidy era ended because the math didn't work at the infrastructure level. The demand era may be shorter than projected because the math doesn't work at the household level either.
The new business models fix the bottom line for AI vendors, but inevitably it will hit their top line. Some users will stay and adapt, becoming more token aware and picking cheaper models when the flagship ones are not needed. Some users will still find value and pay the higher bill. Some users will churn. Hard to know what the mix would look like but it's reasonable to expect a negative impact on revenue.
That makes sense to me, and it's exactly what worries me from a consumer perspective. The subsidy era ending means passing real infrastructure costs to users who are already stretched. The ones who churn aren't just making a rational pricing decision. Many simply can't absorb another bill going up.
And from what I've been reading, businesses aren't immune either. Companies that bought into AI to replace expensive human labor are discovering the ROI isn't there. Some are quietly going back to humans because their expectations simply weren't met. If business customers start churning alongside consumers, that revenue compression gets a lot more serious.
That's not a technology adoption curve. That's a household and business budget problem showing up in your revenue numbers simultaneously.
I am definitely a layperson when it comes to this type of analysis, but I do have concerns about an AI bubble — one that you imply without fully exploring.
Your closing question about whether the transition will be orderly or chaotic is the one that keeps me up at night. Because the chaos risk isn't just at the infrastructure financing level. It's in the consumer foundation underneath it.
The capex buildout assumes continuous revenue growth. That revenue ultimately depends on users who can afford expanding metered usage bills now being passed through at API rates. But those users — businesses and consumers — are already stretched. Consumers are carrying grocery balances on credit cards. Business margins are compressing under tariffs. The subsidy era ended because the math didn't work at the infrastructure level. The demand era may be shorter than projected because the math doesn't work at the household level either.
I wrote about this from a consumer perspective — not a tech perspective — here: https://lakesidegrammy.substack.com/p/gilding-the-gdp?r=4psz66
The new business models fix the bottom line for AI vendors, but inevitably it will hit their top line. Some users will stay and adapt, becoming more token aware and picking cheaper models when the flagship ones are not needed. Some users will still find value and pay the higher bill. Some users will churn. Hard to know what the mix would look like but it's reasonable to expect a negative impact on revenue.
That makes sense to me, and it's exactly what worries me from a consumer perspective. The subsidy era ending means passing real infrastructure costs to users who are already stretched. The ones who churn aren't just making a rational pricing decision. Many simply can't absorb another bill going up.
And from what I've been reading, businesses aren't immune either. Companies that bought into AI to replace expensive human labor are discovering the ROI isn't there. Some are quietly going back to humans because their expectations simply weren't met. If business customers start churning alongside consumers, that revenue compression gets a lot more serious.
That's not a technology adoption curve. That's a household and business budget problem showing up in your revenue numbers simultaneously.