URL: https://prospect.org/power/2025-03-25-bubble-trouble-ai-threat/
Project Stargate, a $500 billion supercluster in the rolling plains of Texas that would run OpenAI’s massive artificial-intelligence models.
Stargate would dwarf most megaprojects in human history. Even the $100 billion that Altman promised would be deployed “immediately” would be much more expensive than the Manhattan Project ($30 billion in current dollars) and the COVID vaccine’s Operation Warp Speed ($18 billion), rivaling the multiyear construction of the Interstate Highway System ($114 billion).
OpenAI, the current market leader, expects to lose $5 billion this year, and its annual losses to swell to $11 billion by 2026.
OpenAI, which released ChatGPT in November 2022, now sees 250 million weekly active users and about 11 million paying subscribers for its AI tools. The startup’s monthly revenue hit $300 million in August, up more than 1,700 percent since the start of 2023, and it expects to clear $3.7 billion for the year.
According to its own numbers, OpenAI loses $2 for every $1 it makes, a red flag for the sustainability of any business. Worse, these costs are expected to increase as ChatGPT gains users and OpenAI seeks to upgrade its foundation model from GPT-4 to GPT-5 sometime in the next six months.
Oracle recently announced plans to build a gigawatt-scale data center just for AI, powered by a trio of nuclear reactors, while OpenAI pitched the White House on the necessity of five-gigawatt data centers, which would be enough power for about three million homes consumed by a single AI data center. A recent report from McKinsey expects the electricity going to fuel AI data centers will triple from 3 to 4 percent of the country’s electricity to 11 to 12 percent by 2030.
Microsoft researchers concluded that workers became more productive using generative AI tools but their critical thinking skills declined, presumably because they were offloading the thinking to AI. Looking past the hype, the business case for generative AI two years after the stunning success of ChatGPT appears weaker by the day.
Silicon Valley has gone corporate and managerial; even private equity invests in the Valley today. The fusion of venture capital and Wall Street threatens to bring the unbridled speculation of unregulated finance and the breathless tech industry hype together in a single, massive bubble. Inimical to the old ethos of the Valley and emblematic of a bloated, rotten investing strategy, in Silicon Valley now the money chases founders rather than founders chasing money.