AI Bubble Troubles Keep Boiling Over

Jun 10, 2026

A few top experts are now sounding a fire alarm on the collapse of the AI bubble that I have been saying for a couple of years will eventually take the stock market down, though particularly emphasizing the now-imminent timing of that event as the market’s convulsions look like the bull is dying. And with that will go other markets in a great collapse.

One more piece of evidence of the insanity came in today with news that Apollo and Blackstone have just put together a MASSIVE $35 BILLION loan/equity funding entity (called a “Special Purpose Vehicle”) for Anthropic, which makes for one of the biggest private-credit deals in the history of Earth.

Half the insanity comes on the side of the major investors. Blackstone is already struggling with serious troubles in its flagship fund, forcing it to put limits on redemptions from the fund to prevent a run to hell. Apollo, too, is in some jeopardy, but both are running long on Anthropic—very long—and that’s where the trouble lies on the other side.

Just like all those dot-com busts of companies around the year 2000, Anthropic has never reported a profit as it reached for the moon in loans and equity investments. Though it has strong revenue, it loses in the billions every year by endlessly expanding is expenditures. And, now, with energy prices soaring, that is sure to make its bottom line tougher, being an ultra-high energy demand company.

Even if not all of its enormous energy consumption is oil-based, as Petro-generation plants charge massively higher levels, customers start to try to shift to alternative, providing increased demand into which the alternatives are able to start raising prices. We’ve already seen how that has caused one electrical utility in the Tahoe area to abandon an entire community of 50,000 to go chasing after the higher money that AI is willing to pay to get the power it needs.

So what could go wrong?

The toxic chemistry

Many major banks and investors have been pulled into the tranched deal. (And who could be concerned about the feigned safety of tranched investment layers after the massive collapse of mortgage-backed securities that were tranched, yet still wound up peeling every single layer down to about nothing?)

The announced deal, of course, is to fund Anthropic’s continuing relentless build-out of AI data centers. It’s largely a chip deal, and chips makers have been showing the biggest signs of trouble in the stock market as AI starts bracing for headwinds. You may recall, I recently asked the question, “With AI now taking charge of its own development, how long before its exponential increase in design speed causes its own data centers to become obsolete? A year or two? It won’t be long and AI will likely develop much less power-consumptive forms of faster computing and greater storage, turning all these massive, power-starving, heat-wave pushing, noise-rocking, light-polluting centers built in the middle of nowhere to become giant liabilities.

Or as Zero Hedge far more mildly phrased it,

It also adds to a deluge of chip-backed loans that sparked debate over how quickly graphics processing units would depreciate as AI technology evolves.

I think the answer to that is “very,” meaning many of these project may become victims of their own success, locked into extraordinary energy-consumptive facilities with longterm financing to pay off on the the chips when new companies come along with technology that uses half the space and a tenth the energy in just a year or two, designed, of course, by renting space on the AI behemoths being built today.

We can see here the spending on these AI ventures is scheduled to keep growing at a massive rate, with the biggest step up this year, though some of the centers are starting to experience serious public pushback that has caused the largest of all of them (in Utah) to be scaled back.

Or as ZH also put that:

But wait, there’s more... because if that wasn’t enough, Morgan Stanley, which advised Broadcom and arranged the transaction, is also lending money to investors participating in the deal!
And just because this is a “chip-backed” off-balance sheet SPV where nobody really knows who holds the debt, the monstrous circularity of all the deal aspects will be ignored until the AI credit bubble cracks.

Which could be this week or next, since cracks are already appearing everywhere on the surface of AI and chip manufacturers.

Piling all of these banks into the toxic chemistry of this brew, means the AI meltdown could become as explosive to the entire financial world (if not likely worse) than the Great Financial Crisis of 2008.

And, exactly like that massive mess …

As for the punchline: demonstrating the insane frenzy of anything involving AI, investors involved in the deal did not even know what they were investing in! According to the FT, investors pitched on the deal were not given early access to Anthropic’s financials ahead of its IPO….
This wasn’t the only such deal: just days prior, Anthropic (which will use proceeds from this private credit SPV to purchase Google chips made by Broadcom), agreed to pay $1.5 billion a month for access to 325,000 Nvidia GPU also held by SpaceX. No wonder these sham agreements were structured so they can be terminated by either party after December 2026.

Being so deeply inter-wired, it will be hard if the bubble bursts, as I believe it is starting to do, for it not to become a devastating cascade of failures.

White House already talking about bailouts

As these top-heavy deals stack up, another article today asks if the White House knows something is going wrong with all this AI stuff. Is it all about to tip over?

Does the White House Know Something About AI That It Isn’t Telling Us?
…The S&P 500 dipped down below its 21-day exponential moving average (EMA) for the first time since this bull run began nine weeks ago. Again, the dip was expected, but the severity was extreme.
This is a significant warning that the uptrend is in danger. How the market reacts in the first half of this week will determine whether this was just a “garden variety” dip in a bull market, or if stocks are in danger of something worse.

Well, the market has been rather tremulous in the first half of this week, following the Friday episode of the cold sweats and shivers that the above article was talking about. The NASDAQ, which is the watering hole where all of these stocks gather, flatlined Monday after its spectacular Friday plunge. Then today it plunged another 2% but recovered some of that toward the end of the day to end up down 1%. So, it’s stumbling, and that looks like “something worse” based on this analyst’s warnings about Friday’s heavy action.

He goes on with an interesting side note. The bailout talk has already begun:

What is telling is that the Trump administration immediately surfaced over the weekend to talk about potentially taking stakes in large AI-companies.

The kind of Fascist economics Trump loves.

The fact the Trump administration is already talking about an implied bailout of large AI-companies is a major warning. It’s well known that the most famous AI company, OpenAI which first introduced the public to Large Language Models (LLMs) with the launch of ChatGPT in November 2022 is in significant financial trouble: the company has over $100 billion in commitments on just $26 billion in annual revenues. Indeed, OpenAI CEO Sam Altman has been hinting at the need for a bailout since third quarter of 2025.

OpenAI is one of the biggest over-spenders of all the over-spenders.

In this context, the fact the President of the United States is suggesting that the government take stakes in AI companies just a few days after a severe market sell-off is deeply concerning. Does the White House know something about AI that it isn’t telling us? Are these companies not actually the highly profitable market leaders that they claim to be? Or is there something systemic happening under the surface that the White House is attempting to get “in front of”?

Taxpayer dollars might get piled by the Treasury (now allowed to own stocks) into the biggest LOSERS of all. Of course, with unlimited funding possible, will the Treasury just keep piling in enough trillions to keep them above water, even if they don’t recover their losses on tax-payer dollars for an entire decade, if ever, as the best of the best managed to do after the dot-com bust while all the rest of the major market leaders got flushed entirely?

More big names speaking out about a big bust

I led off by saying other big-name analysts and investors were in today’s news, expressing their beliefs that it looks like the AI bubble is about to burst, as I’ve been saying I am certain it is:

The ongoing stock market retreat has fueled concerns that the AI bubble may be on the verge of bursting, potentially ending one of the most remarkable bull runs in history—one that created several trillion-dollar companies.

And that’s a lot of value to implode, which will leave widespread damage throughout the financial world if this over-leveraged market melts down. Again, this concern developed out of Friday’s market action, which I started leaning toward prior to Friday.

US stocks retreated sharply this week, with top technology companies being the top laggards. Broadcom AVGO was one of the top laggards as it plunged by 21% from its highest point this year. Its market capitalization dropped from $2.27 trillion to $1.83 trillion.
Some analysts are warning that the AI bubble is forming and that it may burst soon. A good example of this is billionaire Ray Dalio, who warned of parallels between the current AI growth to that of the dot-com bubble, which burst in 2000. He also warned that the soaring US debt may compound this crisis, saying that the US was now in a point of no return.
Mark Cuban, the billionaire Shark Tank star, also warned that the AI bubble may burst and end like the search engine crash. He pointed to the search engine wars of the late 1990s, which eventually resulted in Google GOOG being the most dominant players.
Michael Burry, who predicted the housing bubble, has also warned about the industry. He has also placed short trades on top companies in the AI industry like Nvidia NVDA and Palantir PLTR.

Ties to the slippery slope of oil lies

Of course, these stocks gyrate with every lie the president tells to jury-rig the oil market back down in price. We are now on lie 38 of his Iran Series in the count of the number of times he has said Iran is eager to strike a deal in 2-3 days, according to the count of those lies kept by the writer of one article in the news below.

Each time, Trump makes those announcements, it appears insiders profit hyugely from the swings that come to oil and stocks with bets placed perfectly to profit from the swings just about 15-minutes to half an hour before the president makes his announcement.

President Donald Trump claimed that a peace deal with Iran is just “two or three” days away, asserting it would prevent the country from acquiring nuclear weapons and reopen the Strait of Hormuz.
However, this is not even the first or second time the president has made such a claim. It is, in fact, the 38th time that the president claimed a deal was coming….

One can see why he would want to play this game as often as he could, given that someone of several is/are profiting immensely each time he does.

Speaking to reporters at Madison Square Garden on Monday, Trump revealed that Washington [or Jerusalem?] and Tehran had been going “back and forth.” He stated, “They were going back and forth [with strikes], and now they both agreed, through me, to stop, and now we’re in the final throes of what will be a very, very good deal.”

But then Iran blew up a US helicopter over the Strait of Hormuz, so Trump said was forced to retiate and blew up some Iranian stuff, and now Iran says that means it is forced to blow up more US stuff, even as the Schmeasefire continues to fall apart with Israel striking Beirut and other parts of Lebanon and Iran retaliating by striking northern parts of Israel. (That’s why I call it the “Schmeasefire.”) Still, the markets are endlessly dumb enough to keep hearing what they want to hear from Trump’s mouth and trade the way his insiders need them to move in order to capture the biggest swings.

Of course, the Supreme Court has already ruled that Trump is immune for prosecution for anything he does as part of an official action. So, no doubt, he had people he needed to notify about each of his announcements just ahead of the actual public announcement, whom he happened to know would be positioned to cast some very profitable trades for both themselves and him.

This latest time:

“The strait will open up right away,” he insisted, adding, “It’ll open up immediately upon signing.”

As I’ve said so many times before, “Uh huh, sure.”

The stealth recession and the fake CPI

Also very interesting is a very article that is very specific in its details, which I’ve tacked onto the boldfaced headline section. It covers the AI/chip revolt in the stock market, but also says, we have been in a hidden recession for quite awhile now, exactly matching my claim that we have been in a stealth recession since Biden’s last year in office.

What the article does very nicely is lay out all the ways with specifics in time that the US has dummied down the way it calculates inflation, always to the effect of reducing it, just as I’ve reported for years (but in one nice comprehensive, easy-to-read package). It details how official inflation, as I’ve been claiming, cloaks recessions in the government’s real GDP numbers because the government’s stated real GDP growth is far from being real growth. Throughout that past two years, if you take out all the fakery that was made even worse by the DOGE firings and government shutdowns that seriously hampered the ability to gather data from businesses, GDP “growth” has been negative.

So, yes, Trump’s golden era started in a stealth recession from the Biden era, and it has become only deeper in recession at an accelerating rate during Trump’s first year of tariff and turf wars. And now it is falling even more rapidly under the massive oil inflation that is building up quickly.