At the beginning of this month, IBM's CEO made a statement that sent chills down the spines of Silicon Valley: "There is no way that all this massive spending and AI and data centers will ever be able to pay off."。
If this had been said a year ago, it would have been considered a desecration of "future technology".
But today, in December 2025, as Broadcom fails to meet market expectations and Oracle's financial statements show cracks rarely seen in decades, market sentiment is undergoing a subtle yet fatal reversal. This is not just a tech stock correction; it could be the collapse of the "last bastion" of the US economy. 01 The End of the Frenzy: From "Buy with Faith" to "Checking the Accounts" Over the past two years, the capital market's attitude towards AI can be summarized as an almost religious frenzy: "Buy first, ask questions later." Everyone firmly believed it was a disruptive technology that would reshape the world; as for the profit model? That's something to consider 20 years from now. However, as the narrative reaches the end of 2025, the previously vague vision is forced to collide with the cold, hard reality of finance. The most typical example is Oracle. This company, once considered a cash cow, now has a negative free cash flow—a sight unseen for decades. To maintain its stock price and high dividends, Oracle has had to take on massive amounts of debt. This is an extremely dangerous sign: tech giants are trading debt for growth expectations. Oracle's CEO attempted to reassure the market in a conference call, claiming a commitment to maintaining its investment-grade rating. But this statement only exacerbated the panic: a company that had survived for decades by generating its own revenue suddenly began emphasizing "maintaining its rating" and "borrowing capacity," indicating that they themselves were aware of the tightness in their cash flow. The market began to raise questions that were once considered "out of place": What if they continue to lose money next year? If the debt market tightens, who will pay for these expensive data centers?
02 The "Vanke Moment" in Silicon Valley
This scenario evokes a strong sense of déjà vu.
If we look back to the real estate bubble era, we'll find that today's AI giants are reenacting a scene from that time. The current AI industry is strikingly similar to Chinese real estate companies on the eve of a storm—such as Vanke..
The logic of real estate developers back then was: as long as they acquired enough land and built buildings quickly enough, future appreciation would cover current debts.
Today's AI companies operate on the same logic: **As long as they stockpile enough GPUs and build large enough data centers, the future "AGI revolution" will offset the current massive capital expenditures (Capex).** What Oracle and similar companies are doing is essentially "borrowing to refinance," attempting to extend their debt for another year in gamble on miraculous revenue growth next year. However, the reality is that Broadcom's backlog, while reaching a staggering $73 billion, still falls short of the market's inflated expectations. When growth ceases its parabolic surge, even the slightest sign of slowdown can trigger panic selling by investors. Once free cash flow fails to turn positive, the debt-driven growth model collapses instantly. This isn't a technical issue; it's basic accounting common sense.
03 What's Collapsing Isn't Just Stock Prices, It's the Illusion of Class Wealth
If this were merely a crisis in the tech industry, it might not be so unsettling. What's truly frightening is that the AI bubble has become the sole pillar supporting the US macroeconomy. The current US economy is exhibiting a brutal "K-shaped" divergence: the lower and middle classes are experiencing painful waves of layoffs, with the labor market actually losing tens of thousands of jobs every month. Even Federal Reserve Chairman Powell has had to back down from the phrase "strong labor market." So why don't the consumption data look like it's completely collapsed yet? The answer lies in the "wealth effect." The spending power of the wealthy in the United States (especially the baby boomers) is almost entirely tied to the performance of the stock market. As long as the Nasdaq continues to rise, and as long as Nvidia and Oracle's stock prices remain high, they dare to spend lavishly there, thus masking the plight of ordinary consumers at Walmart and McDonald's. The AI bubble, in essence, is the last line of defense on the balance sheets of the wealthy. Once the market realizes that IBM's CEO was telling the truth—that "huge investments cannot be recouped"—the valuation system of tech stocks will face a reassessment. When the Nasdaq index corrects as it did in March and April of this year, the wealth illusion of the rich will shatter. At that time, we will see a hard landing of the economy without any buffer: the lower classes will have no money to consume, the rich will dare not consume, and companies will be burdened with huge AI debts they cannot repay. 04 The Naked Swimmers After the Tide Recedes The Federal Reserve seems to have also sensed the danger. Although inflation still appears to be rising, internal divisions within the Federal Reserve are widening. Officials like Austan Goolsbee have begun to suggest that they are more concerned about the deteriorating labor market than about inflation. This is a policy game of "walking a tightrope": the Federal Reserve must carefully protect the stock market because they know that the stock market (i.e., the AI bubble) is the last resort to maintain a superficial economic prosperity. But time is running out for them. The current situation is: companies are burning money to gamble on the future, the wealthy are relying on stock prices to support consumption, and the Federal Reserve is betting on a soft landing for the economy before the bubble bursts. While everyone is waiting for a turnaround in 2026, the real problems may erupt in the coming months: the dominoes will fall when the first major tech company is forced to sell off GPUs or data center assets at bargain prices due to a cash flow crisis. Just like during the dot-com bubble burst, people always think "this time is different," until their stocks become worthless. For ordinary investors, now may not be the time to be greedy, but rather to think about how to exit the market. Because when a movie theater catches fire and there's only one exit, you can't outrun the throngs of people.
Joy
