This doesn’t mean the party will not go on for a bit longer. Right up to the end there will be people spending and investing like things are just getting started, but this bubble’s days are numbered and Ed Dowd lays out the reasons why.
The signs are piling up faster than the hype can spin them. AI capex has been the rocket fuel for markets, but the second derivative is turning. Factors ending the party:
- Private credit stalled — flows reversing, redemptions surging, industry effectively paused.
- Enterprise demand cracking — ROI skepticism, token costs biting, data/alpha extraction backlash.
- Power constraints hitting hard — the grid can’t scale without massive, long lead time builds or dystopian reallocation.
- Open-source pressure — Chinese based DeepSeek and now the new open-source frontier model Kimi K3 are rivaling OpenAI and Anthropic frontiers labs at fraction of the price, commoditizing the economics.
This doesn’t mean the party will not go on for a bit longer. Right up to the end there will be people spending and investing like things are just getting started, but this bubble’s days are numbered and Ed Dowd lays out the reasons why.
> The signs are piling up faster than the hype can spin them. AI capex has been the rocket fuel for markets, but the second derivative is turning. Factors ending the party:
>
> * **Private credit stalled** — flows reversing, redemptions surging, industry effectively paused.
> * **Enterprise demand cracking** — ROI skepticism, token costs biting, data/alpha extraction backlash.
> * **Power constraints hitting hard** — the grid can’t scale without massive, long lead time builds or dystopian reallocation.
> * **Open-source pressure** — Chinese based DeepSeek and now the new open-source frontier model Kimi K3 are rivaling OpenAI and Anthropic frontiers labs at fraction of the price, commoditizing the economics.
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