Dr Jeffrey Funk returns to discuss how the current AI boom is driven not by healthy demand or sustainable profits, but by shady circular financing and hype.
Jeff argues that AI is a bubble, but not like the dot-com or the 1929 bubble, because the structure centres on a few firms rather than a broad market. Traditional bubble metrics like price-to-earnings ratios are misleading, since most companies in the market aren't actually benefiting from AI.
We delved into the broader damage caused by this bubble that distorted startup incentives, media and VC hype cycles, and what could happen when the bubble finally breaks.
Join the conversation and let's discuss how the AI bubble may be approaching a breaking point, including OpenAI’s centrality, hyperscaler cash flow strain, and weakening confidence in major AI-linked stocks. My concern is that it could also bring the end of entrepreneurship as we know it! Hold on to your seats, folks.
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Timestamps:
(00:00:00) – Preview
(00:02:07) – Why did economic experts and the mainstream media fail to see the AI bubble coming?
(00:06:43) – What is a bubble, and why is the AI bubble uniquely different from all the previous hype cycles?
(00:18:53) – The apparent lack of understanding and basic knowledge about AI’s limitations and potential leading to bizarre claims and investment decisions
(00:23:08) – Are people waking up to the true realities of AI and how data centres killed trust in the whole sector and may kill Oracle!
(00:29:01) – How China’s approach toward AI is beating Silicon Valley and why they are immune to the AI bubble crash
(00:34:18) – The fallacy of AGI and the singularity claims and how analysts had no idea if these promises are viable, leading to hyperinflation of the AI bubble and its imminent crash
(00:43:27) – The shady and questionable financial statements as circular financing
(00:48:47) – How some of the major mainstream media outlets, business magazines, influencers and podcasters are being paid by the AI companies and VCs to report positively about AI. Tim reveals he was approached by one of these companies!
(00:53:04) – Ad exposing the UK government’s targeting of independent media and journalists and how you can support and protect our independence
(00:54:21) – The South Korean market crash of July 2026 and how it will impact the stability of US and global markets
(00:58:28) – Are SoftBank and Oracle the biggest losers of the AI bubble? Could they potentially collapse?
(01:00:38) – The political and regulatory failure in preventing the overinflation of the AI bubble and protecting investor interests
(01:02:22) – Who will be the biggest losers after the AI bubble crash, and who will be held responsible? The blame game will be epic!
Episode Notes & Citations:
https://retortmedia.com/podcasts/ceoretort/2026/08/25/jeffrey-funk-explains-why-the-ai-bubble-is-crashing-and-the-shady-circular-financing
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