Ideas Weave Every Narrative with AI.
Most companies could unplug their AI tools tomorrow and survive. The uncomfortable truth is that your AI spending isn’t driven by measured advantage—it’s driven by the paralyzing fear that your competitors might pull ahead. Welcome to the collectively irrational AI arms race.
Aswath Damodaran reveals that Big Tech’s AI spending is a fear-driven arms race, not a calculated bet. Companies invest because they’re terrified of being left behind, with no clear ROI. This prisoner’s dilemma mirrors past bubbles like railroads and fiber optics, leaving investors, workers, and users at risk of a painful correction.
Big Tech’s $2.4 trillion in AI spending commitments, plus $3 trillion in existing debt, equals 15% of US GDP—a capital trap driven by game theory, not ROI. This isn’t an AI boom; it’s a hostage situation that starves the rest of the economy. The real bubble isn’t in technology—it’s in balance sheets.
AI employees are petitioning the government for regulation, but don’t mistake it for heroism. They’re trapped in a prisoner’s dilemma where unilateral disarmament means losing the race, so they want the government to be the ‘bad cop’ and force a slowdown. This isn’t a plea for safety—it’s a plea for cover.