People, including members of this staff, keep asking me with varying degrees of excitement or fear when the AI bubble will burst. I’ll tell you what I tell you: If I knew that, I would make a life-changing bet in the market, leveraged as much as I could, and then, after I made money, I would retire to a beach somewhere. Maybe I run a cat sanctuary, who knows.
What I can tell you is that I read with interest a story in Bloomberg this morning: “Wall Street CEOs and big money managers divided over AI risks.” The story itself is a summary of what was said at the 2026 Global Financial Leaders Investment Summit in Hong Kong. Here’s what caught my attention: The CEO of Pacific Investment Management Co. (i.e., PIMCO, the legendary bond firm) told listeners that there’s going to be a slowdown in the AI market “and then things are going to break.”
“What we don’t know is how prices and the economy will evolve.”
The CEO of PIMCO (his name is Emmanuel Roman, but what matters here is his job) has estimated that the development of AI could generate $2 trillion in financing needs over the next five years. The total US bond market is about $12 trillion.
It’s not just PIMCO that calls for caution. Apollo Global Management, which had lately been talking to SpaceX about a $40 billion chip deal, also warns about the risk of AI. Apollo President Jim Zelter told analysts today that while he expects society to use “a lot more computing power in the future” and that AI is improving rapidly, there is still significant uncertainty. “What we don’t know is how prices and the economy will evolve.”
This is what I mean when I say “I don’t know.” However, I do think something big (PIMCO’s Roman pointed to US rate hikes, war or a eurozone crisis as possible triggers) could change this market. We’re not in go-go-go territory now. Maybe that will change; Anthropic’s IPO is likely to be a blockbuster, and it will be like someone showing up to a party where the beer is running out with a 24-pack. But as more people express caution – and particularly after the disaster at Situational Awareness – the best part of the party might be over.
