Why AI may be bad for markets — and for retirement savings

For years, big tech companies’ investment into developing large language models have sent asset prices soaring, creating a dynamic in which index funds are heavily weighted to a single industry.

On this episode of the Everybody’s Business podcast, Ed Zitron, host of Better Offline, tells us what could happen to the economy — and your investments — should the industry falter.

What does it say about the prospects for an artificial intelligence “golden age” that some of those who most enthusiastically predicted it are now tamping down expectations? Earlier this week, in what looked like damage control over the release of a new version of ChatGPT, OpenAI Chief Executive Officer Sam Altman said investors have been inflating a speculative bubble in AI. He predicted “someone’s going to get burned.”

Altman and other AI insiders seem more or less fine with that, arguing that asset bubbles often coincide with technology breakthroughs. The thinking goes like this: the dot-com bust was bad, but at the end of it we had a new information infrastructure that led to lasting economic growth. Maybe that happens this time around, but there’s reason to think an AI bust would be economically devastating—and not just for businesses that bet heavily on the software and data centers needed to run it.

On this week’s episode of Everybody’s Business, we explore the potential economic fallout of an AI implosion with Ed Zitron, a skeptic who makes a compelling case for panic in a recent essay () and on his podcast, Better Offline ().

In other words, rather than continuing to embrace the new technology, maybe it’s time to hate it. The argument boils down to a problem of misalignmentFor years, big tech companies have dumped hundreds of billions of dollars into developing evermore advanced large language models (LLM) (like OpenAI’s GPT, Google’s Gemini and Anthropic’s Claude). Much of that money has gone to chipmakers, especially Nvidia, which sells the graphical processing units needed to train new models. All of this spending has sent asset prices soaring, creating a dynamic in which index funds are heavily weighted to a single industry ()which you guessed itthreatens to crash the entire stock market if it falters. A similar dynamic may be playing out in the world of private credit, which tech companies are increasingly tapping to build data centers, creating another economic risk ().

At the same time, there are signs those wildly expensive LLMs are failing to generate commensurate financial returns. These include the blowback to the release GPT5, which OpenAI had promoted as potentially godlike () but which many users say is actually worse than the last version (). There’s also a recently published study () from the Massachusetts Institute of Technology that showed the vast majority of pilot programs involving socalled generative AI failed to lead to revenue growth.

A smart and fun chat show about all things business. Hosted by award-winning business and economics journalists Max Chafkin (author of The Contrarian: Peter Thiel and Silicon Valley’s Pursuit of Power) and Stacey Vanek Smith (former co-host of NPR’s Planet Money and reporter for Marketplace), Everybody's Business is powered by the unparalleled sources and reporters who bring you Businessweek magazine’s headlines and the stories behind them. The show gives listeners a window into the discussions happening in boardrooms, Zooms and group chats in power centers around the world. From interpreting Fed meetings to the business of wolf cloning, each week Max, Stacey and their friends at Bloomberg Businessweek guide listeners through what really went on during the last week from Wall Street and Main Street. Because what’s happening with money and markets is everybody’s business.

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