AI Bear Case: What Skeptics Get Right And Wrong

Authored by Lance Roberts via RealInvestmentAdvice.com,

The AI “bear case” isn’t one argument; it’s three. Burry on earnings. Bernstein on circular financing. MIT on revenue. Two are half right. One falls apart on the data.

Michael Burry broke a two-year silence on November 11 to accuse the world’s largest technology companies of cooking their books, calling it one of the more common frauds of the modern era. That got attention, and it should. When the man who shorted the housing bubble says AI earnings are fake, you listen. But the AI bear case that has hardened over the past six months isn’t one argument. It’s three. And when you pull them apart, two hold up as real risks, and one falls apart on contact with the data.

Three Arguments, Not One

Here’s the problem with the way the AI bear case is usually discussed. The skeptics blur three separate claims into a single mood.

• The earnings are fake.
• The demand is manufactured.
• The spending will never earn a return.

Each one points to something real, but each one also gets stretched beyond what the evidence supports. Most notably, that often occurs in the same breath.

I’ve spent the better part of a year on this question. Last summer, I argued that the READ MORE AT SOURCE »