Apple Will 'Watch Everything Burn' When AI Bubble Bursts - Ed Zitron

[rgwebb]

The scenario he paints reminds me of all the doom-and-gloom comments about the Internet, circa 2000. Masses of investment capital were being shoveled into startups willy-nilly. Most were never going to turn a profit; only nobody knew at the time which ones were DOA or going to thrive. It was mostly guesswork. Do we need to hear examples of both? Hope not.

When the Internet bubble burst 25 years ago, it validated the chicken littles who said "I told you so!"

But what they failed to recognize then is that it's in the very nature of major disruptions that we won't be able to predict winners and losers. It took time to separate them then -- just as it will now.

Then he commits himself to a major contradiction: AI is a sinkhole of cash that will never turn a profit for investors. And yet, because of AI, Oracle is dead meat. So he undercuts his entire argument by essentially admitting that he doesn't know how this disruption will play out. Some will win. A lot of others will lose. But after will be very different than before.

Hey, I could have told you that. Without any numbers.

Oracle is in trouble not because of AI technology but that they're over-leveraged on datacenter build outs and have a liquidity problem that others besides Zitron have started to notice around Wall Street/investment circles. Most other major tech companies have taken the good press from saying they're headlong into AI DC build out whilst being far more conservative on their CapEx. Oracle has been aggressive in this respect, so they're the most exposed if there is a pullback on AI investment.

 

[turbineseaplane]

AI technologies are here to stay and will develop further and probably move to more local and specialized things.

That said there is an insane bubble going on right now and there absolutely will be a huge financial haircut before we get to where we are going.

If you are denying this, I would encourage you to reevaluate.

 

[Ta_whirimatea]

First question rattles on about tokens but doesn’t explain what a token is (likely explained in full article tho).

Sensible apple to hold back on the side lines ready to watch the ai world burn! Always been very careful imho.

I don’t need ai, I don’t want ai,l so I’ll never subscribe to it. I’d rather get out into nature than hide fixed to a screen.

 

[Jensend]

Another issue is that AI services are just not that useful or differentiated. While people get some sort of benefit out of AI-generated code, these tools actually end up making them slower, and are filling codebases full of slop.

Citing that study to make a blanket claim is irresponsible, for two reasons.
One: The study is out of date. There have been significant improvements to AI coding capabilities since that study was published over a year ago. The website of the organization that published the study has this disclaimer on their website:

These results are out of date.
We have released results that are current as of early 2026, in a continuation of this study. We believe these historical results no longer reflect the current impact of AI models on open-source developer productivity.

Two: They only tested with a narrow subset of developers, which may not be representative of the median user for AI coding:

we conduct a randomized controlled trial by having 16 developers complete 246 tasks (2.0 hours on average) on well-known open-source repositories (23,000 stars on average) they regularly contribute to.

I'm not super enthusiastic about AI, and I believe there are a ton of downsides, and the downsides may very well outweigh the benefits, but I can't trust Zitron as a source when he makes an unsubstantiated claim like this.

 

[panjandrum]

People hate Apple Intelligence, and I think Apple knows that.

In the EDU environment, we certainly have a lot of people who like Apple Intelligence. Our dyslexic (and other at-risk) students especially love it, as they are often the 'brightest bulbs' but have trouble putting their knowledge/creativity down in school-acceptable ways. Being able to dictate their writing content was always helpful, but now they can use Apple Intelligence to do a reasonably good proofread, all without needing to upload content to an online service, worry about file types, cutting and pasting, or any other time-burning workarounds. This was darn near life-changing for this particular group. (A bit like spell checkers were back in the day for those with atrocious spelling.) Staff like that they can use these basic/limited "AI" (*cough*) features without burning down the planet. In many ways, Apple's current on-device "AI" is the right amount of assistance for K-12 environments; an aid to a student's work, not a replacement. It's the first good thing Apple's done for their EDU sector (the tiny bit of it that remains) in about 15 years. (I therefore fully expect Apple to completely Bork it up any day now.)

 

[JohnWick1954]

It’s really not. I just asked it a question and it completely whiffed the answer. ChatGPT and Grok both nailed it.
On Device requests have also been slower and less accurate than the older version of Siri, especially when responding to text messages by voice while I’m wearing headphones.

That's a huge problem for me, Siri just doesn't listen or work very well, I was in the shower recently and tried to text my daughter, Siri called 911 🙄 🙄 🙄 🙄 🙄 🙄 🙄

 

[JohnWick1954]

He needs to experience Siri AI yet, apparently (because it is really quite good), but otherwise he‘s spot on. It is really wild (in a horrible way) how much Big Tech (except Apple) has put all their eggs (plus loads of borrowed eggs) in the same flimsy basket.

Sorry but no, Siri is trash 🙄

 

[JohnWick1954]

How long was Amazon in the red? For how many years did they focus solely on growth?

I think only three AI providers will survive:

OpenAI, Anthropic, and Gemini.

How many active users do they have?
How many would be willing to pay 10–20€ per month if free access were increasingly restricted or eliminated?

All these people are hooked on AI for now, but what about later?

Who wants to go back to Google Search and wade through 10 pages of results?

Don’t forget:
People pay ridiculous prices at Apple for iPhone cases and stuff.

This isn't Amazon....

 

[Michael Scrip]

I'm old enough to remember the dot com bubble and what happened when that burst. AI is 100% here to stay but the frenzy around it and the spend is reminiscent of what happened at the very end of last century.

Exactly.

Amazon.com has been around for more than 30 years.

Pets.com was gone in less than 3 years.

I wonder how many of these AI companies will have the staying power of Amazon? And how many will suffer the same fate as Pets.com?

🤔

 

[adrianlondon]

I don't think they should call it "AI" when it wasn't too long ago this "AI" would confidently proclaim there are two "r"s in "strawberry. It's wrong so frequently.

There are two "r"s in Strawberry.

Plus another one 😁

 

[turbineseaplane]

This isn't Amazon....

No kidding.

Folks, look up AWS.

THAT is what kept Amazon going.

AI isn’t even making money, let alone a firehose of it like AWS.

 

[Jensend]

It really comes down to the oversubscription rate. A 10–20X cost basis is rough, but the real question is how many casual subscribers who barely use it can offset that. Right now, it’s probably not many because most people only subscribe when they need it, and free tiers are adequate for casual users. There’s a bubble forming on the horizon, and it’s quickly heading toward a giant needle. The big question is what the landscape will look like afterward and which players will still be in the game.

Yeah, my work provides me a Claude subscription, and I use less than 5% of the usage allotment. I still think it's worthwhile, I definitely get enough benefit from it to justify the monthly cost, which is significantly less than an hour of my pay.

 

[IJ Reilly]

Oracle is in trouble not because of AI technology but that they're over-leveraged on datacenter build outs and have a liquidity problem that others besides Zitron have started to notice around Wall Street/investment circles. Most other major tech companies have taken the good press from saying they're headlong into AI DC build out whilst being far more conservative on their CapEx. Oracle has been aggressive in this respect, so they're the most exposed if there is a pullback on AI investment.

We will see if that turns out to be an accurate forecast. Data was Oracle's business before AI and I expect it will continue to be in the future, no matter how AI plays out. Overall I see a serious forest-for-trees problem with his analysis. Full disclosure: former ORCL investor. Sold years ago.

 

[SKeijmel]

No one wants to pay for a ************************** 🙂lol you are not allowed to say le me gogl that 4 u

 

[Robert.Walter]

He needs to experience Siri AI yet, apparently (because it is really quite good), but otherwise he‘s spot on. It is really wild (in a horrible way) how much Big Tech (except Apple) has put all their eggs (plus loads of borrowed eggs) in the same flimsy basket.

They are so loading the basket that the bottom will fall out. Lots of eggs to break soon.

 

[polaris20]

I know I sound like an old man when I say my life was just fine before AI. It's really not worth what it's doing to the industry, the environment, and security.

Now, please get off of my lawn.

 

[ThailandToo]

This is missing the whole story. Amazon lost money for 20 years before it ever turned a profit. The costs drop in fractions monthly. The biggest costs they have is in power infrastructure. When they have that solved, it will become so cheap to run LLMs and potentially open source LLMs could run on our own devices for almost no cost other than electricity. This is a business model based on expected hype. Anthropic is killing it. Maybe only one company survives the biggest blow but I suspect there will always be competition and AI itself will disrupt entire industries and workflows forever. Anyone who doesn’t see it isn’t using the latest models to see the improvements. It’s truly staggering what they have accomplished, and my big bet would be AI leads to quantum AI which breaks our own reality as we know it. AI wins any outlook AI wins and returns the money to the investors. It will become profitable but it will take a few years and investors believe in it. Unless there’s a solar storm that takes away and destroys all of our tech and energy infrastructure, AI wins.

 

[PBG4 Dude]

I *think* what he’s saying is that his Vision Pro needs an update, but in order to apply the update, he has to wear the headset for the length of the update process…which he’s not willing to do. Therefore, his VP isn’t usable to him right now.’’

In other words, “I want to start the update and then come back to it later when it’s done, like I can with my other gadgets.”

But I don’t own a VP, so no idea if that’s how the update process works. That’s how his statement reads to me, though. 🤷‍♂️

That’s the meaning I got from it too but I have not been forced to wear it during a visionOS update. Start the update, put it in the carrying pillow and wait for the next “I’m ready to wear now.” chime.

 

[ricketysquire]

More than anything, I just want an economy based on reality. Can we just make stuff, sell stuff, and do stuff? Why do we need SaaS based AI RevOps platforms that generate reports for Product Managers to salivate over during weekly Syncs? Technology was supposed to enhance our lives and not take them over. So much of our economy has become an abstraction on top of an abstraction while we all work "make work" jobs that don't add real value. Meanwhile countries we have an adversarial relationship with are making all of our physical goods. Can we just have a real economy, real jobs and do real work?

 

[MiamiFL]

99% of people think AI is just a chatbot that answers questions. Which is extremely idiotic, there is no bubble. It will continue to evolve and spill into every aspect of this country. The people who think it’s a “bubble” are scared their job won’t exist. And it probably won’t. But none of this is a bubble. This is common sense commentary from someone who’s a computer engineer and uses it daily. The smartest companies in the world aren’t spending 300+ million on a bubble. Believe me or not. But your life is going to change drastically over the next 2-3 years. Adapt and learn. Don’t be stupid and stuck.

precisely, I couldn't have said it better myself.

 

[BGrifter]

Always happy to see Ed Zitron pop up in my feed. More of this would be great Macrumors!

 

[MiamiFL]

So much of that fiber stayed dark for so long. Looks like there isn't a consensus on how much is still dark, but I found a reference to 95,000 "route miles" (miles of bundled fiber cables) that are dark. Who knows? Eventually it may all get used.

I worry about when the data centers are no longer needed—either the bubble bursts, companies go under, and the data centers stop; or the tech simply becomes vastly more efficient, and the tech scales smaller. Then these vast data centers become dead space. I grew up in Detroit—I've seen this happen (look up the Packard plant—it went under in the late 1950s, and demolition only finally finished in 2024). In a decade or two, will we need these data centers?

Data centers will always been needed... do you even know what "the cloud" is? I ask because I'm told some people look up when asked exactly what/where the cloud is 😂 The number of data centers was continuously scaling up well before AI.

 

[iDento]

In five years, no one will need money, because we will live in the era of abundance. That’s what AI said in the Economist interview.

 

[abracadaver]

Ed always makes a compelling case - has really informed me about something that I otherwise would not have understood much about.

 

[GrumpyOldGuy52]

Data centers will always been needed... do you even know what "the cloud" is? I ask because I'm told some people look up when asked exactly what the cloud is 😂 The number of data centers was continuously scaling up well before AI.

I've worked in data centers—understand who you are talking with before you start.

Trust me... there are plenty of people who thought auto plants in the US would "always been[sic] needed." The simple fact of the matter is nothing is ever indispensable.