jakiro
Earlier this month, the CEO of IBM made a statement that sent chills down the spine of the entire Silicon Valley: “There is no way that all this massive spending and AI and data centers will ever be able to pay off.”
A year ago, this statement would have been seen as blasphemy against “future technology.”But today in December 2025, when Broadcom fails to live up to the market’s high expectations, and when Oracle’s financial statements show cracks rare in decades, the market’s sentiment is undergoing a subtle and fatal reversal.
This isn’t just a tech stock correction, it could be the collapse of the “last bastion” of the U.S. economy.
01 The end of the carnival: from “buying faith” to “account checking time”
Over the past two years, the capital market’s attitude toward AI can be summed up as an almost religious fervor: “Buy first, ask questions later.”
However, as the narrative reaches the end of 2025, the originally vague vision is forced to collide with the cold financial reality.
The most typical example is Oracle.The company, once considered a cash cow, now has negative free cash flow – something it hasn’t seen in decades.
This is an extremely dangerous sign: Tech giants are exchanging debt for growth expectations.
Oracle’s CEO sought to reassure markets on the conference call, saying he was committed to maintaining an investment-grade rating.But this statement only intensified the panic: a company that had relied on its own hematopoietic ability to survive for decades suddenly began to emphasize “maintaining ratings” and “borrowing capacity,” indicating that they themselves were aware of the tight capital chain.
The market is beginning to ask questions that were once considered “untimely”:What if losses continue next year?If debt markets tighten, who will pay for these expensive data centers??
02 Silicon Valley’s “Vanke Moment”
This scene gives people a strong sense of déjà vu.
If you look back to the real estate bubble period, you will find that today’s AI giants are repeating the scene of those years.The current AI industry is very similar to Chinese real estate companies on the eve of the storm – such as Vanke
The logic of real estate developers back then was: As long as they acquire enough land and build buildings quickly enough, future appreciation can cover current debts.Today’s AI companies have the same logic:As long as enough GPUs are stocked and data centers are built large enough, the future “AGI revolution” will be able to offset today’s huge capital expenditures (Capex).
What Oracle is doing is essentially “borrowing the old and replacing it with the new,” trying to extend debt for one year and betting that there will be miraculous revenue growth next year.
But the reality is that although Broadcom’s backlog is as high as US$73 billion, it is still lower than the market’s expectations driven by appetite.
Once free cash flow fails to turn positive, the debt-driven growth model will collapse instantly.This is not a technical issue, this is the most basic accounting common sense.
03 It’s not just the stock price that collapsed, it was also the illusion of class wealth.
If this were just a crisis in the tech industry, it might not be so disturbing.What is really scary is that the AI bubble has become the only pillar supporting the US macro economy.
The current U.S. economy shows a cruel “K-shaped” differentiation: the bottom and middle classes are experiencing a painful wave of layoffs, and the labor market is actually losing tens of thousands of jobs every month.
So why doesn’t consumer data look like it’s completely broken yet?
The answer lies in the “wealth effect.”The spending power of wealthy Americans (especially the baby boomers) is almost entirely tied to the performance of the stock market.
The AI bubble is essentially the last line of defense on the balance sheets of the wealthy.
Once the market realizes that what IBM CEO said is true – that “the huge investment cannot be repaid”, the valuation system of technology stocks will face revaluation.When the Nasdaq pulls back like it did in March and April this year, the illusion of wealth among the rich will be shattered
By then, we will see an economic hard landing without any cushion: the bottom class has no money to consume, the rich are afraid to consume, and companies are burdened with huge AI debts that they cannot repay.
04 Naked swimmers after the tide goes out
The Federal Reserve seems to be sensing danger, too.
Although inflation still appears to be on the rise, divisions within the Fed are growing.Officials like Austan Goolsbee are starting to signal they are more worried about a deteriorating labor market than inflation
It’s a policy game of “walking on a tightrope”: the Fed must carefully guard the stock market because they know that the stock market (i.e., the AI bubble) is a last resort to maintain the economy’s semblance of prosperity.
But there is not much time left for them.
The current situation is: companies are burning money to bet on the future, the rich are relying on stock prices to support consumption, and the Federal Reserve is betting that the economy can land softly before the bubble bursts.
While everyone waits for a turnaround in 2026, the real problem may erupt in the next few months: when the first big-name tech company has to sell off its GPU or data center assets at a low price because its cash flow breaks, the dominoes will fall.
Just like when the Internet bubble burst, people always felt that “this time is different” until the stocks in their hands turned into waste paper
For ordinary investors, now may not be the time to be greedy, but the time to think about how to get out of the market.Because when a movie theater is on fire and there’s only one exit, you can’t outrun the crowd.
