Written by: thiigth
IBM CEO made a chilling statement at the beginning of this month: 'There is no way that all this massive spending on AI and data centers will ever be able to pay off.'
If this were said a year ago, such remarks would be seen as blasphemy against 'future technologies.' But today, in December 2025, as Broadcom fails to meet high market expectations and Oracle’s financial statements show rare cracks not seen in decades, the market sentiment is undergoing a subtle yet deadly reversal.
This is not just a correction in tech stocks; it could be the collapse of the "last bastion" of the US economy.
01 The End of the Frenzy: From "Buy with Faith" to "The Moment of Auditing"
Over the past two years, the capital market's attitude towards AI can be summarized as an almost religious fervor: "Buy first, ask questions later." Everyone firmly believes that this is a disruptive technology that will reshape the world; as for the profit model? That's something to consider 20 years from now.
However, as the narrative reaches the end of 2025, the originally vague vision is forced to collide with the cold financial reality.
Oracle is the most typical example. This company, once considered a cash cow, now has negative free cash flow—a sight unseen for decades. To maintain its stock price and high dividends, Oracle has had to take on massive amounts of debt.
This is an extremely dangerous sign: tech giants are replacing growth expectations with debt.
Oracle's CEO attempted to reassure the market during a conference call, claiming a commitment to maintaining its investment-grade rating. However, this statement only exacerbated the panic: a company that had survived for decades by generating its own revenue suddenly emphasizing "maintaining its rating" and "borrowing capacity" indicates that they themselves are aware of the tightness in their cash flow.
The market is starting to ask questions that were once considered "out of touch": What if losses continue next year? Who will foot the bill for these expensive data centers if the debt market tightens?
02 The "Vanke Moment" in Silicon Valley
This scene evoked a strong sense of déjà vu.
If we look back to the real estate bubble era, we'll find that today's AI giants are reenacting a scenario from that time. The current AI industry bears a striking resemblance to Chinese real estate companies on the eve of a storm—such as Vanke.
The logic of real estate developers back then was: as long as they acquired enough land and built buildings quickly enough, future appreciation would cover current debts. Today's AI companies follow the same logic: as long as they stockpile enough GPUs and build large enough data centers, the future "AGI revolution" will offset current huge capital expenditures (Capex).
What Oracle and others are doing is essentially "borrowing old money to renew new money," trying to postpone their debt for another year in hopes of a miraculous increase in revenue next year.
However, the reality is that while Broadcom's backlog stands at a staggering $73 billion, it still falls short of the market's inflated expectations. When growth ceases its parabolic surge, even the slightest sign of slowdown can trigger panic selling among investors.
Once free cash flow fails to turn positive, the debt-driven growth model will collapse instantly. This is not a technical issue; it's basic accounting common sense.
03 What collapsed was not just the stock price, but the illusion of class wealth.
If this were merely a crisis in the tech industry, it might not be so unsettling. What's truly alarming is that the AI bubble has become the sole pillar supporting the US macroeconomy.
The current US economy exhibits a brutal "K-shaped" divergence: the lower and middle classes are experiencing painful waves of layoffs, and the labor market is actually losing tens of thousands of jobs every month. Even Federal Reserve Chairman Powell has had to back down from the phrase "strong labor market."
So why don't the consumption data look like they've completely collapsed yet?
The answer lies in the "wealth effect." The spending power of America's wealthy class (especially the baby boomers) is almost entirely tied to the stock market's performance. As long as the Nasdaq index continues to rise, and as long as Nvidia and Oracle's stock prices remain high, they dare to spend lavishly there, thus masking the plight of ordinary consumers at Walmart and McDonald's.
The AI bubble is essentially the last line of defense on the balance sheets of the wealthy.
Once the market realizes that IBM's CEO was telling the truth—that "huge investments cannot be recouped"—the valuation of tech stocks will face a reassessment. When the Nasdaq index corrects as it did in March and April of this year, the wealth illusion of the rich will be shattered.
At that time, we will see an economic hard landing without any buffer: the lower class will not have money to consume, the rich will not dare to consume, and enterprises will be burdened with huge AI debts that they are unable to repay.
04 Nude swimmers after the tide recedes
The Federal Reserve also seems to have sensed the danger.
Although inflation appears to be trending upwards, divisions within the Federal Reserve are widening. Officials like Austan Goolsbee are beginning to suggest that they are more concerned about the deteriorating labor market than inflation.
This is a policy game of "walking a tightrope": the Federal Reserve must carefully protect the stock market because they know that the stock market (i.e., the AI bubble) is the last resort to maintain the appearance of economic prosperity.
But they don't have much time left.
The current situation is: companies are burning money to gamble on the future, the rich are relying on stock prices to support consumption, and the Federal Reserve is betting that the economy can achieve a soft landing before the bubble bursts.
While everyone is waiting for a turnaround in 2026, the real problems may erupt in the coming months: when the first major tech company is forced to sell off GPUs or data center assets at bargain prices due to a cash flow crisis, the dominoes will fall.
Just like when the dot-com bubble burst, people always thought "this time is different," until the stocks they held became worthless.
For ordinary investors, now may not be the time to be greedy, but rather to think about how to exit the market. Because when a movie theater is on fire and there's only one exit, you can't outrun the crowd.