A bearish take on the AI trade: American tech companies are burning trillions to build AI, and cheap Chinese models could pop the bubble holding up the whole stock market.

• US firms are spending about $1 trillion a year on AI — roughly 3% of the economy — while China spends a tenth of that and gives its models away for free.
• Chinese open models like GLM and DeepSeek do most everyday business tasks at 7-12 times cheaper than top US models, and companies don't need the smartest AI for boring work.
• The business is broken: unlike normal software, each AI answer costs real money, so more customers means more losses — OpenAI burned over $20 billion in one year.
• Businesses don't trust AI vendors either, fearing their data trains their own future competitor, so many now want to own and run models in-house.
• Warning signs to watch: the first big company rewarded for cutting AI spending, data-center debt drying up, and Michael Burry flagging chip stocks at peak valuations.

Outlook: No one knows the timing, but the bubble likely bursts once one major tech company pulls back spending and Wall Street cheers it, giving the rest permission to follow.