Transcription
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The current AI bubble, so to speak, that we're experiencing right now is 17 times larger than the dotcom crash of the 1990s. It's four times larger than the subprime mortgage crisis in 2008, which contributed to a global great recession. And if what these companies are doing is allowed to continue when the music stops and the money goes dry, it will threaten the economic stability of half the planet.
My source for that, by the way, is an analyst named Julian Garin, referencing the work of early 19th century economist N. Wixel, who pioneered a theory about the misallocation of capital. But this isn't supposed to be an episode about economic history. Don't worry because the practical demonstration that I want to focus on right now is what certain companies are actually doing at the moment and how that behavior is a lockstep replica of what's now occurred three separate times across the past three decades. Each time wiping out the savings of everyday people who typically don't even fully understand why or how it ended up happening to them at all.
Let me start with this. All right. Allbirds. Allbirds is a shoe company, a failing shoe company for that matter. Initially going public shortly after COVID, the pandemic, with a stock price of well over $500 at the time, it has since dropped by nearly 99% in a state of pretty much freefall. The business has only ever lost money, wasted almost half a billion dollars on aggressive retail expansion or new product lines. And yet instead of simply going bankrupt like a regular company, Allbirds decided to make one last final desperate attempt at fleecing their investors by suddenly rebranding themselves under the direction of new management. It seems as an AI infrastructure play. These two things have nothing to do with each other. A shoe company is effectively grabbing the change from under the couch cushions and pretending that this somehow gives them the option of competing with Amazon.
But no matter how ridiculous the decision itself might seem to be, the reaction it received from the public is even worse. After this ridiculous rebrand, that has nothing to do with the core business by the way. After the rebrand, the share price for Allbirds, the stock price increased by almost a thousand%. People were practically begging to throw their money away. And not because of actual potential, not because of revolutionary technology, but because a shoe company said, "Now we're an AI technology firm." It doesn't really get any more ridiculous than that.
Sadly, Allbirds wasn't even alone in this. Shortly after they demonstrated how easy it was and is, another company called MYM did the exact same thing. This time at least they already operated in the world of social media. But renaming your company MYUM AI doesn't actually change anything. And yet simply because of this new name, the stock price rose by almost 400%.
Here's the problem. Not only is the AI bubble itself grossly larger than any prior financial bubble in human history, it's also now demonstrating the exact same red flags, the exact same corporate greed, and the precise atmosphere that we've seen multiple times in past decades. So much so that by the end of the video, if I haven't managed to convince you that AI is an unignorable Titanic level economic iceberg, I want you to actively press dislike.
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Okay, back to it. Allbirds rebrands and rises by a thousand%. MYM follows suit and rises by 400%. But what if I told you that this isn't some sort of novel concept? It's not a brand new thing. All the way back in 2018 during the blockchain craze this time, the SEC was actually pretty clear about how the process should be treated. Speaking in Washington D.C., then chairman Jay Clayton in a speech said, quote, "Before I move on to the next topic, I want to raise one more narrow distributed ledger or blockchain related legal issue by means of a hypothetical. I doubt anyone in this audience thinks it would be acceptable for a public company with no meaningful track record in pursuing the commercialization of distributed ledger or blockchain technology to one start to dabble in blockchain activities, two change its name to something like blockchains are us and three immediately offer securities without providing adequate disclosure to mainstream investors about those changes and the risks involved." End quote.
Honestly, that's very reasonable. That makes complete sense. Seeing a trend, renaming your entire company with no realistic expectation of ever succeeding in that new space simply to then become an investment vehicle under that new banner and run away with tens of millions of dollars in investor capital isn't exactly a healthy free market technique. And yet, at the risk of overpoliticizing the video, the current United States governing agencies do not seem to care about white collar crime anymore.
Let's go back in time because to understand the present, you have to understand the past. How many people have ever heard of a company called Long Island IC Tea? Anyone? Maybe yes, maybe no, but even if you haven't heard of it. Back in 2017, shortly after receiving a NASDAQ delisting notice because they were a failing company even then, this beverage manufacturer decided, let's become a crypto company. Except they had no actual intention of becoming a crypto company. Just like Allbirds, the shoe company, they pledged some money, changed their name. Instead of Long Island Ice Tea, they were now Long Blockchain, and the share price rose by like 300%. You can see it right here with the massive volume spike.
Of course, that's not all they wanted to do. Immediately after they spiked the share price with nothing but a name change, they did a 1.66 million share common stock sale, thereby raising a whole bunch of money, like I think $8 million plus, from unsuspecting retail investors, which had basically nothing to do with the company itself because they eventually were delisted from the NASDAQ and then they got hit by a subpoena from the SEC. So, just well done, guys. Total and complete failure on that one. Long story short, the beverage company that decided, "Let's pretend to be a blockchain crypto company," unceremoniously failed. As if that's even surprising.
But to really drive the point home fully, they weren't even the only drink company back then to do this. A Chinese firm called Sky People Fruit Juice suddenly renamed itself as a financial technology company. And purely because of rampant, wild, unhinged speculation, the stock price went up like 200%. Because what if it's about Bitcoin?
The story is actually pretty simple when you start to look at things with a historical lens. Right now, 2026, companies are simply rebranding with no credible business infrastructure or foundation supporting them and seeing ridiculous valuations because of that. Back in 2017, same exact thing. Drink companies at the time saying, "Oh my god, blockchain." And spiking two, three, 400% in their share price.
But even further back, as in the early 2000s during the dotcom crash, the same precise thing was happening. This time leaving a veritable graveyard of names because most of these companies could not justify their valuations. In the dotcom situation, there were hundreds of companies doing this all at the same time. A post-mortem of the crash found that simply adding ".com" to the name of a company created on average a 74% stock appreciation, like stock rise, for no other reason aside from "internet big money go up," aka just totally delusional hype.
Remember the AI bubble, okay? And it is a bubble that we're experiencing right now as per the Wixle spread of misallocated capital is 17 times larger than the dotcom crash, which again had ripple effects across the entire world. And if you then look at the parallel catalyst of how that bubble popped in the first place, it gets even better. The simple version is that the dotcom crash was heavily preceded by infrastructure overinvestment. Companies were racing to build massive fiber optic networks, anticipating that overall traffic online would double every 100 or so days, culminating in a scenario where most of these companies couldn't justify their valuations despite owning a tremendous amount of infrastructure behind them because they simply weren't making money. The result of that bubble obviously was catastrophe.
And if you now draw a comparison between the 1990s dotcom craze and the mid-2020s AI craze, what you see is almost the exact same thing. For starters, the relative consumer interest in large language models is declining. At an enterprise level, as in big businesses, it's declining as well because the quality and speed of work assisted by language models doesn't necessarily justify the cost. The pilot programs are mostly failing is what I'm saying. But at the same time, initially reported by Bloomberg, half of all US planned data centers are either delayed or canceled outright because of power restrictions, component shortages, and financial drawbacks, which is eerily similar in terms of overhyped infrastructure when compared to the dotcom bust.
It's not precisely identical necessarily. There are some differences. A lot of these AI companies who are engaging in what's called circular finance, as they invest in each other around and around like a pinwheel, or maybe a better analogy would be a snake eating its own tail. A lot of these companies do have some sort of revenue somewhere, but the scraps that they earn pale in comparison to their spending because the goal isn't to make a sustainable business. The goal is to get the valuation astronomically high, execute a public offering in some cases, and then everybody on the inside gets rich. It doesn't really matter what happens to the bubble afterward as long as you cash out before it pops at the expense of regular people. So basically, everybody on the inside gets rich and everybody on the outside loses everything.
Look at this. Okay, just look at this. The former CTO of OpenAI, Mira Murati, leaves, starts her own company. Okay, cool. Good for her. And that company receives a $10 billion initial valuation immediately after $2 billion in seed funding led, like overall catalyzed by major technology firms. And this happened while the company had no product. Okay? But not only that, the company wouldn't even disclose what its own purpose was. Think about this. Investors were breaking records, throwing never-before-seen amounts of money at a company that was actively refusing to tell them what the [ __ ] it even was simply because of AI hype. That is insane and delusional.
Ultimately, it's the same sort of accounting tricks, the same valuation schemes, the same hype-driven irrationality, and the execution of a well-known, well-established pattern. Because economic hype cycles, for some unexplainable reason, seem to exist outside the world of collective logic. Back when I talked about how crypto was a massive unsustainable bubble, I literally got hate mail for saying that. Flash forward to now, and practically every single crypto project has categorically failed. The capital wipeout is best measured in the trillions. And yet, even with a more precise historical example, that being Long Island Iced Tea, which rebranded, sold more stock, and then got delisted and subpoenaed, people are lining up behind a shoe company, spiking the valuation by a thousand percent and throwing their money on a burn heap because the words artificial intelligence were involved.
Earlier, I said that if I failed to convince you that AI is a Titanic level iceberg, you should dislike the video. But let me clarify that it shouldn't matter whether or not you think that AI might in some future version of reality become a society-shaping construct. Right? Back in the 1990s, people said the internet would be just like that. And it is like that. Okay? It is that monumental. But just because the vision behind the bubble can be accurate 20 or 30 years later, right? Doesn't make the bubble itself any less real or damaging. You could be the biggest fan of large language model development on planet Earth and still accurately acknowledge that the amount of wasted capital, the number of companies driving up their valuations in what I would say is a fraudulent manner on top of the debt spiral that all of it's creating is an iceberg. And if you hit the iceberg wrong, you sink the ship.
My goal here is not to make a universal argument about whether or not any one piece of technology is good or evil. Even though I do think the danger and negative downside right now far outweighs the benefits when it comes specifically to AI development. But regardless, my goal isn't to argue in absolutes. My goal is to showcase that the AI craze, right, with big air quotes there, is now the largest financial bubble in human history, with warning signs that perfectly echo prior economic meltdowns, multiple of them. And when the music stops, it will stop eventually. Regular people get screwed. Executives cash out, founders walk away with golden parachutes, and billionaires get like government bailouts. But little Timmy, with his life savings in a cookie jar, trying to make some extra money by trusting the experts and putting that money in the data center market, he gets screwed. Just because a company puts AI in their name, doesn't make it a good investment. That's it.
If you want to support the channel, check out the links down below. The video sponsor, of course, Clean My Mac, special deals, channel memberships, and more. But I'll cut it there and stop rambling. As always, thank you all for watching. Question everything and have a nice night.