I never really understood why so many seemingly smart people gave Mr. Zitron any of their time and/or mental bandwidth. He was wrong and very loudly so.
We have had a total of one post that even mentions him and it has nothing to do with AI, though this one, truth be told, links to his blog:June 1, 2024
"The Man Who Killed Google Search"
From Ed Zitron's substack, Where's Your Ed At?,
This is the story of how Google Search died, and the people responsible for killing it.
The story begins on February 5th 2019, when Ben Gomes, Google’s head of search, had a problem. Jerry Dischler, then the VP and General Manager of Ads at Google, and Shiv Venkataraman, then the VP of Engineering, Search and Ads on Google properties, had called a “code yellow” for search revenue due to, and I quote, “steady weakness in the daily numbers” and a likeliness that it would end the quarter significantly behind....
For what it's worth, I think AI is a bubble.*
And the headline story from The Argument, April 28:
Ed Zitron thinks that AI is a bubble.
The tech columnist — whose newsletter reportedly has 80,000 subscribers and who has bylines in The Atlantic and The Guardian — first made his case in March 2024, quoting analysts who were saying things like we were “at the peak of the hype cycle around Large Language Models and other generative AI.”
He doubled down that summer: AI was a bubble and it wasn’t clear anyone but Nvidia would make money. Zitron is today one of the most prominent people, and certainly the most prolific person, making this case — but while I’m glad someone’s making it, reading through several hundred thousand words of his recent coverage on the topic left me wishing it was being made better.
When you read “AI is a bubble,” think of the dot-com boom of the late 1990s: Yes, the internet was going to be a big deal, but valuations soared for specific companies that had small or speculative revenue, often on the assumption that they would capture the value the internet would one day deliver. They didn’t, their stocks crashed, and the invested money was mostly lost. The internet was as big as imagined — bigger, even — but Pets.com didn’t survive to see it.
In 2024, Ed Zitron was hardly alone in wondering if AI would take this route; it seemed plausible to me too. Models like GPT-4 were tantalizing mostly because of what they suggested might be possible in the future, rather than for their direct economic utility. If building bigger models didn’t pan out, it was easy to imagine that we’d see some bankruptcies.
But time passes and situations evolve. Ed Zitron, though, clearly does not.
Over the last two years, he has called the top repeatedly: The AI bubble was definitely about to burst here, and here, and here, and here, and here, and here. His conclusion hasn’t changed, but his arguments have.
The 2024 and 2025 articles make, basically, the business case against AI: that companies aren’t really using it, it isn’t adding value, and AI investors are betting that will change before they run out of cash. In 2026, the focus is much more on alleging widespread, Enron- or FTX-tier outright fraud.
This is basically an admission that he can’t make the case in terms of the economics anymore. And in deciding how seriously to take his case in 2026, I think it’s valuable to read it in parallel with his case from 2024 and 2025.
“Have we reached Peak AI?” he asked on March 18, 2024. “Things are beginning to unwind in the most annoying bubble in history,” he told us on April 21, 2026. Let’s compare the two articles.
In 2024, Zitron’s coverage of the Bubble Question was rich with admissions from businesses that they weren’t really using AI yet and did not expect AI to have significant impacts on their revenues. He quoted from earning calls in which companies said that AI-related business impacts were zero. In order to be profitable in the future, he pointed out, AI would have to get a lot better — was there any reason to think it would?
Zitron repeatedly made a specific prediction that it would not and could not. “Generative AI,” he wrote in the summer of 2024, “is peaking, if it hasn’t already peaked. It cannot do much more than it is currently doing, other than doing more of it faster with some new inputs. It isn’t getting much more efficient.”....
As reiterated in January 7 2025's:
"Everything (retail) Nvidia Announced at CES 2025"
Reminder: We believe AI is a bubble and have made the decision to ride the bubble.
June 18, 2024: Nvidia's Financial Dominance (NVDA)
For the last year we have been referring to the AI phenomena as a bubble, perhaps not so much in financial terms but rather in terms of the psychology, the speculative frenzy. It's true in Nvidia's case, the stock could be cut in half and still be discounting the future with a 2-3% discount factor i.e. 33 to 50 times free cash flow.
However! Despite this we have been pitching a "Ride the Bubble" approach to the stock for over a year (we have an almost full decade with this one but it was in the last thirteen months that we thought it bubblelicious). Here's a July 1, 2023 post:
....So, we are faced with the decision whether-or-not to play a dangerous little game, riding the bubble knowing full well it is a bubble, or retiring to the sidelines.For now one of our favorite economists with one of our favorite stories.
Here's the version hosted at MIT:
This paper presents a case study of a well-informed investor in the South Sea bubble. We argue that Hoare’s Bank, a fledgling West End London bank, knew that a bubble was in progress and nonetheless invested in the stock: it was profitable to “ride the bubble.” Using a unique dataset on daily trades, we show that this sophisticated investor was not constrained by such institutional factors as restrictions on short sales or agency problems...
The two most important parts of the paper "II. Hoare’s Trading Performance" and "III. Causes of Success" are definitely worth a couple minutes....
*****
....We'll have more on the big stories, autonomous vehicles, agentic AI and humanoid robots later today.
Mr. Huang believes they are each trillion dollar+ addressable markets.*We reiterated the ride the bubble pitch a few more times, despite some trepidation.note: stock prices should be divided by 10 to adjust for the most recent stock split.January 19, 2024 at $594.91 "AI: Lessons From The South Sea Bubble".
February 6, 2024:
The stock is down $11.87, so a little less than half yesterday's up-move. $681.45 last after trading as low as $663.00 (down $30.31 and almost the entire Monday $31.72 up-move.) Unfortunately there is a gap on the chart at $660 so it didn't completely fill. Nervous-making....By-the-bye, that $660 ($66, new style) is the "cut in half" number.
March 6, 2024:Earlier this morning the stock got to $889.68 and we are still pitching the "ride the bubble" approach—up $220 since the last mention, Feb. 6—but that could change anywhere between today and the end of the NVDA GTC conference (Mar. 21)....If interested in some of our history with the big dog there are links embedded in January 2024's "Nvidia expands its reach in China’s electric vehicle sector" (NVD
Finally, as Adam Smith put it in his book on the 'sixties bull market, The Money Game:
“Now you know and I know that one day the orchestra will stop playing and the
wind will rattle through the broken window panes, and the anticipation of this
freezes us. All of these kids but one will be broke, and that one will be the multi-
millionaire, the Arthur Rock of the new generation. There is always one, and
maybe we will find him.”
—As seen in February 2024's "JPMorgan's Jamie Dimon On The Business Case For AI: "This Is Not Hype" (JPM)"
Not being in government, I don't have the authoritarian type of authority so I tend toward Burkeian humble and lovable:
His unbiased opinion, his honest advice, and his best reasons."
—Edmund Burke (1791)*
—Power Politics For Outsiders, March 2023 (and elsewhere)*Potential downside: Burke was described by Edward Gibbon (he of The...Decline and Fall...) as:
"The most eloquent and rational madman that I ever knew".
