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This article is all vapor. After reading it in it's entirety, there is only a short section that's actually about the headline, and it communicates nothing about what the headline means. What is 17x what?
No link to the original research note. No real details on the methodology used. A few notes on the well-known lack of an AI business model (similar things were said about search in the late 90's).
I just don't see how the broader market is exposed to an AI crash in the way it was exposed to subprime loans. If OpenAI goes belly up is it really taking anyone else down with it?
A quick and dirty google shows that global financial institutions wrote down 1-2 trillion in mortgage related securities, a ~6trn drop in the us real estate mkt and another 6trn destroyed in the equities mkt. Not sure I really trust these numbers but they are the right order of magnitude. I have a very hard time believing the AI bubble is as big as the subprime bubble. But it very well could help trigger a massive correction and recession on a similar scale because everything else that has been propped up by low rates will likely correct with it.
By paulpauper 2025-10-0618:17 Agree. The reason given and examples are totally vapid.
Artificially low interest rates have stimulated investment into AI that has hit scaling limits, says research firm
He blames "low interest rates," yet interest rates have surged since 2022 to their highest levels in decades. He cannot even get the basic facts right, which kills his credibility at the start.
This also torpedos a common narrative that high interest rates are always bad for asset prices. The difference between 1% vs 5% interest rates does not factor much into VC decisions when the expectations are for 40-100+% annual returns with the hottest AI companies, which far exceeds the additional cost of borrowing. A similar pattern was seen in the the '80s and the late '90s, in which high interest rates also coincided with high valuations of tech companies.
This means a much longer effort at reflation, a bit like what we saw in the early 1990s, after the S&L crisis, and likely special measures as well, as the Trump administration seeks to devalue the US$ in an effort to onshore jobs," he says.
In an attempt to paint a negative picture of impending crisis, he gives examples, of 2001 and 1991, of among the mildest recessions ever. The US stock market and economy would go on to boom in 1995, just a few years after the S&L crisis.
If there is a job that AI needs to automate, it's these overpaid and useless analysts.
By tim333 2025-10-078:06 The source for all this stuff, the 17x, is a guy called Julien Garran who wrote a report which has the been quoted in all these spammy articles.
You can see him talking about the research here https://youtu.be/uz2EqmqNNlE?t=40
The 17x refers to a macro model based on the "cumulative Wicksell spread" that suggests the stock market may be overvalued due to interest rates, nothing about AI specifically.
The youtube talk, and the slides which are from his report are quite interesting, and I think the economic analysis is quite good, though he's not a tech/AI guy.
As far as I can figure for the Wicksell spread you calculate (annual GDP growth) +2% - (annual interest rates) and then integrate that which gives a graph with bumps on and the current bump is 17x the size of the one at the time of the dot com bubble.
By rtkwe 2025-10-0618:10 It seems the link has been replaced with a Morningstar report instead of the blagspam trial funnel originally linked.
By jt2190 2025-10-0617:54 This article is referencing a subscriber-only letter.
I think this video is from the same source as the letter
MicroStrategy Partnership: “Power Plai - Julien Garran - 02 October 2025” https://youtu.be/uz2EqmqNNlE
> Make no mistake, I think that this is the biggest and most dangerous bubble the world has ever seen. The misallocation of capital in the US (which also includes housing, VC and crypto) is already 17x the Dotcom bubble and 4x the 2008 real estate bubble, and as it unwinds it will not just threaten significant economic malaise, it will threaten to overturn the entire globalist agenda, that developed with the advent of Thatcher and Reagan in from 1979 and 1982, accelerated with the fall of the Berlin Wall fell in 1988, and sped up again with China’s accession into the WTO in 2002.
By zerosizedweasle 2025-10-0617:053 reply All the financial engineering to prop up the bubble is going to end badly, it always does.
Edit: I think it's fair to say there is a fair bit antics by companies that are actually illegal, like in every bubble, that have been hidden by the mania. They get exposed as the tide goes out.
There was a nice podcast from Prof G Markets about how the bubble could collapse: https://www.youtube.com/watch?v=Oeepx2ZLrCA
In short it's companies turning to issuing debt, fuelled by increase in M&A activity, potential IPO of OpenAI, followed by collapse as tricks to increase revenue will fail to meet expectations and companies that mismanage debt will go bust.
The real problem is continued socialization of risk when the inevitable bailouts come. The government is basically telling everyone to take crazy risks, because if the risk is big enough, we'll bail you all out.
By wslh 2025-10-0617:55 One of the best ways to be in a bubble is to live in the middle of transactions.
