If enough other companies report the same, the bubble pops. 🫧
Breaking: “Uber COO Andrew Macdonald said he’s not seeing proportional productivity gains from increasing AI costs.”
Note the text at the bottom. Uber blew through its AI “token” budget for the year in just a few months, and they don’t feel it is working out as well as they might have hoped.
As I wrote last night on X (over 700,000 views already), if enough other companies report the same, the bubble pops. 🫧
§
And some companies more or less already are, implicitly if not explicitly.
Microsoft just cut off Claude Code licenses, and Tom Warren at the Verge claim that this is at least in part because of costs.
Target has expressed some anxiety about pricing models for AI agents.
Starbucks just shut down an AI inventory experiment that they had been experimenting with because they realized that it couldn’t be trusted:
Techmeme@TechmemeSources: Starbucks shut down an AI program for automating inventory counts, nine months after deploying it, after it frequently miscounted and mislabeled items (@waylon_wc / Reuters) (Visit Techmeme dot com for the link and full context!)7:35 PM · May 21, 2026 · 415K Views10 Replies · 55 Reposts · 292 Likes
None of this should be surprising; I have been pointing out the errors since the week ChatGPT was introduced in 2022, and study after study after study (I will go into this more in a later newsletter) has shown that most companies don’t seen a significant return on their AI investment.
§
The overall situation is this:
Three companies that have not yet shown themselves to be profitable are expected to soon IPO for a total of something like four trillion dollars.
Index funds, the staple of many people’s retirement funds, are going to be more or less forced to rapidly absorb these exercises in fantastical thinking.
Those exercises in fantastical thinking are premised on the notion that customer demand will be essentially endless.
But we are already seeing cracks in that fantasy.
If enough customers have second thoughts, none of the three IPO’ing companies will ever hit their long-term projections.
In which cases those stocks will eventually fall.
A lot of banks may take a hint as well.
Get ready for “too big to fail”, and watch your portfolio drop.
Disclaimer: I can’t give you investment advice (let alone tax advice), and the market might remain irrational for longer than any of us can remain solvent.
But I see what I see, and it just doesn’t make sense.
There is likely an "Emperor's New Clothes" effect among the rank and file employees of these companies and many others where the upper management is trying to enforce this LLM fantasy. There can be severe social and career costs for any individual who chooses to speak out and say what they see (as you are valiantly doing here). It wouldn't be surprising if a similar effect is behind a lot of the company-level public pronouncements around LLMs as well. No-one wants to be the first to break ranks and see a hit to their career, their investment potential or their stock price. That would suppress a lot of dissent that we would otherwise see in a saner world, so we might expect to see a flood of dissent once the dam finally bursts (sorry for mixing metaphors).
If EVERYONE runs at maximum speed in the same direction, there is a high probability it is not the right direction. Railroad overbuilding led to extraordinary levels of bankruptcy In the 19th century