Even banks and hyperscalers are now sounding the alarm about the AI bubble
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Even banks and hyperscalers are now sounding the alarm about the AI bubble
Oracle's down more than 40% this month, the BIS thinks AI could destroy the economy, and we've got the Kettle on for a chat about the whole mess
Brandon Vigliarolo
Brandon<br>Vigliarolo
Published<br>mon 6 Jul 2026 // 14:00 UTC
KETTLE From international banking worries to the market state of canary-in-the-coal-mine Oracle, the AI bubble is sure looking taut.<br>The Bank for International Settlements, often referred to as "the central bank for central banks", said in a report at the end of June that it was worried the AI bubble was nigh on to popping and taking the global economy with it. Oracle, the hyperscaler with arguably the largest exposure to the AI bubble, has lost more than 40 percent of its share value in the past month and recently outlined all the ways it might suffer if this whole AI thing doesn't pan out.
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If you ask our systems editor Tobias Mann and senior reporter Tom Claburn, those factors and more make it seem like the AI industry could be on the verge of a massive contraction, and that's the very thing they chat about with Kettle host Brandon Vigliarolo on this week's episode.
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You can listen to the latest episode of The Kettle by clicking on the player above, as well as on Spotify, Apple Music, or YouTube, or read the transcript of the latest episode below. It's been lightly edited for clarity.<br>Brandon (00:05)<br>Welcome to the latest episode of The Register's Kettle Podcast. I'm Brandon Vigliarolo, and this week the topic is one that neither we nor the investors of the world can seem to stop thinking about, and that's the possibility that the edges of the AI bubble are beginning to come into focus. I'm joined this week by systems editor Tobias Mann and senior reporter Tom Claburn to talk about the latest news in this space, and there is a lot to talk about, so thanks for joining me guys.<br>Tom Claburn (00:30)<br>Yeah, thank you.<br>Tobias Mann (00:31)<br>Good to be here.<br>Brandon (00:32)
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So let's start with a piece our UK editor Paul Kunert wrote, and he couldn't be here for this episode, so we're going to have to pick it apart in his place. And that's the Bank for International Settlements' report that it's worried that the AI bubble could pop and take the global economy with it. Tom, can you explain a bit about what was in that report and what they're worried about?<br>Tom Claburn (00:51)<br>So the Bank of International Settlements is sort of like a central bank for central banks or the UN of finance organizations.<br>Brandon (01:02)<br>So their opinion matters, basically.<br>Tom Claburn (01:13)<br>Yeah, it's not like some person, a blogger having an opinion. This is a big dea. The report raises the specter of all the previous financial manias like the British railway mania of the 1800s and the canal investment bubbles and the dot com bubble.<br>Brandon (01:26)
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Yeah, the dot com boom, obviously.<br>Tom Claburn (01:28)<br>And it draws a comparison saying that all these things shared a common trait, which is that they attracted a lot more capital than the resulting industry could actually produce. And if that's the case with the AI bubble, there are going to be a lot of people who have invested billions in capex who are not going to see that money back. That's presumably not really the best investment scenario. And I think that that's on a lot of people's minds as all these major hyperscalers keep pouring money into this, and in so doing, raising all the costs for the equipment that they're putting into place, making it harder for everybody to get RAM and even consumers to, in the end, buy computers because there are just no supplies of RAM left.<br>Brandon (02:08)<br>My wife just bought a MacBook Neo the week before the price went up. And it was like, oh my God. I just sent her an article, and I was like, "Well, you should be glad you bought that now," then she had some issue with the payment and she was worried that it wasn't going to go through and they were going to reset the order and then she had to pay more. But luckily that got cleared up in time. It's affecting everyone.<br>To put some of these capex forecasts in perspective, I think Amazon is saying that it's planning north of two hundred billion in AI build outs this year. Microsoft's looking at one hundred and ninety billion. Google a hundred and eighty billion. Meta one hundred and forty billion. I mean this is a lot of money being tossed around for potentially no returns, right?
Tobias Mann (03:02)<br>Well, some of it is empire building with the major hyperscalers. Because if you look at their business models, they can afford to lose a sizable portion of that. Their investors aren't going to be happy, but their investors won't be happy if they're not spending that money either. It becomes a catch-22 for them. But in the event the bubble pops, you...