Thanks Fred, appreciate you following up on the story. Yes, others claim the headlines but this one will define the success or failure of the business cycles for generations to come. I agree, love the technology, but at what price? I have to think there is something more nefarious going on than just writing essays and doing research for this Substack. Look forward to more on what's really driving this venture, if not the money, must be the power and I have a sneaking suspicion that the public will end up footing the bill. Then there's China. Same technology, much broader view to infrastructure. As only they can accomplish? Keep on writing......
A very important post, with real data that's frankly scary. What caught my attention were these two points:
KPMG surveyed organizations using AI and found only 26% had full real-time visibility into what their AI systems actually cost to operate.
Another 2026 survey, this one of 500 finance leaders at large American and British companies, found 79% had experienced AI-related cost overruns during the previous year.
I agree that AI isn't going away. But the cost side is of critical and urgent importance for companies and individual investors who may be, through their investments in exchange-traded funds (ETFs), heavily exposed to AI stocks. We don't need a dot-com bubble that occurred in the 90s. A personal anecdote: at that time, I was shopping at TipTop Tailors and overheard a store clerk telling a customer to immediately buy some Nortel stock. Well, those of us around during those tumultuous times certainly remember what ultimately happened to Nortel.
Good post, but myself, I am not a fan of AI and I don't use it for anything. I like my own brain better. These corporations that are gung-ho about AI are spending billions, apparently unknowingly because they're not paying attention. Guess what else they're not paying attention to? Their employees. While the corporation does all this enormous spending, their employees are still suffering the effects of inflation, stagnant wages, lack of benefits, no pension plans, etc., etc., etc. Why can't the billions being spent on AI help to make the lives of the employees better? That would 'buy' their loyalty, their harder work (because they would see that harder work is rewarded), and the list goes on. Investment in PEOPLE, not machines, is far more important, especially given the warnings from AI developers themselves regarding the autonomy now being gained by the 'bots' that have been developed. The warnings are not overstating the danger. Machines, given autonomy, could very well be used by evil people for nefarious reasons, or the machines themselves could just decide that they don't need humans anymore, and presto! they attack and delete US. I don't see AI as even necessary if people would just develop a greater level of patience and acceptance that no one person has all the answers, so seeking knowledge from multiple people (and online encyclopaedias) is sufficient. As a post-secondary educator (retiring at the end of this year), I have heard the frustrations from fellow faculty about students handing in written assignments completely fabricated by AI. That is not learning.........and how much faith can we put into future workers if the information that they supposedly 'learned' during their education actually only exists in an AI model? Ok, rant over............I just don't trust nor use any AI intentionally.
You're right; it was a second article. I have been (fairly) accused of writing entire 'books' when responding to emails from family/friends. It's a disease I've had all my life; verbal diarrhea. LOL. Fortunately, it only comes on once in awhile.
I for one very much appreciate an independent human brain and yours is clearly excellent. While my capacity to do thorough research is diminishing fast now( i m older than Fred), that aha! moment when you encounter an odd but perfect factoid that shifts understanding of what s going on is the thrill of the chase I miss and which I doubt ai cannot capture on behalf of humans. No question it can introduce oddities to the mix and fix on one, but lacking a human heart, I dread to think what three generations of remaining humans in an ai run world will be like. We ll be like cattle, used to pens and trusting our herders, our freedon long forgotten.
Me: no smart tv or smart anything in my house, still drive stick, make coffee from scratch,a relic of a bygone time. Use it or lose it.
I love your association of ideas, from that most excelent machine: the human brain, well used. please keep em coming.
Hello Bev; Thank you for your kind words; it's a pleasure to 'meet' you. I'm no spring chicken (69 and edging toward being 70 in March), but I try to make use of my brain every day, so that I don't lose what I have inherited. I also keep my heart fed with the love and care of family and friends. My vehicle is not a stick transmission (sigh........love driving stick), but it is 10 years old, a diesel and I hope I have it still 10 years from now. You're right about 'use it or lose it'; that includes our brains and our hearts. AI will never, ever, have a heart. It will never, ever, be able to assess information the way that our human brain (connected to our heart) does. I have smart appliances but I don't use that function of them; I simply use them exactly the way that I used their predecessors that were not 'smart'. I use a drip coffee maker after grinding the beans in a non-'smart' grinder, etc. I do appreciate my newer washing machine's ability to gauge the load and only use the water necessary to wash it, but I don't use any connection between it and my phone. Life can be complicated enough already; I don't need to have an umbilical cord between me and my phone..........lol.
Enlightening info, Fred. Once they took away GPTs it made me wonder what is next on the chopping block. Writing books and creating websites within minutes is making creators fast money. Something's gotta change, but how, what, and when will make the next year in AI very interesting.
🇨🇦💙 This reminds me of the giddy 80’s days after Bush jr deregulated banks and they started bundling subprime home loans and selling them as AAA bonds. Moody's and Standard & Poor's, (debt rating agencies) gave them fake AAA Credit ratings. Everybody qualified - from gardeners to strippers - all were buying homes. (At the time Carney was the Governor of the Bank Of Canada and refused to let them into Canada). Just before the stock market crashed, all the banks’ C suite personnel took out billions in profits and the world’s stock markets crashed. Iceland almost went bankrupt.
Similarities to AI? Both involve massive capital flowing into an asset class whose valuation rests on optimistic future projections rather than current cash flows.Both show concentrated, interlinked risk, where a handful of major banks or a handful of AI firms and their circular investment deals (chip makers, cloud providers, and AI labs funding each other) create systemic exposure if one link falters. TICK TOCK ⏰
not because AI is automatically another 2008, but because history keeps reminding us what happens when enthusiasm gets miles ahead of people asking uncomfortable questions about risk and where the money is actually going.
One small correction...
Carney became Bank of Canada governor in 2008, after the crisis had already begun, so Canada’s stronger mortgage system wasn’t something he personally created.
But your larger point stands...
when enormous amounts of money become concentrated and interconnected, somebody had better be watching the plumbing.
Really weird - my source was Carney on the Daily Show discussing the bank crisis ??? https://youtu.be/zs8St-fF0kE?si=s0So7kyP_CdR_HXF. But yea, I’m watching AI closely - don’t like the altitude.
Thanks Fred, appreciate you following up on the story. Yes, others claim the headlines but this one will define the success or failure of the business cycles for generations to come. I agree, love the technology, but at what price? I have to think there is something more nefarious going on than just writing essays and doing research for this Substack. Look forward to more on what's really driving this venture, if not the money, must be the power and I have a sneaking suspicion that the public will end up footing the bill. Then there's China. Same technology, much broader view to infrastructure. As only they can accomplish? Keep on writing......
That’s where my curiosity is heading too, Michael.
I’m not ready to call anything nefarious without evidence, but the bigger question fascinates me...
if the immediate profits don’t justify this level of spending, what exactly are they buying?
Infrastructure, market dominance, strategic power, future control?
And who eventually pays for it?
Then, as you say, throw China into the comparison and it gets even more interesting.
Lots more digging to do.
A very important post, with real data that's frankly scary. What caught my attention were these two points:
KPMG surveyed organizations using AI and found only 26% had full real-time visibility into what their AI systems actually cost to operate.
Another 2026 survey, this one of 500 finance leaders at large American and British companies, found 79% had experienced AI-related cost overruns during the previous year.
I agree that AI isn't going away. But the cost side is of critical and urgent importance for companies and individual investors who may be, through their investments in exchange-traded funds (ETFs), heavily exposed to AI stocks. We don't need a dot-com bubble that occurred in the 90s. A personal anecdote: at that time, I was shopping at TipTop Tailors and overheard a store clerk telling a customer to immediately buy some Nortel stock. Well, those of us around during those tumultuous times certainly remember what ultimately happened to Nortel.
That Nortel story says a lot, Jerry.
When the guy at TipTop Tailors is giving stock tips, enthusiasm has probably outrun caution. 😂
I’m not calling AI another dot-com bubble... I use it every day and believe it’s transformative.
But your point is exactly why these cost numbers matter.
Great technology and a great investment aren’t automatically the same thing.
Thanks, my friend.
Good post, but myself, I am not a fan of AI and I don't use it for anything. I like my own brain better. These corporations that are gung-ho about AI are spending billions, apparently unknowingly because they're not paying attention. Guess what else they're not paying attention to? Their employees. While the corporation does all this enormous spending, their employees are still suffering the effects of inflation, stagnant wages, lack of benefits, no pension plans, etc., etc., etc. Why can't the billions being spent on AI help to make the lives of the employees better? That would 'buy' their loyalty, their harder work (because they would see that harder work is rewarded), and the list goes on. Investment in PEOPLE, not machines, is far more important, especially given the warnings from AI developers themselves regarding the autonomy now being gained by the 'bots' that have been developed. The warnings are not overstating the danger. Machines, given autonomy, could very well be used by evil people for nefarious reasons, or the machines themselves could just decide that they don't need humans anymore, and presto! they attack and delete US. I don't see AI as even necessary if people would just develop a greater level of patience and acceptance that no one person has all the answers, so seeking knowledge from multiple people (and online encyclopaedias) is sufficient. As a post-secondary educator (retiring at the end of this year), I have heard the frustrations from fellow faculty about students handing in written assignments completely fabricated by AI. That is not learning.........and how much faith can we put into future workers if the information that they supposedly 'learned' during their education actually only exists in an AI model? Ok, rant over............I just don't trust nor use any AI intentionally.
That wasn’t a rant, Leslie... that was a second article. 😂
We probably differ on AI itself because I use it every day and find it enormously useful.
But I think we meet in the middle on the important question...
useful to whom, and at what cost?
I don’t want machines replacing human judgment, curiosity or learning either.
And billions for AI while workers are struggling is absolutely a conversation worth having.
Thanks for giving me plenty to chew on.
You're right; it was a second article. I have been (fairly) accused of writing entire 'books' when responding to emails from family/friends. It's a disease I've had all my life; verbal diarrhea. LOL. Fortunately, it only comes on once in awhile.
I for one very much appreciate an independent human brain and yours is clearly excellent. While my capacity to do thorough research is diminishing fast now( i m older than Fred), that aha! moment when you encounter an odd but perfect factoid that shifts understanding of what s going on is the thrill of the chase I miss and which I doubt ai cannot capture on behalf of humans. No question it can introduce oddities to the mix and fix on one, but lacking a human heart, I dread to think what three generations of remaining humans in an ai run world will be like. We ll be like cattle, used to pens and trusting our herders, our freedon long forgotten.
Me: no smart tv or smart anything in my house, still drive stick, make coffee from scratch,a relic of a bygone time. Use it or lose it.
I love your association of ideas, from that most excelent machine: the human brain, well used. please keep em coming.
Hello Bev; Thank you for your kind words; it's a pleasure to 'meet' you. I'm no spring chicken (69 and edging toward being 70 in March), but I try to make use of my brain every day, so that I don't lose what I have inherited. I also keep my heart fed with the love and care of family and friends. My vehicle is not a stick transmission (sigh........love driving stick), but it is 10 years old, a diesel and I hope I have it still 10 years from now. You're right about 'use it or lose it'; that includes our brains and our hearts. AI will never, ever, have a heart. It will never, ever, be able to assess information the way that our human brain (connected to our heart) does. I have smart appliances but I don't use that function of them; I simply use them exactly the way that I used their predecessors that were not 'smart'. I use a drip coffee maker after grinding the beans in a non-'smart' grinder, etc. I do appreciate my newer washing machine's ability to gauge the load and only use the water necessary to wash it, but I don't use any connection between it and my phone. Life can be complicated enough already; I don't need to have an umbilical cord between me and my phone..........lol.
Enlightening info, Fred. Once they took away GPTs it made me wonder what is next on the chopping block. Writing books and creating websites within minutes is making creators fast money. Something's gotta change, but how, what, and when will make the next year in AI very interesting.
That’s the part I’m watching too, Yvette.
The tools, pricing and business models are changing almost as fast as we learn to use them.
I wouldn’t want to predict what AI looks like a year from now...
but I suspect adaptability is going to be worth a hell of a lot more than mastering any one tool. 😎
🇨🇦💙 This reminds me of the giddy 80’s days after Bush jr deregulated banks and they started bundling subprime home loans and selling them as AAA bonds. Moody's and Standard & Poor's, (debt rating agencies) gave them fake AAA Credit ratings. Everybody qualified - from gardeners to strippers - all were buying homes. (At the time Carney was the Governor of the Bank Of Canada and refused to let them into Canada). Just before the stock market crashed, all the banks’ C suite personnel took out billions in profits and the world’s stock markets crashed. Iceland almost went bankrupt.
Similarities to AI? Both involve massive capital flowing into an asset class whose valuation rests on optimistic future projections rather than current cash flows.Both show concentrated, interlinked risk, where a handful of major banks or a handful of AI firms and their circular investment deals (chip makers, cloud providers, and AI labs funding each other) create systemic exposure if one link falters. TICK TOCK ⏰
That’s the comparison worth watching, Roxy...
not because AI is automatically another 2008, but because history keeps reminding us what happens when enthusiasm gets miles ahead of people asking uncomfortable questions about risk and where the money is actually going.
One small correction...
Carney became Bank of Canada governor in 2008, after the crisis had already begun, so Canada’s stronger mortgage system wasn’t something he personally created.
But your larger point stands...
when enormous amounts of money become concentrated and interconnected, somebody had better be watching the plumbing.
Tick tock indeed. 😎
Really weird - my source was Carney on the Daily Show discussing the bank crisis ??? https://youtu.be/zs8St-fF0kE?si=s0So7kyP_CdR_HXF. But yea, I’m watching AI closely - don’t like the altitude.
With that Fred, STOP ALL AI DATA CENTRES!!!
As a bean counter I've been pondering this for a while.
Where's the beef?
Raise capital for money in.
Money out and no money in?
None on the balance sheet either?
Makes me wonder where it went?
Ah yes, R&D.
How does it work?
Sell copies for money in.
Buyer has money out and no money in.
Ah yes, R&D.
What does it do?
Raise prices to cover cost.
Sounding like a Trumpian level scam.
😂 Spoken like a true bean counter, Jim.
I’m not ready to call it a scam, but “Where’s the beef?” is exactly the question.
Eventually R&D has to become a return on investment.
You can’t keep feeding billions into the machine forever and call the spending itself success.
I don't really think scam either, Fred. However, when I submit my suspicions of nefarious activity they are generally laughed out of the room.
So very interesting, Fred.
Thank You. We need a big dose of reality sometimes.
Thanks, Carol-Ann.
That’s exactly what caught me... AI can be extraordinary and still need a reality check.
Both things can be true at the same time. 😎