The release of ChatGPT 3.5 in November 2022 was an indelible moment in the modern history of Silicon Valley tech.
Over the coming months, all of the SV big whigs would let the media and people know that the future had arrived, and the world would not be the same now that generative artificial intelligence had arrived.
The spending spree that has ensued since that moment has been unprecedented in its scale, though the return on that investment hasn’t matched the hype. While AI use and adoption rates are increasing among the general public, there is a significant and persistent cohort that is firmly anti-AI everything, from its use to the infrastructure it needs to operate.
But that opposition hasn’t slowed anything.
Global AI infrastructure spending is expected to reach $758 billion by 2029, according to the International Data Corporation. That’s more than double the $300 billion spent in 2025.
That is part of the problem, according to a new analysis from Ed Zitron, the frequent AI tech critic who has been following this story since the beginning.
“The AI bubble isn’t a result of any actual return on investment,” Zitron declared in his latest scathing takedown. “Whether that be in purely monetary terms, like revenue or profitability, productivity gains, or anything tangible or measurable. Rather, it’s an episode of cult-like psychosis that infected the brains of some of the most powerful and wealthy individuals and institutions, where the powerful mythology of a company inspired — and been used to inspire — the greatest capital misallocation in history. “
Zitron has the facts and figures to back up his argument.
OpenAI is spending too much money to ever be profitable
OpenAI has already declared that it intends to spend over $852 billion by the end of 2030. About $750 billion of that total is tied to the remaining performance obligations of its partners and investors, Microsoft, Amazon and Oracle.
It intends to spend $50 billion or more on compute power just this year, which, according to Zitron’s math, is more than 50% of all global AI compute spend.
Since OpenAI doesn’t generate nearly enough revenue to cover that, it can only afford to pay that amount thanks to its latest $122 billion funding round, of which it has received at least $50 billion.
At this point of the argument, AI boosters could point out that OpenAI is simply one cog in a vast AI industry, so even if the company is financially imprudent, that doesn’t automatically mean the rest of the industry is the same.
Related: Palantir CEO has a blunt verdict on OpenAI and Anthropic
Zitron’s argument: OpenAI is by far the biggest cog.
In fact, according to him, “OpenAI is also the reason Anthropic exists — not just because multiple founders came from the company, but because both Google and Amazon both agreed to give it a total of $6 billion in 2023 as a means of “competing” with Microsoft’s new obsession, which allowed both to justify spending further hundreds of billions of dollars “to make sure they didn’t miss out on AI.”
“The launch of ChatGPT in November 2022 came at the perfect time for a tech industry that had run out of ideas and was flirting with a prolonged depression,” Zitron said. ” The IPO market had collapsed, interest hikes killed the Zero Interest Free era dead, pandemic-era overhiring began to unwind with some of the worst layoffs in the history of the industry.”
For the first time in its history, the modern tech industry was about to have to “cut its cloth in accordance with its means – something which it has historically been loath to do,” according to Zitron.
But OpenAI’s emergence changed all of that.
“The existence of OpenAI justified an era of mania and opulence. Hyperscalers, bereft of new hypergrowth ideas, were able to point at the fact that ChatGPT had ‘the fastest growing userbase of all time‘ and the Microsoft ‘supercomputer’ that built it and tell their investors that if they didn’t invest, they’d be left behind, with Amazon, Meta, and Google announcing their own nebulous ‘supercomputers’ in 2023,” Zitron said.
OpenAI inflated the AI bubble almost by itself
By the fourth quarter of 2023, global venture capital funding had dropped to its lowest level since the third quarter of 2016, Zitron reported. And even if it hadn’t, venture capital by itself couldn’t have backed OpenAI or Anthropic with the money necessary to build their infrastructure, Zitron said.
Still, the tens of billions in private investments from the tech giants of the world proved to be more than enough not only to get OpenAI off the ground, but also to inflate the AI bubble to where we see it now.
“This is the underlying greed that has driven this wasteful, reckless and destructive era — the belief that there will be another OpenAI and, as I’ve said, the chance to become the next OpenAI’s landlord,” Zitron said. “And like any great investment bubble, the more money that piled in, the greater the fear of missing out, the more dollars that can be justified in turn, and the more complex and deranged the mythology becomes.”
According to Zitron’s sources who are familiar with their infrastructures, OpenAI, Anthropic, Microsoft, Google and Amazon have done their best to “obfuscate the actual underlying costs of their operations,” and the media and public have been “more than willing to accept whatever convenient myths might sustain their dreams.”
More AI:
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Despite this, Zitron says the AI industry can’t survive without OpenAI under any circumstances. It’s the company with the most money, the most infrastructure, the most attention and the most AI talent, so if it collapses, it won’t be until after AI data center debt and venture capital funding have been exhausted.
But once the hyperscalers stop spending money, banks that are already “choking on data center debt will see that a vast amount of capital is leaving the market and underwrite deals as such.”
“This will mean, at some point, that both OpenAI and Anthropic will be walking around with their hands out saying “money please!” at precisely the moment that everybody will be cutting back,” Zitron said.
OpenAI needs to keep growing to pay its bills and at some point the company will “run out of real dollars to pay people, likely at exactly the time that it’s hardest to find ore of them.”
And unfortunately for OpenAI, its free user base is quickly becoming a massive money-losing proposition.
OpenAI expects to generate $2.4 billion in advertising revenue this year, with that number inexplicably jumping to $102 billion by 2030. For reference, Meta generated about $196 billion in advertising revenue in 2025 and Meta’s free user base is in the billions.
“OpenAI’s collapse will be a direct result of its loss-laden economics — its doomed, loss-making subscriptions, its pathetic advertising revenue, and API costs that became a “huge issue” for its enterprise customers — and the fact that outside of the hype, AI lacks measurable ROI,” Zitron says.
Related: OpenAI loses another C-suite executive ahead of IPO
