AI Losses Are About To Spiral Out Of Control
When in a hole, just keep digging.
It seems like everyone, including the AI bros, now know that the AI industry is one of the biggest bubbles humanity has ever created. Yet, rather than actually do something about it, like regulate Big Tech, enforce anti-trust laws, crack down on round-trip investments, or have the stewards of our delicate financial systems tell these morons to f**king stop it, we collectively seem to be enabling these idiots and letting this entire circus self-implode. The trouble is, when something is this detached from reality, devoid of logic, and utterly irrational, like the AI bubble, all the typical forces that would cause said self-implosion achieve nothing. They can seemingly just choose to ignore something that would be a fatal blow to any other business/industry and carry on unscathed. It is going to take a mind-altering tsunami of reality to break this cult-like hysteria and pop the bubble. Well, that sucker punch of reality is just over the horizon.
As with all bubbles, this starts with the biblical cash bonfire at its heart.
The poster child for the cash black hole is OpenAI. Despite a reported $5.7 billion revenue in Q1 2026, they posted a non-GAAP loss of $6.9 billion. That means they lost $1.22 for every dollar of revenue they made. To make matters even worse, GAAP stands for ‘Generally Accepted Accounting Principles’, and non-GAAP accounts can exclude certain expenses, such as restructuring costs and certain kinds of depreciation, both of which OpenAI has in spades. So, their actual loss is likely noticeably higher. This is after racking up a $38.5 billion loss last year (read more here).
Oh, and don’t go thinking Anthropic is any better. They have tried to make it look like they are close to profitability, but this isn’t really the case. As Ed Zitron points out, this profit comes from an unsustainable market position and sleight-of-hand accounting that doesn’t reflect their reality (EBITDA profitability).
At this rate of burning cash, OpenAI and Anthropic are on a one-way trip to bankruptcy. In fact, OpenAI is on course to go bankrupt this year or early next year, even with the substantial private investment it receives (read more here).
So, what are they going to do to solve this?
