Tell Me AI Stocks Are in a Bubble Without Telling Me
A $10B AI startup with no revenue. A debt bubble nobody sees. A portfolio playbook hiding in plain sight. What breaks first...Mira or the market?
“A $10 billion valuation. Zero revenue. No product. Just a TikTok-famous founder and some AI buzzwords. Sound familiar?”
If Pets.com and Theranos had a baby in 2025, it would be Mira’s Magical Machine Learning Miracle…and she just raised a Series E.
Welcome to the golden age of artificial ignorance, where investor FOMO trumps financial sanity, and debt-fueled fantasy is mistaken for innovation.
As Wall Street fawns over AI like it’s the second coming of sliced bread, the real risk is hiding in plain sight: a ticking time bomb of private credit leverage, floating-rate debt, and companies with negative free cash flow masquerading as the future.
In this article, we expose the AI bubble for what it really is…a mirage built on easy money, opaque funding, and financial denial.
Magic Beans for Sale: Just Add Buzzwords
Let’s call our imaginary protagonist “Mira’s Magical Machine Learning Miracle.” The pitch?
A slide deck with words like “paradigm,” “scalable,” and “visionary impact.” The valuation?
A cool $10 billion. Revenue?
Not a cent. Product?
Still in alpha.
If you squint hard enough, this isn't just tech optimism…it’s collective psychosis with a term sheet.
But don’t hate the player. Mira’s just playing the game better than most.
The real concern isn’t that these companies are raising obscene amounts of capital. It’s what that capital is built on: debt, not equity. And not just any debt.
Private credit.
The murky, opaque, illiquid kind…the kind that breaks things when gravity returns.
The real problem isn’t Mira’s hustle…it’s that investors believe this time is different.
But what happens when everyone realizes it’s not? The only thing “paradigm-shifting” may be the amount of capital that disappears overnight...
Private Credit: The House of Cards Holding Up the Cloud
Private credit was the financial world’s favorite party trick. Can’t get a bank loan?
No problem.
Some over-leveraged fund run by the ghost of Medley Management will float you something with a double-digit yield and a handshake.
By mid-2023, the global private credit market had ballooned to $1.7 trillion.
On paper, it’s genius. Floating-rate loans that outpace inflation, quick deal-making, bespoke terms. In practice?
It’s a spider web of illiquid obligations tied to fragile, unprofitable firms with no path to cash flow. And guess which shiny new sector attracted an avalanche of that money?
AI.
Now you’ve got AI startups…some pre-revenue, others just burning through their Series E…being propped up by leveraged buyouts, fancy debt structures, and the promise of future dominance.
Future. Not present. Not profit. Just vibes.
Few realize how deeply this private credit web has entangled the AI sector.
But when the cracks show, it won’t be some soft correction. It’ll be a shockwave through every corner of the shadow banking system. And most of Wall Street is still asleep at the wheel…
Zombie Unicorns and the Coming Reckoning
The Private Credit Part 2 report from Santiago Capital reads like a horror anthology for financial adults.
From Archegos to Greensill, the lesson is consistent: leverage kills. Especially when liquidity vanishes.
Let’s take a stroll through the financial graveyard.
Archegos: A $100 billion sandcastle built on a $10 billion foundation of leverage and swaps. One wrong move, and it vaporized…along with several investment banks’ risk departments.
Medley Management: A slow-motion car crash. Raised money to plug holes from earlier bad bets. Classic Ponzi energy. Chapter 11 came not with a bang, but a spreadsheet.
PeerStreet: Mortgaged the myth of “liquid real estate loans.” When rates rose and the music stopped, everyone was left holding empty promissory notes.
New Century Financial: The poster child of the subprime crisis. Built on the belief that house prices only go up. AI today says, “Revenue will come later.” Sound familiar?
Greensill Capital: Invented receivables out of thin air. AI firms doing the same with “future expected monetization streams.” The only thing these firms will be monetizing is their office furniture.
Each collapse was fueled by the same four horsemen: leverage, illiquidity, concentration risk, and denial.
And AI, for all its promise, is neck-deep in all four.
If history is a guide, these zombie firms won’t go quietly…they’ll unravel suddenly, with ripple effects that make 2020’s blowups look quaint. The only question is: which domino falls first?
The Interest Rate Time Bomb
Interest rates don’t care about your pitch deck.
In 2025, 10-year Treasury yields hover around 4.5%. That’s a death knell for “zombie companies”…the unprofitable firms kept alive by low rates and easy refinancing. Most AI startups fall squarely in that camp.
The Santiago report notes that as rates rise, the cost of servicing floating-rate private credit balloons. Defaults aren’t a maybe…they’re a when.
And as capital dries up, the illusion of infinite VC funding vanishes. Already, signs are flashing red: private credit funds gating withdrawals, liquidity vanishing faster than your latest GPU preorder.
In an economy with real rates north of 4%, reality comes fast. Cash is no longer free.
And for firms built on the assumption that it always would be? The endgame is already in motion…
We’ve Seen This Movie Before
Let’s bring this back to Earth.
The AI sector isn’t doomed. Far from it. The long-term promise is extraordinary.
Medical diagnostics, automation, even that dream of replacing your mother-in-law’s nagging with a friendly AI assistant…it’s all within reach.
But that future isn’t built on hype and leverage. It’s built on infrastructure, energy, and actual profitability. The firms leading the AI wave today?
Most aren’t even doggy-paddling. They’re burning cash at SpaceX escape velocity and hoping the Fed bails them out when the fuel runs low.
Spoiler alert: it won’t.
The long-term AI dream is still alive. But the short-term delusion? That’s what gets investors killed. And the bodies are already piling up just beneath the surface…
Macro and Geopolitical Rocks in the Road
Let’s throw a few more wrenches into the AI machine.
The UN’s global shipping tax, slated for 2028, will raise costs on chip imports…bad news for AI firms addicted to GPUs.
Meanwhile, Trump’s trade playbook is back in rotation, pressuring supply chains and countries that try to route around tariffs.
AI startups with wafer-thin margins and global hardware dependencies? They’re toast.
And inflation? Still sticky. Consumer spending? Starting to wobble. In this environment, AI startups are effectively luxury goods masquerading as infrastructure.
When the macro tide goes out, we’ll see who built their AI dreams on borrowed sand.
Supply chains are weaponized, inflation is sticky, and AI hardware is more exposed to geopolitical whiplash than anyone admits. If you think these firms are ready for macro turbulence, think again…
Reality Check: How to Survive What’s Coming
What happens next is painfully predictable.
The AI bubble, still inflating, will pop when the market demands results.
Private credit funds…bloated with illiquid debt…will be forced to mark-to-market, liquidate at fire-sale prices, and close their doors to redemption. The startups they back will vanish overnight.
Investors will grumble, regulators will posture, and someone…probably Mira…will write a memoir.
But not all is lost. Inverting the problem, as Charlie Munger suggests, provides a path forward.
Want to avoid the next Greensill? Avoid startups with no product, no plan, and 100-slide pitch decks filled with acronyms.
Want to survive the storm? Back the boring.
Buy into private credit funds that focus on actual cash flow, boring industries, and seasoned managers who’ve seen a rate cycle before.
And if you’re Mira? For the love of Satoshi, take the money and run.
The playbook is clear: avoid the shiny object, buy the cash flows, and treat every AI pitch like it’s wrapped in subprime CDOs. Because when the bubble bursts, only boring businesses will be left standing…
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Gravity Always Wins
As the Santiago report so clearly puts it, without risk controls and disciplined underwriting, the rapid growth of private credit will trigger a “systemic reckoning.”
The AI hype machine is its poster child. It has all the ingredients: leverage, opacity, unrealistic expectations, and a complete disregard for how real businesses are built.
We’re not being flippant when we say most of these unicorns are heading for landfill. We’re being generous. Landfill implies someone might still want to recycle the parts.
Because what goes up…especially when inflated by hope and debt…comes down hard.
And the landing… won’t be soft.
If you found yourself nodding along while reading about Mira’s magical valuation and the private credit time bomb ticking beneath Silicon Valley’s unicorn barn, then you need to see what’s inside Insider Issue #311.
Because while the AI bubble gets the headlines, Chris MacIntosh is busy connecting the dots no one else is talking about…from how Trump's tariffs are really a bankruptcy restructuring play for the dollar system… to how China’s financial plumbing is quietly overtaking SWIFT… to why Mira’s startup is just the tip of a debt iceberg that’s about to crack.
Inside this edition:
A Dying Man Will Try Any Medicine — What trade wars, reserve currency panic, and geopolitical humiliation have in common.
Tell Me AI Stocks Are In a Bubble Without Telling Me — Spoiler: Mira isn’t alone, and the private equity financing her party has a hangover coming.
Gold Miners & Offshore Drillers — Two sectors with real cash flow, rising dividends, and not a TikTok founder in sight.
The Big Five Six — Deep value names that are everything AI stocks are not: cheap, unloved, profitable.
This isn’t hindsight wisdom. It’s the playbook for navigating a world where empires are aging, liquidity is vanishing, and bubbles aren’t bursting—they’re bleeding out.
👉 Read Insider #311 here before your broker does 👇
