Caveat Emptor

August 14, 2025

Emily Clancy

Data Center Boom (or Bubble?)

If you want to understand the magnitude — and potential peril — of the current artificial intelligence (AI) boom, look beyond the headlines and into the humming aisles of the world’s largest data centers.

“Technology infrastructure providers have become the unsung heroes as the AI revolution accelerates,” says Paradigm’s trading pro Enrique Abeyta. Their chips and computing platforms power everything from language models to next-gen data centers.

Without these companies, he argues, “The software breakthroughs capturing headlines wouldn’t be possible.” In many ways, Enrique suggests, this new AI infrastructure “is to AI what steel and railroads were to the Industrial Age.”

But history warns that every infrastructure boom, no matter how highflying, can end in a sobering bust. “The railroad boom of the 19th century collapsed after infrastructure buildout — fueled by speculative capital and greed — surged ahead of demand and hit a painful wall,” he says.

He draws a vivid link to the present: “We are facing a similar situation in the global race to build out AI.” Tech giants are locked in an arms race, spending over $350 billion this year alone on data centers, chips and energy infrastructure.

Nowhere is this race more apparent than Nvidia. Once a niche graphics chip supplier, Nvidia is “the crown jewel of the AI revolution, powering nearly every major data center buildout with its high-performance GPUs.”

Nvidia’s wild ride from market darling to history’s most valuable public company is legendary. But beneath this meteoric ascent, Enrique sees a bubble.

“AI infrastructure spending is driven not by current revenue, but by fear of missing out. Cloud giants pour tens of billions into building AI capabilities, funded by investors overlooking costs for market leadership.”

For Nvidia, Enrique warns, “The capital outlays resemble the telecom fiber boom, where exuberance outpaced sustainable returns.” If spending slows, as it will, “Nvidia's revenue growth could quickly flatten or reverse.”

The company’s $4 trillion market cap assumes it will dominate unchallenged. Yet history shows early infrastructure players often enjoy spectacular gains — just before the bottom falls out.

“Nvidia risks repeating that pattern,” Enrique says, citing Cisco’s collapse after the dot-com bubble. “A slowdown in AI infrastructure buildouts, margin pressure or a shift to in-house chips could trigger a sharp correction.”

He predicts Nvidia’s share price could crash as early as 2026. It’s important to note, in late 2024, Enrique previously forecast a $1 trillion market loss for Nvidia.

“On the chart below, I circled the stock’s price when I published my prediction,” Enrique notes. “By early April, Nvidia had officially lost $1 trillion in market cap.”

Chart

After a brief recovery, he cautions: “The next fall will be steeper…

“Nvidia’s next drop could wipe out $2 trillion soon,” says Enrique.

He calls this the “capital cycle that will crush Nvidia,” drawing on two centuries of crises in railroads, electricity, radio and the internet.

“Every time, companies invest too much in the short term. Capacity will be used eventually, but after buildout, there’s too much supply for demand.”

The result: “A period of weakness… even the best equipment, like Nvidia’s chips, will see demand crater.”

What’s an investor to do? Enrique is clear: “If you own Nvidia shares, take profits now or hedge. Now is the moment to protect gains and prepare for downside. The risk is too big to ignore.”

Paradigm’s macro expert Jim Rickards agrees, but sees things from a different angle.

Jim warns much of the AI hype is based on the elusive promise of artificial general intelligence (AGI) — a goal he believes may never be achieved.

“AGI is unlikely because it requires abductive logic — that humans have but computers can’t program.”

If that hope collapses, Jim says: “Much investment will be written off. That could come sooner than expected and cause the greatest stock market collapse ever.”

Beyond financial risk, Jim highlights the boom’s physical toll: “AI data centers consume huge electricity, exceeding some U.S. states.”

He foresees an energy crisis that could cripple technology advancement and national security, worsened by automation and job losses.

The upshot: While the AI boom promises dazzling tech and returns, history warns a reckoning looms.

As Enrique and Jim argue, investors must approach this revolution with clear-eyed skepticism as well as humility. Because if history is any guide, what goes up — especially at the heart of a hyped buildout — will inevitably come down.

GM’s Innovation Flip-Flop

“General Motors is really good at one thing. Unfortunately, it’s not innovation, engineering or visionary leadership,” says Paradigm editor Davis Wilson at The Million Mission e-letter.

No, GM’s specialty is spending “billions chasing the ‘next big thing’… only to slam on the brakes, reverse course and start all over again years later from behind,” Davis continues.

Just a few years ago, for instance, GM promised an all-electric lineup by 2035 — “big talk,” Davis notes. Yet with production delays, “slowing sales and infrastructure challenges,” the company quietly abandoned these ambitions.

But not after investing “billions in supply chains, R&D and retooling factories only to slam the brakes at the first bump… Doesn’t exactly scream visionary leadership,” he quips.

orion

Courtesy: Oakland County Times
Orion Township, Michigan

Then came the Cruise debacle, when “a high-profile incident in San Francisco” led GM to shutter its robotaxi program, costing the company nine executives and a CEO.

Their most recent flip-flop? After scrapping its robotaxi venture amid “regulatory crackdowns, executive firings and public embarrassment,” GM is trying to jump back into autonomous vehicles (AVs).

Now GM is attempting “to lure back former Cruise employees” and push for “hands-free, eyes-free driving,” led by Sterling Anderson, ex-Tesla Autopilot chief.

Still, GM’s rivals (Tesla, Waymo, Zoox, Baidu) already have “a multiyear head start and active deployments.”

“This is becoming GM’s playbook: Make a big, expensive innovation push. Reverse course when things get tough. Lose momentum and market share. Announce a ‘new’ push years later (starting from behind),” Davis writes.

Ultimately, he warns: “Beware companies that chase buzzy industries primarily for stock-market glory… Consistent vision, deep execution and the patience to see innovation through tough times — those are the real keys to leadership.”

Inflation at the wholesale level is defying expectations (not in a good way). The Producer Price Index (PPI) leapt 0.9% in July versus the consensus 0.2%. Year-over-year, wholesale inflation is now running at 3.3%... Will this evaporate the Fed’s will to cut rates come September?

The market is paring its losses after slumping hard — post PPI data. Notwithstanding, the three major stock indexes are all in the red. The Dow’s hit hardest, down 0.25% to 44,780. At the same time, the S&P 500 is down 0.10% to 6,450 while the tech-heavy Nasdaq is down 0.05% to 21,695.

Commodities? Oil is up 1.40% to $63.50 for a barrel of WTI. As for precious metals, gold is down 0.70% to $3,385.80 per ounce, and silver is down 1.50% to $38.

When it comes to the crypto market — that never sleeps — Bitcoin (-3.45%) and Ethereum (-2.70%) are hanging out at $118,240 and $4,590 respectively.

Lost in Translation: “Bailout”

Four years after Evergrande’s financial collapse shook China’s property market, the company faces a symbolic milestone: its delisting from the Hong Kong stock exchange on Aug. 25, 2025.

This event marks the official end of the trading life of what was once China’s second-largest property developer, a towering figure in the country’s real estate boom and subsequent bust.

Evergrande’s downfall began in 2021, when the company disclosed it could not meet its vast debt obligations.

julia tweet

By January 2024, a Hong Kong court ordered Evergrande’s liquidation after rejecting its restructuring plans, revealing a staggering debt load over $300 billion owed to banks, bondholders and suppliers.

Trading in Evergrande’s shares has since been suspended, with the Hong Kong Stock Exchange canceling its listing after 18 months of inactivity in July 2025. Evergrande confirmed it would not contest the decision, leaving shareholders with certificates that hold no tradable value going forward.

Meanwhile, the liquidation process has been a slow, complex affair. Liquidators have taken control of more than 100 group companies, valuing assets collectively around $3.5 billion as of early 2024.

To date, only about $255 million worth of assets have been sold, reflecting the difficult job of realizing value amid tangled ownership structures.

But debt claims submitted far exceed initial estimates, reaching $45 billion by mid-2025 with the total likely still rising.

[A pivotal aspect of this saga focuses on Evergrande’s founder, Hui Ka Yan. Hui, who controls about 60% of the company, refuses to disclose his assets to creditors.

At a court hearing in September, however, liquidators aim to compel Hui to reveal his holdings. The outcome could set a precedent for other insolvent Chinese developers and the scrutiny their owners may face.]

Evergrande’s collapse reflects broader challenges in China’s real estate sector.

Despite government efforts, the property market remains mired in a deep slump, with investment declining further in 2025 and little sign of a stimulus to revive growth.

Not to mention the political and economic environment under President Xi Jinping has shifted priorities away from bailout-style rescues, emphasizing party control and stability over market intervention.

This approach contrasts sharply with Western notions of “too big to fail,” underscoring a new paradigm where loyalty to the Communist Party trumps traditional capitalist safeguards.

The key takeaway from Evergrande’s prolonged demise is a stark signal that China’s property crisis is far from over. The delisting and slow asset recovery illustrate a fractured sector facing long-term pain, with profound implications for investors, homeowners and the economy as a whole.

This story continues to unfold, but Evergrande’s downfall stands as a cautionary tale of debt excess and the perils of state capitalism in one of the world’s largest economies.

The Last Days of Dial-Up

AOL’s dial-up internet, once the gateway for millions venturing online for the first time, is officially coming to an end on Sept. 30, 2025.

In its heyday, AOL made the internet accessible to everyday families, introducing its famous “You’ve got mail” catchphrase that still resonates in pop culture.

And who can forget the chorus of beeps and static that defined the early web experience? Or the frustration of being booted offline when someone picked up the landline?

Launched in the late 1980s as America Online, AOL reached dazzling heights — with its market cap soaring to over $200 billion by the turn of the millennium.

The company, in fact, dominated the internet landscape, connecting over 20 million users at its peak and even merging with media giant Time Warner in a colossal (but, ultimately, disastrous) deal.

The march of progress, however, was relentless: Broadband and wireless networks quickly eclipsed dial-up’s slow, quirky connection.

Yet even as technology raced forward, a small, determined group held on. As recently as 2023, around 163,000 U.S. households were still using dial-up as their sole online access, often in rural or underserved regions.

Now as AOL shutters its dial-up service, it marks not just the end of a technology, but the closing of a chapter in internet history.

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