WASHINGTON — In September, just weeks before Americans were set to vote in this year’s midterm elections, a sudden panic over the dangers posed by artificial intelligence caught the White House off guard. A whistleblower had gained viral attention warning the technology could soon pose an existential threat. President Trump was quick to dismiss concerns, evoking urgency in the U.S. race to achieve global dominance in superintelligence.
He rejected calls to negotiate guardrails on the most advanced AI models with China’s leader, Xi Jinping, weeks later, during a prime opportunity to do so in Washington. Privately, the president expressed concern that public hysteria over AI could jolt markets that have become excessively concentrated in AI-related stocks. He had already seen fresh polling that showed widespread bipartisan opposition to the boom in construction of AI data centers, a push by Trump that has cannibalized chips and energy from other sectors of the economy, driving up costs.
Now, on the campaign trail in the final days before the vote, Trump is vowing to expand a “golden age” of prosperity through the end of his presidency. But experts say his policies on AI have set the U.S. economy up for a period of tremendous risk over the next two years. Some of the world’s leading financiers are sounding increasingly alarmed about an AI bubble.
Ray Dalio, founder of Bridgewater Associates, has warned that AI stocks have become detached from financial fundamentals, pushing markets to precarious highs. Ken Griffin, the world’s richest hedge fund owner, said last week that AI is “almost certainly” fueling a market bubble that could be on the verge of a burst. Economists warn that Trump has overseen fiscal policy that would give the federal government fewer tools than it has had in the past to respond to a crisis.
Without it, growth would have slowed to a mere fraction of a percentage point, leaving the economy nearly stagnant and flirting with recession. The Nasdaq 100 has about 70% of its index weight in companies that depend on AI, from semiconductor manufacturers and Big Tech giants to cloud platforms and software providers. Anthropic, one of the top AI industry leaders, plans an initial public offering next month, while its chief rival, OpenAI, expects to go public next year.
Tariffs have raised the costs of imported chips, servers, networking equipment, metals and electrical components, and visa restrictions have tied the hands of industry leaders trying to secure the world’s best talent. Runaway federal deficits have driven long-term bond interest rates, adding pressure on AI firms already strapped with debt. Servaas Storm, an economist closely following the AI sector at the Delft University of Technology, said the industry is already facing severe financial headwinds that could precipitate a panic.
Extract — continue reading at the source.
