Axios: Revenge of the AI bubble

Posted on June 6, 2026 by michelleclarke2015
Revenge of the AI bubble
 
Animated illustration of a bubble with a sparkle shape inside it bouncing off the four sides of the frame.
Illustration: Brendan Lynch/Axios
 
The AI bubble debate has lurched through at least three frenzied phases in the span of three years, Axios’ Zachary Basu writes.

Suspicion: Historic sums of capital poured into AI before anyone proved it could reliably automate work. A violent market correction felt inevitable.

Mania: Claude Code and autonomous agents made the early skepticism look outdated, fueling a corporate scramble to embed AI everywhere and maximize usage.

Reckoning: Companies discovered that AI can be extraordinary when aimed precisely — and ruinously expensive when treated as a universal productivity machine.

Why it matters: The first phase doubted the technology. The second phase worshipped it. The third phase — currently gaining steam across Corporate America — questions whether AI’s immense power is worth the price.

🔎 Zoom in: The case against AI used to come from outsiders — Luddites, “doomers,” short sellers betting on a crash. Its newest skeptics are emerging from inside the boom.

Uber capped employee AI usage after burning through its annual Claude Code budget in four months. A top executive said the spending was getting “harder to justify,” with no clear link between token use and more useful consumer features.

Amazon shut down an internal token leaderboard after employees gamed it with throwaway tasks to climb the rankings. An Amazon executive told staff, “Please don’t use AI just for the sake of using AI.”

GitHub moved Copilot, the AI coding assistant used by millions of developers, to usage-based billing as part of its effort to create a “sustainable” business. The change shocked users who were suddenly confronted with the true cost of heavy AI usage.

Bain surveyed 951 large companies and found AI savings falling well below projections, even as most firms planned to spend more. “The technology worked. The value didn’t arrive,” the report concluded.

The intrigue: Even OpenAI CEO Sam Altman has acknowledged the new concerns, calling the question of whether AI spending will show up in revenue “the most fair criticism” of the moment.

🎯 Reality check: The companies sounding the alarm are the early adopters. Most of the economy is still at the starting line, while the pioneers are the ones absorbing the cost shocks, wasted tokens and employee backlash.

AI is already creating real value for chipmakers, model labs and some power users. The harder question is whether that value spreads across the companies paying to deploy it.

By the numbers: Wall Street got a fresh reminder yesterday of how much AI optimism is baked into markets.

The Nasdaq plummeted 4.2%, recording its worst day and worst week in more than a year. The Philadelphia Semiconductor Index plunged 10.3%, its worst day in more than six years.

One culprit was Broadcom: The chipmaker reported explosive AI growth, but failed to raise its longer-term AI revenue outlook — disappointing investors looking for signs that demand was still accelerating.

The bottom line: AI can make the right worker dramatically more productive, but those gains depend on knowing exactly where and how to apply it. The real bubble may have been the assumption that AI could be sprayed across companies, employees and workflows and reliably pay for itself.Share this story.
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About michelleclarke2015

Life event that changes all: Horse riding accident in Zimbabwe in 1993, a fractured skull et al including bipolar anxiety, chronic fatigue …. co-morbidities (Nietzche 'He who has the reason why can deal with any how' details my health history from 1993 to date). 17th 2017 August operation for breast cancer (no indications just an appointment came from BreastCheck through the Post). Trinity College Dublin Business Economics and Social Studies (but no degree) 1997-2003; UCD 1997/1998 night classes) essays, projects, writings. Trinity Horizon Programme 1997/98 (Centre for Women Studies Trinity College Dublin/St. Patrick's Foundation (Professor McKeon) EU Horizon funded: research study of 15 women (I was one of this group and it became the cornerstone of my journey to now 2017) over 9 mth period diagnosed with depression and their reintegration into society, with special emphasis on work, arts, further education; Notes from time at Trinity Horizon Project 1997/98; Articles written for Irishhealth.com 2003/2004; St Patricks Foundation monthly lecture notes for a specific period in time; Selection of Poetry including poems written by people I know; Quotations 1998-2017; other writings mainly with theme of social justice under the heading Citizen Journalism Ireland. Letters written to friends about life in Zimbabwe; Family history including Michael Comyn KC, my grandfather, my grandmother's family, the O'Donnellan ffrench Blake-Forsters; Moral wrong: An acrimonious divorce but the real injustice was the Catholic Church granting an annulment – you can read it and make your own judgment, I have mine. Topics I have written about include annual Brain Awareness week, Mashonaland Irish Associataion in Zimbabwe, Suicide (a life sentence to those left behind); Nostalgia: Tara Hill, Co. Meath.
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