Ed Zitron: Apple Will Watch the AI Bubble Burn
Apple Will 'Watch Everything Burn' When the AI Bubble Bursts
I argue that the Large Language Model industry is built on broken economics where subscription fees cannot cover token costs. While hyperscalers spend trillions on data centers funded by private credit, the actual enterprise demand is a mirage. As memory prices double and hardware costs rise, consumers are subsidizing a speculative buildout that will likely collapse, leaving Apple to watch the fire while others burn.
I fundamentally believe that Oracle gets killed by OpenAI because its massive bets on AI data centers require OpenAI to become the largest, most-profitable company in the world by 2030, or Oracle runs out of money.
- cmiles8
Apple looks better and better as every day passes. Other players going deeply into debt to build out massive infrastructure, VCs pumping up the model ecosystem that is now a total commodity.
Apple’s just been sitting there with solid cashflow waiting for all this to implode and then have on-device models with their own chips.
Apple will own the end device while the rest of the world is fighting over a pure commodity. It will burn hard and Apple will laugh all the way to the bank.
- jandrewrogers
That article is a bit incoherent.
I think it is pretty clear at this point that Apple has gone all-in on being the ideal edge silicon for AI. This leverages their core competencies, requires only modest investment, and will likely pay out no matter how the AI market eventually shakes out. They are in one of the only parts of the obvious future AI market where there isn't really a fight for greenfield turf with other big companies.
Staying in their lane is arguably the optimal business decision for Apple and they lose nothing by it.
- bananamogul
I don't know if Ed Zitron is right about allhis analysis, but it's nice to have an alternative, well-argued narrative to the gushing torrent of AI company propaganda.
- simonw
One big difference I have with Ed Zitron is I look at companies suddenly getting worried that they're spending millions of dollars on tokens and think "wow those AI vendors are going to make SO MUCH MONEY".
The best price for a product is what I call the "suck air through your teeth" price. You want your customers to suck air through their teeth... and then pay the full amount anyway.
Uber set their per-developer token allowance to $1500 per developer per tool. That suggests to me that they think they can get at least that much ROI out of AI tooling.
Selling $1500/employee/month plans to companies is a great business to be in.
- juancn
AI companies are a lot more like traditional manufacturing companies.
They can only subsidize you so far, because they may not be even be covering their variable cost at this point.
There's no software multiplier (build once — pay the cost once — sell many times).
Traditional SaaS is in a middle ground, there are operational costs associated with providing services, but per request they're usually negligible.
AI? I don't know, but it's not looking great from where I sit, unless there's a significant breakthrough in inference efficiency.
- sssilver
I will never understand the decision-making process that led to "Let's build an awesome VR headset that can't do gaming".
I would love to replace my monitor with Apple Vision Pro for programming and productivity. I would gladly pay $1000 for that.
But at $4000 it really needs to put me in a Microsoft Flight Simulator cockpit.
- sajithdilshan
This is quite a short sighted analysis. I do think the valuations are quite and they would need to meet the reality, but don’t think there’s gonna be a crash or we’d ever go back to pre-AI era. It would more or less would be a correction to valuations.
The future of AI would be on-device models which are as powerful as current frontier models and also I can imagine companies have their own deployments of inference of open weighted models for most of the use cases and use the frontier models for extremely niche or higher intelligence tasks.
As an example I use Claude code heavily for every day development and Opus 4.8 was already good enough for my use cases and never used Fable. Also note that I use AI as a tool to help with my work and I do not offload everything I have to do to AI in a single prompt
- epistasis
> If Anthropic and OpenAI believed customers would actually pay the real cost of AI tokens, they wouldn't have to give away 20 to 40 times the amount of tokens to subscribers.
One logical gap in the SemiAnalysis 40x cost of tokens versus subscription: I don't know anybody actually maxing out their account limits.
Sure, if you're somehow always running stuff, you can max it out, but subscriptions like this allow people to max sometimes (or always), while others never come close to the max.
What is the average usage of subscribers? Only Anthropic and OpenAI know, as far as I can tell.
- kiaansaraiya
There is a difference between "AI is overvalued" and "AI isn't valuable". We've seen entire industries deliver real tech progress while still going through harsh valuation resets.
- scrlk
> While people get some sort of benefit out of AI-generated code, these tools actually end up making them slower
Curious that he references a METR study from July 2025, before the leap in model and harness performance towards the end of 2025/early 2026.