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When OpenAI’s Sam Altman that the AI sector is in a bubble, .

Combined with the fact that , traders treated his remark as a broader warning. Although Altman was referring specifically to private startups rather than publicly traded giants, some appear to have interpreted it as an industry-wide assessment.

Tech billionaire his Nvidia holdings, for instance, while American investor Michael Burry (of fame) that companies like Palantir and Nvidia will drop in value.

What Altman’s comment really exposes is not only the fragility of specific firms but the deeper tendency Prussian philosopher Karl Marx predicted: the problem of surplus capital .

Marx’s theory of crisis

The future of AI is not in question. . What is in question is will flow once AI equities stop delivering the speculative returns they have promised over the past few years.

That question takes us directly back to driven by over-accumulation. Marx argued that an economy becomes unstable when the mass of accumulated capital can no longer be profitably reinvested.

An overproduction of capital, he explained, occurs . When surplus capital cannot profitably be absorbed through the production of goods, it is displaced into speculative outlets.

Tech investments mask economic weakness

Years of low interest rates and pandemic-era liquidity have . Much of that liquidity has entered the technology sector, concentrating in the so-called — Amazon, Alphabet, Meta, Apple, Microsoft, Nvidia and Tesla. Without these firms, .

This does not signal technological dynamism; it reflects capital concentrated in a narrow cluster of overvalued assets, functioning as that circulates without any grounding in real economic activity.

The consequence of this is that , which fuels economic stagnation and the cost-of-living crisis, both of which remain obscured by the .

How AI became the latest fix

Economic geographer David Harvey extends Marx’s insight through the idea of the “,” which refers to the way capital temporarily resolves stagnation by either .

generates surpluses of labour, productive capacity and money capital, which cannot be absorbed without loss. These surpluses are then redirected into long-term projects that defer crises into new spaces that open fresh possibilities for extraction.

The AI boom functions as both a temporal and a spatial fix. As a temporal fix, it offers investors claims on future profitability that may never arrive — what Marx called “.” This is wealth that shows up on balance sheets despite having little basis in the real economy rooted in the production of goods.

Spatially, the expansion of data centres, chip manufacturing sites and mineral extraction zones . These projects absorb capital while depending on new territories, new labour markets and new resource frontiers.

Yet as Altman’s ad����ֱ�� suggests, and as , these outlets are reaching their limits.

The costs of speculative capital

The consequences of over-accumulation extend far beyond firms and investors. They are experienced socially, not abstractly. Marx explained that an overproduction of capital corresponds to an overproduction of the means of production and necessities of life that .

In other words, prevents capital from being valorized at the pace it is being produced. , the economy resolves the imbalance by destroying the livelihoods of workers and households whose pensions are tied to equities.

History offers stark examples. . The .

Today, . Vanguard, for instance, has .

Speculation drives growth

The AI bubble is primarily a symptom of structural pressures rather than purely a technological event. In the early 20th century, Marxist economist Rosa Luxemburg questioned .

Her answer echoes Marx and Harvey: when productive outlets shrink, capital moves either outward or into speculation. The U.S. increasingly chooses the latter.

Corporate spending on AI infrastructure now contributes , an unprecedented inversion that shows how much growth is being driven by speculative investment rather than productive expansion.

This dynamic pulls down and when the speculative flow reverses, contraction will follow.

Tariffs tighten the squeeze on capital

Financial inflation has intensified as the traditional pressure valves that once allowed capital to move into new physical or geographic markets have narrowed.

have narrowed the global space available for relocation. Since capital cannot readily escape the structural pressures of the domestic economy, it increasingly turns to that postpone losses by rolling debt forward or inflating asset prices; mechanisms that ultimately heighten fragility when the reckoning comes.

U.S. Federal Reserve Chair Jerome Powell’s signals a renewed turn toward cheap credit. Lower borrowing costs let capital paper over losses and pump up fresh speculative cycles.

Marx captured this logic in his , where finance generates claims on future production

The result is that households are pushed to , effectively swapping a crisis of stagnation for a .

Bubbles and social risk

If the AI bubble bursts when governments have limited room to shift investment internationally and the economy is propped up by increasingly fragile credit, the consequences could be serious.

Capital will not disappear, but will instead concentrate in bond markets and credit instruments inflated by a U.S. central bank . This does not avert crisis; .

Bubbles are not accidents, but recurring mechanisms for absorbing surplus capital. If Trump’s protectionism ensures that spatial outlets continue to close and temporal fixes rely on ever riskier leverage, the system moves toward a cycle of asset inflation, collapse and renewed state intervention.

AI will survive, but the speculative bubble surrounding it is a sign of a deeper structural problem — the cost of which, when finally realized, .

, PhD Candidate, Political Economy,

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