For months, financial analysts have been "picking the daisy" about whether Artificial Intelligence will burst like a bubble or not.
So far, one of the main risks to the bursting of the Artificial Intelligence bubble has been the so-called "circular financing." Mythical sums of money are changing hands among Big Tech giants, boosting stock market indices and, by extension, the economy.
Only, the merry-go-round of mutual funding is less reminiscent of traditional investments and more of a high-stakes game, with the same players passing the “hot potato” to each other. One AI company supplies billions of dollars in capital to another, and the other in turn funnels its own funds into the original investor’s projects: chips, cloud service contracts, and new data centers.
It is a “loop” that accelerates innovation, guaranteeing super-returns, but blurs the lines between real demand and artificial growth.
Shh…boing or bang and down?
A new Bloomberg analysis warns that “the artificial intelligence bubble is about to burst.” The article is written by Shannon O'Neill, vice president and director of studies at the Council on Foreign Relations – CFR, the American think tank that publishes the magazine Foreign Affairs.
But unlike other techno-skeptics, the CFR analyst fears not so much circular finance or competition from China as the consequences of Trump's tariff and anti-immigration policies.
President Trump has promised to do “whatever it takes” to develop artificial intelligence, in any way he can. He is giving up state land to become data centers and power plants. He is speeding up permitting and environmental inspections. He is buying shares in Intel, the microprocessor giant, in promising startups and in companies that produce critical minerals – such as rare earths used to make semiconductors.
It has also exempted imports of semiconductors and other components, which constitute 1/3 of the cost of Data Centers, from duties. However, duties on the import of construction materials remain.
Electrical short circuit
With all this "pushing," AI companies are investing hundreds of billions of dollars in supersized Data Centers to upgrade their networks and systems. At the same time, their electricity requirements are also increasing.
McKinsey predicts that new data centers coming online between now and 2030 will consume more than 600 terawatt hours per year, enough energy to power nearly 60 million households.
As the demand for electricity increases, so does the cost of building electrical and other infrastructure.
Punitive 50% tariffs on steel, aluminum, and copper cables disproportionately hit power transformers, grids, and transmission towers.
The electricity storage batteries used by utilities almost all come from China and are subject to even higher tariffs.
The "broom" on immigrants sabotages Artificial Intelligence
Trump's immigration policy also acts as an inhibitor to the development of Artificial Intelligence.
CEOs of big tech companies complain that they can't bring in skilled scientists from abroad. One reason is that special-purpose visas are much more difficult to obtain and cost more than in the recent past.
The picture is even worse in construction, where the foundations of investments in Artificial Intelligence are literally laid – through Data Centers.
25% of construction workers are foreign-born, and one in seven are undocumented. With closed borders, ICE raids, and intensified deportations, construction workers are becoming increasingly difficult to find.
Over 80% of contractors have vacant positions, which are increasingly difficult to fill. The lack of workers is not only slowing down the construction of Data Centers, but also construction activity in general, which has decreased by 10% in residential and 13% in commercial-industrial properties.
Billions in investments don't "go to waste"
For AI and Data Center companies, hundreds of billions of dollars in capital expenditures are not yielding the expected benefits.
This trend will worsen in 2026. Ahead of the November 2026 midterm elections, the White House is under pressure to take action on the cost of living and the lack of affordable housing.
The U.S. Commerce Secretary is talking to contractors about what they can do about housing. A surge in residential construction will intensify competition for an already small pool of skilled workers.
When will Artificial Intelligence make its money back?
The success or failure of AI will depend on whether it starts to prove the value of the huge investments, the CEPR analyst emphasizes. In other words, she confirms that despite the climate of enthusiasm, for now investors are "getting in" and money is simply being recycled. But even if AI manages to transform one sector of the economy after another, who will win and when is a function of time and cost.
For now, the Trump administration's policies on tariffs and immigration are not helping American AI companies, in either regard.
Although the press releases will range from very select to rare, I said I'd pass...because sometimes the editors hide.
