Unlike past speculative bubbles, the current AI frenzy has near-universal, top-down support. The government wants domestic investment, tech giants are in a competitive spending arms race, and financial markets profit from the growth narrative. This rare alignment of interests from all major actors creates a powerful, self-reinforcing mandate for the bubble to continue expanding.

A reflexive loop governs markets: Big Tech's AI CapEx boosts NVIDIA's stock, which supports the entire market. If investors punish Big Tech for this spending, they may pull back, hitting NVIDIA. Since NVIDIA is now systemically important, a significant drop would likely force a Federal Reserve intervention to provide liquidity.

Unlike debt-laden startups, tech giants are funding AI buildouts with cash and can weather a downturn. They fully expect smaller, leveraged competitors to go bankrupt, creating a strategic opportunity to purchase their data center assets for pennies on the dollar, thereby reducing their own future capital expenditures.

OpenAI's CFO hinted at needing government guarantees for its massive data center build-out, sparking fears of an AI bubble and a "too big to fail" scenario. This reveals the immense financial risk and growing economic dependence the U.S. is developing on a few key AI labs.

The US economy is not broadly strong; its perceived strength is almost entirely driven by a massive, concentrated bet on AI. This singular focus props up markets and growth metrics, but it conceals widespread weakness in other sectors, creating a high-stakes, fragile economic situation.

Geopolitical competition with China has forced the U.S. government to treat AI development as a national security priority, similar to the Manhattan Project. This means the massive AI CapEx buildout will be implicitly backstopped to prevent an economic downturn, effectively turning the sector into a regulated utility.

The current market boom, largely driven by AI enthusiasm, provides critical political cover for the Trump administration. An AI market downturn would severely weaken his political standing. This creates an incentive for the administration to take extraordinary measures, like using government funds to backstop private AI companies, to prevent a collapse.

The massive capex spending on AI data centers is less about clear ROI and more about propping up the economy. Similar to how China built empty cities to fuel its GDP, tech giants are building vast digital infrastructure. This creates a bubble that keeps economic indicators positive and aligns incentives, even if the underlying business case is unproven.

Leaders from NVIDIA, OpenAI, and Microsoft are mutually dependent as customers, suppliers, and investors. This creates a powerful, self-reinforcing growth loop that props up the entire AI sector, making it look like a "white elephant gift-giving party" where everyone is invested in each other's success.