Arthur Hayes said in his latest essay, "Situationship," that an AI bubble may eventually burst, but the fallout could also drive an expansion in global liquidity and act as a catalyst for Bitcoin’s next bull market.
Hayes says AI infrastructure is being priced like tech, but looks more like real estate
Hayes argues that the key to judging whether AI is in a bubble lies in how investors define AI infrastructure buildout. He said the market broadly treats multi-trillion-dollar AI capital expenditure as “technology investment” and assigns it high-growth valuations, even though its underlying character is closer to “real estate investment.”
In his view, current AI infrastructure spending is really going into the base assets that carry computing power, including data centers and power facilities, rather than into technology companies comparable to Apple.
Hayes wrote: “Financial institutions, private credit funds, and governments may mistake investing in AI data centers for investing in technology giants, when in reality it is more similar to investing in highly leveraged infrastructure projects.”
The core risk is credit expansion, not earnings disappointment
Hayes said the main reason an AI bubble could break is not that companies fail to deliver profits. He sees excessive credit expansion as the bigger problem. With support from the U.S. and Chinese governments, he said financial intermediaries may overbuild data centers, power facilities, and related supply chains, creating a credit-cycle risk closer to the 2008 financial crisis than to the earnings and valuation problems associated with the 2000 internet bubble.
Long-term value remains, and so does the macro angle for Bitcoin
Even so, Hayes said AI still holds substantial long-term value. He argued that the computing resources operating inside data centers will help advance “silicon-based life” and could have a far-reaching effect on human civilization comparable to the railway era.
On market impact, Hayes expects that if the AI bubble bursts, governments and central banks may answer with more aggressive monetary easing and large-scale money printing to repair the financial system. In that scenario, risk assets could enter another upswing, which he said would ultimately benefit Bitcoin.
He added that the central variable in the current AI cycle is whether capital markets have mispriced AI infrastructure, and that this judgment will shape the market’s direction from here.