Keen contends that the AI industry is currently burning capital at a rate far exceeding its actual utility. He characterizes the influx of investment into data centers as a speculative bubble comparable to the 19th-century railway mania. While firms have funneled over $410 billion into AI infrastructure this year alone, Keen argues that the rapid obsolescence of hardware—specifically GPUs that lose their competitive edge within three to four years—will force a cycle of reinvestment that many companies cannot afford. He suggests that many of these high-cost facilities may eventually be repurposed for non-technical uses, such as pickleball courts.

Unlike the 2008 crisis, which was fueled by a banking-led debt collapse, Keen anticipates this downturn will stem from a failure in the productive system. He predicts a patchwork of bankruptcies as companies find themselves unable to secure the inputs necessary to maintain their operations. Despite current market euphoria and record-breaking investment-grade bond issuances, Keen remains unmoved, suggesting that professional lenders are failing to account for the cyclical nature of private debt. He maintains that while government finances remain stable, the high level of private sector leverage—which he estimates remains at 85% of its 2008 peak—poses the greatest threat to the broader economy.