Better Offline - AI Is Worse Than The Dot Com Bubble: Part Three

Episode Date: January 29, 2026

In part three of this week’s Dot Com Bubble series, Ed Zitron explains how the economics of the AI bubble are much, much worse than the dot com bubble, with far fewer customers, way more debt, and a stock market with an unhealthy obsession with one stock - NVIDIA. Please support me by subscribing to my premium newsletter - here’s $10 off your first year of annual https://edzitronswheresyouredatghostio.outpost.pub/public/promo-subscription/84rt762qen - it features an in-depth version of my dot com bubble analysis here: https://www.wheresyoured.at/dot-com-bubble/ YOU CAN NOW BUY BETTER OFFLINE MERCH! Go to https://cottonbureau.com/people/better-offline and use code FREE99 for free shipping on orders of $99 or more. --- LINKS: https://www.tinyurl.com/betterofflinelinks Newsletter: https://www.wheresyoured.at/ Reddit: https://www.reddit.com/r/BetterOffline/  Discord: chat.wheresyoured.at Ed's Socials: https://twitter.com/edzitron https://www.instagram.com/edzitron https://bsky.app/profile/edzitron.com https://www.threads.net/@edzitron Email Me: [e-mail] omnystudio.com/listener for privacy information.

This is an IHeart podcast. Guaranteed Human. Run a business and not thinking about podcasting. Think again. More Americans listen to podcasts than adds supported streaming music from Spotify and Pandora. And as the number one podcaster, IHearts twice as large as the next two combined. Learn how podcasting can help your business. Call 844-844-I-Hart.

Another podcast from some SNL late-night comedy guy, not quite. Unhumor me with Robert Smygel and friends. Me and hilarious guests from Bob Odenkirk to David Letterman help make you. you funnier. This week, my guest, SNL's Mikey Day and head writer, Streeter Seidel, help an a cappella band with their between songs banter. Where does your group perform? We do some retirement homes. Those people are starving for banter. Listen to humor me with Robert Smigel and friends on the I-HeartRadio app, Apple Podcasts, or wherever you get your podcasts. Hey, everyone, it's Ryder Strong and Wilfredel from PodMeets World. And now the Podmeets

Twirled podcast. We're two men who were completely clueless to reality TV, and we're gearing up for the season finale of Survivor. I know we annoyed a lot of our listeners by our severe lack of survivor knowledge. That is the point of the show. I'm just going to remind you. Again, we are experts. Listen to Podmeets Twirl on the IHeart Radio app, Apple Podcasts, or wherever you get your podcasts. Your husband is not who you think he is.

Your body is not what you thought it was. Your identity is formed by a secret history. I'm Danny Shapiro. and these are just a few of the stunning stories I'll be exploring on the 14th season of Family Secrets. He kind of shoved me out of the way and said, move, and he went out the front door, and he jumped in a car and drove off,

and that was the last time I saw him. Listen to Season 14 of Family Secrets on the IHeartRadio app, Apple Podcasts, or wherever you get your podcasts. AllZO Media. Hello and welcome back to Better Offline. I'm your host, Ed Zittron. And this is the third.

third part of our series on one, the AI bubble is worse than the dot-com bubble, and today we're going to focus on a question, what actually burst the dot-com bubble? I should also be clear, there is no clear answer to any question like this. It's kind of a difficult thing to pull apart, but to start, we're going to need a comparison, and really, the invidia of the dot-com bubble would be the companies making and selling the fiber optic cables themselves and the associated hardware. In July 2000, Corning, which made and still makes far more than just optical cables, became the largest supplier of fiber optic wires and ended 2000 with $7.1 billion in revenue on a net income of $422 million. That's profit, baby. I know we're not used to that because we talk about AI all the time. By April 2001, Corning had revised its earnings estimates down three times, estimating revenue for the year to be between $7.8 billion and $8 billion.

Corning would eventually reveal net sales of $6.27 billion, with a loss of $5.498 billion for the year. They tried to grow a little too fast, they took out loans, they did the thing that everyone does in this kind of era. Fibro optic cable from Firm JDS Uniface, a conglomerate of different optical companies merged in 1999, would go on an acquisition sprit to dramatically expand its fiber optic offerings, eventually crowning itself, and this is from their own press release, the number one supplier of fiber optic components and revealing net earnings of $208 million in January 2001. In July 2001, it would announce a 35% decrease in sales quarter over quarter and a $44.8 billion decrease in the value of

companies it had acquired on top of a net loss of $477 million in the quarter. The stock would lose 99% of its value before an eventual rebrand and collapse. Okay, so now you know all that, crab. Let's get more specific. InVidia currently represents 7% of of the S&P 500 with a market capitalization of somewhere in the region of $4 trillion. In September 2000, JDE Unifase made up 0.7% and corning 0.62% of the S&P 500, when it total, and it is surprisingly difficult to find the exact number, around $11.7 trillion in total, with the highest weighted tech stocks being Cisco at 3.1%, Microsoft at 2.5%, Intel at 2.2%, Oracle at 1.75%, and EMC at 1.7%. Now, I've had some bright sparks when I've made this point online say, Ed, Ed, Ed,

what about Norto? Norto was at 1.4%. Luscent was at 0.88%. Wasn't the same thing. In simpler terms, the dot-com bubble didn't burst because of the market's obsession with one company, but an evenly distributed in an incredibly vague sense that the future was going to be online, and we all need to be involved. The world didn't wait with bated breath for every single earnings announcement from Corning or J.D. Uniface, nor did the health of the market depend on the continued ability to beat and raise revenues that were echelons higher than any other company in the market. Now, the problem with trying to find an exact comparison is that fiber optic cabling and GPUs are fundamentally different things, requiring amongst other things, massive optical network terminals

to actually turn big looms of cable into actual internet connections. And, well, I guess that you could compare that to a data center, but all of that stuff as big as it sounds, eh, no one near as big as a nai data center, nor was it as power intensive. Nor did they require. to build an entire fucking gas power station in the middle of Texas for it. The massive costs associated with the fibre buildout could make Nortel or Lucent, who each boasted record revenues in 2000 and then got the shit kicked out of them in 2001, the invidias of the dot-com bubble, if you really want, though I must insist that I think that we're going through our own thing.

We're at the beginning of history, not the end of it. In any case, they're the only real revenue comparison. Invidia's last quarterly revenue was $57 billion, with around 88% of that coming from its data center vertical, where it sells GPUs and the associated networking gear. In Lucent's case, the service provider network segment where embandled all its telecoms infrastructure like optical networking and switching, per its 2000-annual report, accounted for 78% of its $33,000 of its $33, accounted for $78,000, accounted for $7,000 of its service provider and carry a slight improvement from $1999 when it was $81,000. For Nortel, the Comp was its service provider and carrier segment, which made 82% of its $30 billion in revenue in 2000. It gets a little confusing at this point when you try and work out whether either of their net income as Lucent had to restate revenues in 2000, and Nortel had to do so for 2001, 2002 and 2003, thanks to creative accounting principles that, in Nortel's case, overstated revenue by nearly $2 billion, poverty's no effect, I guess.

Nevertheless, for 2000, Luson booked $1.2.29 billion. in net income and Nortel, well, okay, whoopsie doodle, they lost $2 billion. Yes, things are materially different in the AI bubble. NVIDIA posted $31.19 billion in net income in its last quarter, and if we are to believe take in Barron's marketing arm for NVIDIA, who acts like a fucking cheerleader, its largest customers are printing money to the point that there's simply no reason to worry. And in some ways they're right. Invidia prints money, it's incredibly profitable, has a virtual monopoly over the GPU's

behind the AI bubble, and it can effectively set prices at whatever it wants to. Similarly, the companies that are buying the most GPUs, Microsoft, Meta, Google and Amazon are all incredibly profitable themselves, which is really easy, if you don't think about it for more than a minute, to take to mean that Nvidia won't end up like Lucent, Nortel or any other dot-com casualty. Now, I need to be very clear about something. Just because NVIDIA isn't like Nortel or Lucent doesn't mean that things aren't bad, and just because some of the companies that buying these GPUs are,

are profitable doesn't mean that all of them are or won't die on their asses the moment the debt train stops showing up. Okay. So to really simplify the comparison here, the debt part of the dot-com bubble was about customers of telecommunications companies taking on debt and the telecommunications themselves taking on debt to service these contracts. These companies also did a number of aggressive acquisitions, many of which had to be marked down as have mentioned. Lucent, Nortel and many of the other Telecom's companies building out internet infrastructure would also loan money to their customers in a thing called vendor financing, leading them to have to write off hundreds of millions of dollars of debts when these customers collapsed. And in fact, Winstar, a company that did a massive deal with,

you may have remembered this with the Enron series, they ended up, their bankruptcy, people ended up suing loose and getting hundreds of millions of dollars. In fact, that's a great place to start to make the comparison. Nortale's largest deals included a multi-billion dollar contract to sell stuff to now famous fraudsters Worldcom, a bizarre $3 billion managed services deal with global IT firm computer scientists that involved 2,000 Nortel employees moving into the company, and a $1.4 billion, 10-year-long deal with England's Cable and Wireless Group to build and operate the cable and wireless internet backbone throughout Europe and North America that was quickly underwater. Lucent's deals included a $5 billion deal with Verizon and a $1.4 billion deal with other carriers

to supply tech to China Unicorn. Money was flowing, but it was all. all in these weird directions with people that couldn't necessarily afford it or that would lose everybody involved money. Another podcast from some SNL, late-night comedy guy, not quite. Unhumor me with Robert Smygel and friends, me and hilarious guests from Jim Gaffigan to Bob Odenkirk to David Letterman, help make you funnier. This week, my guest, SNL's Mikey Day and head writer, Streeter Seidel, help an Acapella band with their between songs banter. There's that worst singer in the group. The worst?

Yeah. Me. Is there anything to the idea that because you're from Harvard, you only got in because your parents made a huge donation. The group. The yard herds, right? That's the name. The Harvard yard, but they're open.

Do you have a name suggestion? We're open. Since you guys are middle-aged, one erection. Listen to humor me with Robert Smigel and Friends on the I-Heart Radio app, Apple Podcasts, or wherever you get your podcast. Huber me. I need some jokes to make me seem funny. Run a business and not thinking about podcasting, think again.

More Americans listen to podcasts than ads supported streaming music from Spotify and Pandora. And as the number one podcaster, IHearts twice as large as the next two combined. So whatever your customers listen to, they'll hear your message. Plus, only IHeart can extend your message to audiences across broadcast radio. Think podcasting can help your business. Think IHeart. Streaming, radio. and podcasting.

Let us show you at iHeartadvertising.com. That's iHeartadvertising.com. There are times when the mind becomes a difficult place to live. This is David Eagleman with the Inner Cosmos podcast, and for Mental Health Awareness Month, we're dedicating a series to understanding the mind when it struggles. I'm joined by doctors, researchers, and those with lived experience.

We'll talk with singer-songwriter Jewel about anxiety. I started living in my car, and then my car got stolen. I was shoplifting, I was having panic attacks, I was agoraphobic. And making it through hardship. To be present is a learned skill, and it's hard to be present.

We'll talk with John Nelson about clinical depression and the brain implant that saved his life. What I learned is that procedure made me happy because I'm disease-free. And we'll talk with leading experts like Judd Brewer about anxiety and John Hirschfield about obsessive-compulsive, of disorder and the science of how the brain can change.

This is a month of deeply personal and honest conversations about what happens when the brain goes off course and what we can do about it. Listen to Inner Cosmos on the IHeart Radio app, Apple Podcasts, or wherever you get your podcasts. Hey, everyone, it's Ryder Strong and Wilfredel from PodMeets World. And now the PodMeets Twirled podcast. We're two men who were completely clueless to reality TV, who now have covered Dancing with the Stars. Traders.

And we're gearing up for the season finale of Survivor. So yeah, now we're experts. I know we annoyed a lot of our listeners by our severe lack of survivor knowledge. That is the point of the show. I'm just going to remind you. I have watched some Survivor. I obviously haven't watched enough. Did people not like it?

Like what was just because we? Yeah. We'll be recapping the big conclusion in the 50th season from the final attempts at gameplay to the desperate pleas of finalists to a finalist to a, a bunch of ha-hoo, ha-hoo, ha-hoo, again, we are experts. So make sure to tune into PodMeets Twirled for all our Survivor 50 takes. Listen to PodMeets Twirled on the IHeart Radio app, Apple Podcasts, or wherever you get your podcasts. The comparison starts to drift when you talk about revenue centralization. Lucent, nor tell, another dot-com bubble telecoms companies had a variety of deals in the $100 million

to $300 million range and many more that were in the $20 million to $50 million range. 2000, AT&T accounted for 10% of Lucent's revenue and Verizon 13%. Nortel sadly didn't disclose its revenue breakdown by customer. Nortel was, however, calling's largest customer for optical cable. And fun fact, Lucent also made optical cable and was the second largest provider in the business. Despite what JD Uniface said, J.D. Unifes, you fucking lied to me. That one's just for Phil. Phil Broughton, you're listening to this, you're going to hear that, you're going to go,

I fucking hated JD Unifase or JDS Unifase. I learned about this company a month ago. I hate them. But that revenue centralisation is very important. InVIDIA's revenue is extremely centralized. In its last earnings, Nvidia noted that 61% of its revenue came from four unnamed companies

and for years, somewhere between 18% and 40% of its revenue has come from anywhere from between two and four companies, none of which it names. This is critically important because Nvidia represents, as I said, 7% of the value of the S&B 500, and the markets have an unhealthy relationship with its stock. Freaking out in August 2025, when year-over-year growth was only, I am not fucking with you, expected to be around 50% year-over-year.

People were freaking out. They dumped the stock for over a month. It was crazy. As a result, any stock panic caused by Nvidia will naturally drag down the entire market with it. The dot-com bubble was, as I've discussed, two things. The bullshit.com bubble from websites and the telecommunications bubble caused by massive overbuilds of fiber optic and internet services. When the bubble burst, it was caused by rising interest rates increasing the cost of borrowing, and the markets were

realizing that these unprofitable companies wouldn't survive long term, and then venture capital being depleted. And I realize it's tempting to claim we're in the same situation, but I must, I must insist. It's really quite different. At the time, venture capital was much, much smaller. For the following numbers, I'm going to give you the numbers adjusted for inflation, otherwise I'm going to be here all fucking day. U.S. venture capital invested $23 billion in 1997, $28.21 billion in 1998, $95.5 billion in 1999, and $197.71 billion in 2000 for a grand total of $34.4.5 billion. A mere $6.2 billion more than the $338.3.3 billion raised in 2025 alone in venture capital, with somewhere between 40 and 50% of that, around $168 billion, going into AI investments.

and in 2024 North American AI startups only raised around $106 billion. It's growing. It's happening more. The dot-com bubble bursts when the bullshit.com stocks died on their ass and the world realized that the magic of the internet was not a panacea that would fix every business model. And there was no magic moment where a company like Webvan or Pets.com would turn into this magical profitable beast from a horribly unprofitable business. Similarly, companies like Lucent Technologies stop being rewarded for doing dodgy circular deals with companies like Windstar, leading to the collapse of the telecommunications bubble that led to millions

of miles of dark fibre being sold dirt cheap in 2002. The oversupply of dark fibre was eventually seen as a positive, leading to an eventual surge in demand as billions of people came online toward the end of the 2000s. Now I know what you're thinking. Ed, isn't this exactly what's happening? Here, in the AI bubble, isn't this the same thing? We've got overvalued startups. We've got multiple, unprofitable, unsustainable AI companies promising to IPO. We've got overvalued tech stocks and we've got one of the largest infrastructure buildouts of all time. Tech companies are trading up ridiculous multiples of their earnings per share, but the multiples aren't as high. That's good, right? No, it isn't. It isn't. AI boosters and well-wishers are obsessed with making this comparison because

saying things worked out after the dot-com bubble allows them to rationalize doing stupid, destructive, and shitty things. Even if this was just like the dot-com bubble, would be absolutely fucking catastrophic. The NASDAQ dropped 78% from its peak in March 2000. This time, due to the incredible ignorance of both the private and public power brokers of the tech industry, I expect consequences that will range from horrifying to calamitous, depending almost entirely on how long the bubble takes to burst and how willing the SEC is to greenlight and IPO of OpenAI or Anthropic. I'm very worried. And tomorrow I'm going to finish up this series with a somewhat dark note, then we need to stop pretending that this will be a

smooth landing, or that anything will be left in its wake worth keeping. Thank you for listening to Better Offline. The editor and composer of the Better Offline theme song is Mattersowski. You can check out more of his music and audio projects at Mattisowski.com. You can email me at E-Z at Better Offline.com or visit Better Offline.com to find more podcast links and of course my newsletter. I also really recommend you go to chat. Where's Your Ed? dot at to visit the Discord

and go to R slash Better Offline to check out our Reddit. Thank you so much for listening. Better Offline is a production of Cool Zone Media. For more from Cool Zone Media, visit our website, coolzonemedia.com, or check us out on the IHeartRadio app,

Apple Podcasts, or wherever you get your podcast. Another podcast from some SNL, late-night comedy guide, not quite, unhumor me with Robert Smygel and friends, me and hilarious guests from Bob Odenkirk to David Letterman help make you funnier. This week, my guest, SNL's Mikey Day and head writer Streeter Seidel, help an a cappella band with their between songs banter.

Where does your group perform? We do some retirement homes. Those people are starving for banter. Listen to humor me with Robert Smigel and friends on the IHeart Radio app, Apple Podcasts, or wherever you get your podcasts. Hey, everyone. It's Ryder Strong and Wilfredel from PodMeets World. And now the Pod Meets Twirled podcast.

We're two men who were completely clueless to reality TV, and we're gearing up for the season finale of Survivor. I know we annoyed a lot of our listeners by our severe lack of survivor knowledge. That is the point of the show. I'm just going to remind you. Again, we are experts. Listen to Pod Meets Twirled on the IHeart Radio app, Apple Podcast, or wherever you get your podcasts.

Your husband is not who you think he is. Your body is not what you thought it was. Your identity is formed by a secret history. I'm Danny Shapiro, and these are just a few of the stunning stories I'll be exploring on the 14th season of Family Secrets. He kind of shoved me out of the way and said, move. And he went out the front door and he jumped in a car and drove off, and that was the last time I saw him. Listen to Season 14 of Family Secrets on the IHeart Radio app, Apple Podcasts, or wherever you get your podcasts.

Your 20s can be so exciting, but they can also be really overwhelming. confusing, and honestly, just kind of lonely. May is Mental Health Awareness Month, and the psychology of your 20s is breaking down the science behind the biggest roadblocks we face. I was six years into my career, the 80-hour weeks, and just the first one in, the last one out, and I ended up burning out.

There was a large chunk of my 20s that I, like, was just so wanting to, like, be out of that phase out of my skin, and I just, like, really regret not living in the present more. You don't need to have everything figured out right now. You just need to understand yourself, a little bit better. Listen to the psychology of your 20s on the IHeart radio app, Apple Podcasts, or wherever you get your podcasts. This is an IHeart podcast. Guaranteed human.