AI's business model has a hole.

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Today, we explore AI’s hole.

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The take: Geoffrey Hinton, the Nobel laureate who helped build modern AI, says tech's trillion-dollar bet has a fatal flaw. The business model assumes workers disappear as costs but remain as customers.

What happened: Speaking with Senator Bernie Sanders at Georgetown University last month, Hinton warned that Big Tech hasn't absorbed a fundamental problem: "If the workers don't get paid, there will be nobody to buy their products."

Why it matters: Microsoft, Amazon, Alphabet, and Meta plan to spend up to $400 billion on AI infrastructure in 2025; their returns depend on a society that can absorb mass displacement without political backlash, regulatory revolt, or a collapse in demand.

What to watch: Senator Mark Warner predicts college graduate unemployment could hit 25% within three years. If that happens before AI creates replacement jobs, the social contract snaps (and so does the customer base).

Hinton quit Google in 2023 to say this out loud. And he won the Nobel Prize. The people still inside aren't talking.

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Hinton's argument: AI will succeed, and that success will destroy the demand it depends on.

Every previous technology revolution displaced workers but created new categories of jobs.

Hinton says this time is different: "If AI gets as smart as people — or smarter — any job they might do can be done by AI."

The escape hatch closes.

The billionaires driving this are betting that wealth can be concentrated while consumption remains broad.

Hinton calls that a miscalculation. "They haven't really thought through the massive social disruption we'll get if we get very high unemployment."

Those infrastructure bets assume a stable society.

If displaced workers can't buy products, can't pay rent, can't service debt — the customer base shrinks.

The companies posting record profits today are hollowing out tomorrow's market.

Pro: AI will create jobs we can't yet imagine, just as the internet did. Transition periods are painful but temporary. Retraining programs can bridge the gap.

Con: Previous tech revolutions left humans with tasks machines couldn't do. If AI matches or exceeds human cognition across domains, the escape hatch disappears.

Our read: The bet is on society absorbing the fallout quietly—a political prediction (and tech companies are notoriously bad at politics).

[Primary] Senator Mark Warner (D-VA), CNBC CFO Council Summit, December 3, 2025

"I think that number could go to 25%. We will have a lot of parents pissed off. I don't think we have our arms around this."

Why it matters: Warner is working with Republican Senator Josh Hawley on a bill requiring companies to report AI-driven job losses. Current unemployment among recent college graduates is 9%. Warner's predicting it will nearly triple within three years. A political bomb.

CNBC

2025 layoffs: 1.1 million. Jobs created by AI so far: still waiting on the data.

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