The article begins by noting that many AI companies are heavily reliant on borrowing and equity dilution to fuel their growth, despite having little profitability. Lockett argues that this dependency on capital makes these firms particularly vulnerable to a potential collapse in investor enthusiasm. In contrast, Musk’s core business, Tesla, Inc., is financed through its car sales rather than speculative AI investments, putting it in a seemingly stronger position if the “AI bubble” bursts.
However, the author doesn’t assume Musk is immune to risk. He suggests that a broad debt crisis—stemming from defaults of AI-linked bonds and over-leveraged firms—could cause a contraction in available capital across the economy. In such a scenario, even companies that were previously stable may face headwinds. The article assumes that when the bubble collapses, it could resemble the dot-com bust or the 2008 financial crisis in terms of scale and impact.
The article further posits that Musk might benefit from such a correction: as AI startups falter and competition retreats, Tesla (and Musk’s other ventures) could emerge with fewer competitors and potentially pick up talent, assets or market share at a discount. But this advantage comes with caveats: Tesla’s own heavy investment in AI (for autonomous driving, robotics, etc.) means it is not entirely detached from the fortunes of the AI sector. The author points out that Musk’s empire still has exposure to the risks he discusses.
In conclusion, Lockett paints a nuanced picture: while Musk is arguably better placed than many pure-AI companies to weather a bubble burst, his success is not guaranteed. The convergence of global debt, investor sentiment, and AI’s real‐world returns will all influence the outcome. If the bubble pops and capital dries up, even the most diversified and resilient tech-heavy empire could feel the effects. Musk might gain on the margin, but the broader environment will matter.
