David McWilliams, one of the world’s most widely read and influential economists, has delivered a blunt assessment of the artificial intelligence boom: it is going to crash. Not “might,” not “could”—but “undoubtedly will.” His view is not rooted in technological pessimism, nor in a belief that AI lacks transformative potential. Instead, McWilliams argues that the current frenzy around AI investment, valuations, and corporate promises is inflated beyond reasonable fundamentals.
In a recent analysis that has stirred debate in financial circles, McWilliams likened much of today’s AI-driven market enthusiasm to “digital lettuce”—something that looks fresh and valuable at first glance, but wilts quickly because it has no real underlying substance. Yet despite his conviction that a correction is inevitable, he also believes the United States—ironically the center of the AI boom—will emerge from the crash strong, largely because of its economic structure, innovation culture, and historical resilience to speculative cycles.
His argument raises big questions about what the AI economy really rests on—and what happens when the hype eventually collides with reality.
AI: Technological Revolution, Financial Bubble
McWilliams draws a distinction between AI as a breakthrough technology and the valuation mania surrounding it.
Why he believes an AI crash is inevitable:
- Too much capital chasing too few real use cases
Billions are pouring into companies with little revenue, unclear business models, and inflated promises. - GPU shortages creating an artificial sense of urgency
Massive infrastructure spending may not match long-term demand, reminiscent of the fiber-optic overbuild of the 1990s. - Corporate FOMO fueling reckless investment
Companies are buying AI tools not because they need them, but because they fear being left behind. - Expectations exceeding fundamental economics
Investors anticipate productivity gains that current AI systems cannot yet deliver at scale.
McWilliams argues that this mismatch between expectations and reality will eventually trigger a collapse—similar to the dot-com bust, the crypto unwind, and previous waves of speculative excess.
“Digital Lettuce”: A Metaphor for Ephemeral Value
Perhaps his most striking critique is the idea that much of the AI content flooding the internet is “digital lettuce”—information that spoils quickly, has low inherent value, and is easily replicated.
What he means by digital lettuce:
- AI-generated content that floods markets but lacks originality
- Cheap, bulk-produced outputs that dilute value rather than create it
- Overreliance on recycled or derivative data
- Business models that rely on volume rather than quality
McWilliams suggests that while AI models can generate staggering amounts of content, this content often cannot sustain long-term economic worth. It is abundant—almost infinitely so—and therefore tends to erode the value of the very industries it touches.
In his view, this abundance of “digital lettuce” makes AI commercially fragile despite its technological brilliance.
A Crash Doesn’t Mean Failure—Just a Reset
McWilliams is careful to stress that a crash does not imply that AI is useless. In fact, he believes the opposite: AI will ultimately be one of the defining technologies of the century.
But before it becomes a stable part of the economy, speculative excess must burn off.
His broader argument:
- AI is transformative
- AI investment is wildly inflated
- Speculative cycles must clear
- Real utility will emerge after the shakeout
This mirrors historical patterns:
- Railways transformed society but went through multiple financial crises.
- The internet changed the world but endured the dot-com bust.
- Crypto introduced breakthrough technologies but also collapsed under speculation.
AI, in McWilliams’ view, is following the same trajectory—boom, crash, stabilization.
Why the U.S. Will Be Fine
Despite predicting a crash in AI markets, McWilliams says the United States will emerge stronger, for three main reasons:
1. America Is Built to Absorb Financial Shocks
The U.S. has:
- Deep capital markets
- High liquidity
- Flexible labor systems
- Entrepreneurial culture
- A long history of surviving speculative manias
Booms and busts are not vulnerabilities—they are part of the American economic engine.
2. Innovation Ecosystem Is Unmatched
The U.S. leads in:
- Semiconductor design
- AI research
- Software engineering
- University and lab collaboration
- Venture capital networks
Even if many AI startups collapse, the nation’s innovation infrastructure remains intact.
3. The U.S. Benefits From Fail-Fast Dynamics
American economic culture encourages:
- Rapid experimentation
- High tolerance for failure
- Quick redeployment of capital
- Fast company turnover
A crash clears out weak players and frees up resources for stronger innovators.
McWilliams argues that this dynamism—absent in more rigid economies—ensures the U.S. will not only survive the AI correction but thrive in its aftermath.
What Happens After the Crash?
McWilliams predicts that once the bubble deflates:
- AI will become more efficient
- Real-world applications will replace hype-driven projects
- Value creation will shift from novelty to productivity
- Infrastructure investment will be right-sized
- The strongest AI firms will dominate globally
Just as Google, Amazon, and Facebook emerged stronger after the dot-com crash, the next generation of AI giants may rise from the ashes of today’s overstretched valuations.
He also foresees:
- Regulation finally catching up
- Less reliance on unverified training data
- Clearer market differentiation
- Economic value shifting toward enterprise AI
- Less “AI theatre” and more actual productivity gains
In short, the crash will separate the signal from the noise.
The Real Story: AI Isn’t the Problem—Human Behavior Is
At its core, McWilliams’ thesis is simple:
The technology is real.
The hype is not.
And markets cannot price exponential technologies without overshooting.
His critique focuses less on AI itself and more on the social, financial, and psychological dynamics around it:
- Herd behavior
- Tech evangelism
- Venture-capital exuberance
- Surplus liquidity chasing “future narratives”
AI is not the first victim of “innovation mania,” nor will it be the last.
Conclusion: A Crash May Be Painful—But It Won’t Stop AI, or the U.S.
David McWilliams’ warning is not a prophecy of technological doom. It’s a recognition that the world is once again confusing innovation with invincibility. The AI economy is inflated, uneven, and full of “digital lettuce,” but the underlying breakthroughs are too powerful to ignore.
The crash he predicts will not kill AI—it will cleanse it.
And when the dust settles, McWilliams believes the United States will be at the center of the next, more sustainable AI wave—just as it was after every major technological upheaval of the past century.
The real challenge will not be surviving the crash.
It will be building what comes after.
