If Trump's War in Iran Spirals Into a Full-Blown Recession, It Could Crush the AI Industry and Spark a Catastrophic Poly

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Polycrisis

Far be it from tech writers to chart yield curves or forecast jobs data, but it doesn’t take a tenured econ professor to notice the sorry state of the financial world. Thanks to Trump’s disastrous invasion of Iran, gas has surged to $9 a gallon in some places, the Dow and Nasdaq have officially entered a correction, and Bloomberg TV anchors are actively weighing the possibility of a full-blown “recession” on the airwaves.

If they’re right, people across the US — indeed, the world — are in for plenty of financial pain. And though we’re fresh out of pity, the effects on the AI industry, which has long been speculated to be in a financial bubble, could be catastrophic.

Well before the US war on Iran kicked off in late February, there were already trillions of dollars stuffed into the AI industry — a bottomless pit swallowing every last penny it comes across. Even several years into the goldrush, AI still has yet to deliver any returns indicating that the world’s financiers might one day make their money back, let alone turn a profit.

As more and more capital is fed to the machine, the rest of the economy only becomes more dependent on its eventual success. Depending on which economist you ask, the US would have found itself in a functional recession back in the first half of 2025 had it not been for this rampant tech spending.

https://finance.yahoo.com/economy/articles/trump-war-iran-spirals-full-121500069.html