24/7 Wall St
A broad AI market unwind could erase 10 to 15 trillion dollars in valuation if major US technology stocks fall by one third to one half, pressuring both public and private AI companies including OpenAI.
A reset in utility-sector valuations may follow if data center expansion expectations collapse, affecting projected employment tied to large scale AI infrastructure builds.
Growing corporate experimentation with Chinese open source AI models such as DeepSeek introduces competitive risk to US firms if these tools deliver comparable performance at no cost.
If you’re thinking about retiring or know someone who is, there are three quick questions causing many Americans to realize they can retire earlier than expected. take 5 minutes to learn more here
Our conversation opened with the question of how severe an AI market reversal could become if confidence breaks. Lee and I began by trying to quantify the scale, and the numbers quickly escalated once we walked through the potential chain reaction.
I explained to Lee that a 10 to 15 trillion dollar drawdown is plausible if the largest US technology names were to lose one third to one half of their value. The impact would not end with public companies. Once valuations on firms such as OpenAI reset, private market marks would shift even harder as investors already view them as priced above comparable public peers.
From there the conversation turned to utilities. Their valuations have been elevated by expectations of long term revenue tied to data center expansions. If demand signals reverse, those stocks would reprice sharply. We also discussed how anticipated job creation attached to nationwide data center construction could evaporate. A range of fifty thousand to one hundred thousand jobs was referenced as vulnerable if AI infrastructure buildouts slow.
The most destabilizing factor in our discussion was not domestic. Companies are beginning to experiment with Chinese open source AI systems such as DeepSeek. These models are royalty free and modifiable, and some early experiences suggest performance is already close to OpenAI outputs. The implications broaden if claims about Chinese chip efficiency prove correct. If their hardware can deliver comparable results without the cost and power profile of Nvidia’s Blackwell line (NASDAQ: NVDA), the foundational assumptions behind US AI infrastructure demand change materially.
We also considered China’s willingness to deploy government capital directly to AI developers and chip designers. That level of national financial support could close any remaining gap between the two countries. If parity is reached, the US investment case for firms such as OpenAI, Nvidia, and Microsoft (NASDAQ: MSFT) loses significant structural support.
The trigger may come from a respected institution or a leading company acknowledging that AI revenue expectations are running ahead of reality. Doug suggested this could occur before June of next year, creating the conditions for a rapid and deep valuation reset across the sector.
[00:00:04] Doug Mcintyre: so Lee, there’s been a lot said about the AI train wreck and who’s shorting the stocks, and, uh, obviously a lot about this whole idea of round tripping of revenue. That’s starting to show up a lot. Yeah. Yeah, it is. Now, the thing is, is what is the magnitude of the train wreck if it happens, and I’m gonna give you a number and then tell you why.
[00:00:26] Doug Mcintyre: Uh,
[00:00:26] Lee Jackson: oh, I bet it’s gonna be a big number.
[00:00:28] Doug Mcintyre: The magnitude of the train wreck is between 10 and $15 trillion. And I’ll, I’ll tell you why. I think you’re right. The first thing is there has, there has to be a trigger. The trigger is probably going to be, someone is gonna come out, somebody of substance is gonna come out and say, this is not gonna make as much money as we think it will.
[00:00:54] Doug Mcintyre: It could be Mike. It’s somebody who’s spending a lot of money and has convinced shareholders that there’s a big return now. Or it could be Goldman Sachs, but it’s either one of the companies or it’s somebody where they’re the considered the smartest people in the room. Yeah. what happens? The easy, the easy thing to say that happens is all these stocks go down. So, you know, if the really big, uh, tech stocks go down by a third to a half, that all by itself is probably 5, 6, 7, $8 trillion. You’re then gonna have a resetting of valuation on things like open AI. We won’t see those at first because, and that data’s hidden from us.
[00:01:37] Doug Mcintyre: Yeah. The public companies drop that much. The private companies will probably drop more because at this point, um, PE people already think that they’re overvalued compared to the public companies. Absolutely. The, the next domino is the utilities. Because you’ve, now, you’ve, the, the, the value of the utilities has been jacked up by the idea that they’re going to be paid a lot of money because they’re gonna build the data centers.
[00:02:05] Doug Mcintyre: The next one is jobs. The anticipation, I think across, if you take all of the data centers, I would look at this as probably 50 to a hundred thousand jobs that are supposed to be completely no. Easy, easy. It has to be sure. Because of this and so good. That’s what happens. Now. There’s another trigger for this that people have not thought about much.
[00:02:30] Doug Mcintyre: Uh oh. There’s now conversations that the Chinese ai, open source AI is better than any of the US based AI. Software products. Uh oh.
[00:02:42] Lee Jackson: So that would, that would be the killer. That, that would be the kill shot for sure. So,
[00:02:47] Doug Mcintyre: so, so ultimately, and there’s now stuff there, it’s now starting to show up that companies are using the Chinese software because it’s, it’s royalty free.
[00:02:57] Doug Mcintyre: And it’s royalty free forever. And because it’s open source, they can make any changes they want to it absolutely. As long as they publish the code, they can make a change, whatever the, the other thing that Chinese are saying, which may be true. Maybe a lie is, is that their chip power does not have to be at a Blackwell level for them to get Blackwell open AI results.
[00:03:24] Doug Mcintyre: Okay? So the, the, the second Chinese claim is chip power. We know that the first one is true. Okay? Yes. There, there are a number of people, including Jensen won. Who say that the Chinese are nano, I think you used the term nanoseconds behind us. Right. In terms of AI development. So if they close that nanosecond gap and listen, the Chinese government, unlike the US government, we don’t write huge checks to get stuff done.
[00:03:54] Doug Mcintyre: The Chinese government is writing massive amounts of checks to companies, to chip developers to make this stuff happen. Yeah. If all that works and. And the, you have some places like Microsoft (NASDAQ: MSFT) announced. Look, as far as we’re concerned, we’re better off using the Chinese technology, all of the US investment, whether it’s Nvidia, open, ai, Microsoft, that all gets devalued by a huge amount.
[00:04:26] Doug Mcintyre: So, yep, I think this, this is what happens first case, and I think the best case. Chinese draw, even with the United States in AI development technology, they are basically giving away all the code, everything you and I would need, everything that Microsoft would need. Um. We now can use that absolutely free.
[00:04:50] Doug Mcintyre: Right. And they’ve also proven to us, the Chinese have proven to us that the, the capacity of the chips can be lower. You don’t need a Blackwell. Okay? Right. You need something less expensive than a Blackwell. And also something that’s probably more available. Right. Right, so now you have the perfect storm.
[00:05:11] Doug Mcintyre: Does not have to be a company coming out and saying it’s not working for them. True. The perfect storm would simply be that the Chinese are better off than the Americans.
[00:05:20] Lee Jackson: Well, that’s the rub for everything here because number one, they lie, they always lie. They always have lied, and they continue to lie.
[00:05:28] Lee Jackson: And so I think the, I think what Jensen was sort of like, yeah, they’re nanoseconds behind, but more than nanoseconds. But yeah, if they’re not lying, which they always do. It, it could be a catastrophe, but I mean, again, that’s, that’s probably something that’s further down the road than now. So I think you’re right though.
[00:05:49] Lee Jackson: I think your figure of 10 to 15 trillion would be pretty much right on the money.
[00:05:54] Doug Mcintyre: Yeah. Well, once again, we’re starting to hear from companies that they, they are starting to experiment with, um. With things like deep, deep seek and yeah, that, you know, they’re starting to see results that are very close to what you get from open AI.
[00:06:12] Doug Mcintyre: That’s it, right?
[00:06:14] Lee Jackson: Yeah. And, and again, the biggest, the biggest card to fall or to be played will be open AI because, you know, there’s been so much investment, so much investment. And what if there’s no payoff? Uh oh. Okay, so here you
[00:06:29] Doug Mcintyre: go. Scenario, this is it. Chinese AI draws equal to US AI. It’s open source.
[00:06:38] Doug Mcintyre: Anybody can use it. Okay? Yep. Yeah, and, and chip power is less, and that’s the $15 trillion devaluation of that. for all us. Anything US held open AI, chips, Microsoft, and I’m gonna say this, it happens before the middle of next year. Okay. Uh oh. I think right now there’s probably an eight month window before you get a $15 trillion.
[00:07:09] Doug Mcintyre: Drop in AI valuations. At least have that in public company. Well, tell you what,
[00:07:14] Lee Jackson: tell you what, uh, eight months from now is what? In the summer? Next year? Maybe August, July. No, before that.
[00:07:20] Doug Mcintyre: June. June. June. Is the June, okay. The end date. Okay. $15 trillion loss for US entities. All right. China trigger. Two things.
[00:07:32] Doug Mcintyre: 15 trillion China trigger. All right, so we’ve got that. Everybody, this is obviously recorded. We’re here on tape. So that’s it. I’m done. That’s my, okay. Everybody else has talked about this. That’s, I have two things for you, a dollar number and what triggers it. Okay? And let’s hope you’re incorrect. It depends on if I’m short.
[00:07:54] Doug Mcintyre: Yeah.
You may think retirement is about picking the best stocks or ETFs, but you’d be wrong. See even great investments can be a liability in retirement. The difference comes down to a simple: accumulation vs distribution. The difference is causing millions to rethink their plans.
The good news? After answering three quick questions many Americans are finding they can retire earlier than expected. If you’re thinking about retiring or know someone who is, take 5 minutes to learn more here.