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// The past doesn't repeat. But it does rhyme.
So now, I pray you, bear with me / As I tell how 2026 rhymes with 1873.
A lot of smart commentators are talking about an Artificial Intelligence bubble, driven by the Magnificent 7. In other words, the leading tech companies: Google, Amazon, Tesla, Nvidia, Alphabet, Apple, Meta, and Microsoft. These companies are betting the farm on A.I., and the thinking is that is what is keeping markets buoyant—for the time being. Chip-maker Nvidia may be the first company in history to be valued at $5 trillion. While data centers, which gobble power, land, and water, are being built across the US. the second Trump regime, unlike the Biden administration, isn't building much in the way of infrastructure. (Though if you're involved in the construction and conversion of warehouses to incarcerate brown people, these are good times.) When it comes to transport, they're certainly not supporting anything green and sustainable; one of the first things the Dept. of Transportation under Sean Duffy announced was that it was pulling federal funding to California's high-speed rail project.
Historic Fascist regimes, particularly Mussolini's, actually deployed a huge amount of manpower to build massive public works projects—draining actual swamps, building express electric train lines, and stadiums, many of which still stand. Apart from his proposed triumphal arch, Trump is merely redecorating. (And I suspect almost all of those decorations will be torn down a few months after he's gone.)
But there is a massive amount of investment in A.I. in the United States, and that's what's driving the current boom—or bubble, depending on how you look at things. The problem is, very little real revenue is being generated by the AI companies. In order for big companies like OpenAI, Meta, and Nvidia to break even on their investments in data centers and the like, they would have had to generate between $320 billion and $480 billion in revenue in 2025 alone. Unfortunately, subscriptions to Claude and ChatGPT don't come close. Where the tech companies do make some money—nowhere near enough—is renting out space in their data centers; that's how they can pay back the private equity firms they partner with. The private equity firms then repackage the data center leases into a bond people can sell. These are then combined into securities, which are divided into tranches, based on riskiness in terms of default.
You might be thinking of the Dot-Com Bubble of 2000, or the Sub-Prime Loan Crisis of 2008, in which tech-hype and convoluted financial engineering led to ruin for many, and some form of economic pain for just about everyone.
More importantly, at this point you might be wondering, what does this have to do with railways, which, after all, are the subject of this newsletter?
