Latest / Felix Nikolas Prehn's Podcast / Felix Prehn - Are we in an AI Bubble? (These 5 Warning Signs Will Tell You) + Stock Market News 17 October 2025

Transcript

Felix Prehn - Are we in an AI Bubble? (These 5 Warning Signs Will Tell You) + Stock Market News 17 October 2025 · Felix Nikolas Prehn's Podcast

• 0:00
  SPEAKER_00: While NVIDIA just said a$4.5 trillion market cap and AI stocks are pushing the SP 500 to dot com bubble levels, there is an$800 billion debt bomb ticking in the shadows that almost nobody is talking about.
• 0:17
  SPEAKER_00: And when it explodes, it could take your entire portfolio with it.
• 0:22
  SPEAKER_00: Right now, the companies that are supposed to fund the entire AI infrastructure boom are quietly, well, imploding.
• 0:31
  SPEAKER_00: Blackstone's private credit fund just hit its lowest level in over two years.
• 0:37
  SPEAKER_00: Blue, our capital, is falling off a cliff, and the math behind what's happening is absolutely stunning.
• 0:44
  SPEAKER_00: If you own tech stocks, index funds, or anything tied to the AI boom, you need to understand the circular financing scheme that Wall Street is using to prop up valuations.
• 0:56
  SPEAKER_00: Because history shows us exactly what happens when vendor financing circles collapse and it's not pretty.
• 1:04
  SPEAKER_00: My promise to you is that by the end of this video, you'll understand the massive financing gap that nobody can fill while the world's biggest private credit firms are crashing while AI stocks soar.
• 1:15
  SPEAKER_00: And most importantly, how to position your portfolio before this all unravels.
• 1:22
  SPEAKER_00: My name is Felix Preen.
• 1:23
  SPEAKER_00: I'm an ex-investment banker who's seen how Port Street really works from the inside.
• 1:28
  SPEAKER_00: I've watched these schemes unfold before I started investing during the dot-com bubble.
• 1:33
  SPEAKER_00: That didn't turn out too well.
• 1:35
  SPEAKER_00: The pattern is always the same.
• 1:38
  SPEAKER_00: I'm also the founder of the GOAT Academy, where we have over 20,000 students, and the co-founder of TradeVision.io, where we give you guys access to the news and the data that Wall Street has access to.
• 1:50
  SPEAKER_00: But right now, Wall Street is running one of the most elaborate financing circles I've ever seen.
• 1:56
  SPEAKER_00: And look, this is not theoretical.
• 1:58
  SPEAKER_00: We're talking about companies like Oracle announcing$300 billion deals they literally cannot afford to pay.
• 2:06
  SPEAKER_00: And the private credit industry that's supposed to bridge an 800 billion, maybe even a 1.5 trillion funding gap, well, it's actually collapsing.
• 2:18
  SPEAKER_00: So it's the kind of situation where retail investors get absolutely destroyed if they don't see it coming.
• 2:24
  SPEAKER_00: So let's break down exactly what's happening because the math is just staggering.
• 2:28
  SPEAKER_00: What's actually happening in the AI industry right now is this.
• 2:31
  SPEAKER_00: And I want you to really understand this, write this down so it's critical.
• 2:35
  SPEAKER_00: Let's say OpenAI needs computing power to train its AI models.
• 2:40
  SPEAKER_00: They go to Oracle and they sign a massive$300 billion deal over five years.
• 2:45
  SPEAKER_00: Sounds great, right?
• 2:46
  SPEAKER_00: Oracle's stock jumped 43% when they announced it.
• 2:51
  SPEAKER_00: But here's the problem.
• 2:52
  SPEAKER_00: Oracle doesn't actually have$300 billion sitting around.
• 2:57
  SPEAKER_00: They have a debt to equity ratio of 500%, so they have five times more debt than equity.
• 3:04
  SPEAKER_00: Compared, let's just say Amazon, it's 50%, Microsoft's 30%, Meta and Google are even lower.
• 3:09
  SPEAKER_00: So what does Oracle do?
• 3:11
  SPEAKER_00: They go to Nvidia and they say, we need$300 billion worth of chips and infrastructure.
• 3:17
  SPEAKER_00: Nvidia sells them the equipment, then NVIDIA turns around and invests or provides then the financing to guess to, you guessed it, OpenAI and other AI companies.
• 3:31
  SPEAKER_00: It's money going around in a circle.
• 3:33
  SPEAKER_00: OpenAI sends money to Oracle.
• 3:36
  SPEAKER_00: Oracle sends money to NVIDIA, NVIDIA sends the money back to OpenAI.
• 3:40
  SPEAKER_00: JP Morgan calls it the infinite money glitch.
• 3:43
  SPEAKER_00: Goldman Sachsis, head of Delta One Trading, calls it an increasingly grotesque vendor financing circle jerk.
• 3:52
  SPEAKER_00: Now why is this different from normal business?
• 3:55
  SPEAKER_00: Vendor financing isn't inherently bad.
• 3:58
  SPEAKER_00: If you're a profitable company using your cash flow to help customers buy your products, it's not actually a problem.
• 4:05
  SPEAKER_00: Apple does this with upgrade programs, car companies do it all the time.
• 4:09
  SPEAKER_00: But here is what makes this different and dangerous.
• 4:12
  SPEAKER_00: These companies don't have the cash from operations.
• 4:15
  SPEAKER_00: Oracle's cloud infrastructure revenue is projected to go from 18 billion to 144 billion in 2030.
• 4:23
  SPEAKER_00: That's sort of this hockey stick projection that requires everything to go perfectly right for four straight years, no recession, no competition, and no problems.
• 4:35
  SPEAKER_00: They're funding it with massive new debt.
• 4:37
  SPEAKER_00: And according to analyst estimates, Oracle may need to borrow 25 billion per year, that's 100 billion over the next four years, just to build the data centers for this one OpenAI deal.
• 4:50
  SPEAKER_00: And the customer, well, he doesn't have the money either.
• 4:53
  SPEAKER_00: OpenAI's annual recurring revenue is about 10 billion a year.
• 4:58
  SPEAKER_00: Their signing deals worth 300 billion over five years, which is 60 billion per year.
• 5:05
  SPEAKER_00: They'd need to 6x their entire revenue, and for that to be pure profit to pay Oracle.
• 5:12
  SPEAKER_00: And that's obviously before paying for anything else.
• 5:15
  SPEAKER_00: Now, before we go deeper into how this all is a problem, what we do about it, I want you to literally learn the one secret that Wall Street doesn't really want to know.
• 5:26
  SPEAKER_00: And that is not how to find the greatest stock in the world.
• 5:28
  SPEAKER_00: No, it is how to keep your profits.
• 5:30
  SPEAKER_00: When do you sell?
• 5:32
  SPEAKER_00: When you're in a bull market like this, at some point you've got to take profits on your stocks.
• 5:37
  SPEAKER_00: And it's not some random percentage, it's a little bit more elaborate than that.
• 5:41
  SPEAKER_00: And I'm going to teach you that if you wish to learn it.
• 5:43
  SPEAKER_00: And it's going to be next week, it's going to be live at feelixfriends.org slash training.
• 5:48
  SPEAKER_00: And you can get your pause on that free training live.
• 5:51
  SPEAKER_00: It there'll be no replace.
• 5:52
  SPEAKER_00: You've got to show up.
• 5:54
  SPEAKER_00: And it's about understanding how Wall Street decides when to sell.
• 5:58
  SPEAKER_00: Because the worst thing you can do is have this big, beautiful paper profit in your portfolio and then watch it collapse as the market might tank.
• 6:06
  SPEAKER_00: So that'll never happen to you again if you join me for free at feelixfriends.org slash training.
• 6:11
  SPEAKER_00: So then he give me the numbers.
• 6:13
  SPEAKER_00: And I want you to really let this sink in.
• 6:15
  SPEAKER_00: According to Morgan Stanley, the total global data center spend through to 2028 will be about 2.9 trillion.
• 6:24
  SPEAKER_00: And they break this down.
• 6:26
  SPEAKER_00: 1.6 trillion on hardware, you know, chips and servers, 1.3 trillion on building the infrastructure around it.
• 6:34
  SPEAKER_00: So we're talking about an investment need of over 900 billion every single year.
• 6:41
  SPEAKER_00: Now to give you an idea of comparison point here, the entire SP 500, all the 500 companies combined, spend about 900 billion in all of their investments on everything, not just AI.
• 6:56
  SPEAKER_00: So we're basically saying the AI infrastructure alone will require the entire capital spend in one year, as every major corporation in America spends on everything combined.
• 7:09
  SPEAKER_00: That's kind of staggering.
• 7:10
  SPEAKER_00: So where is the money going to come from?
• 7:12
  SPEAKER_00: Well, let's break down the sources.
• 7:14
  SPEAKER_00: You've got cash flow from your Microsoft's and Amazons and so on.
• 7:18
  SPEAKER_00: The big tech companies, Meta, Apple, Amazon, Microsoft, they can self-fund about 1.4 trillion from their cash flow over the next four years.
• 7:30
  SPEAKER_00: And then you have debt issuance.
• 7:32
  SPEAKER_00: We're looking at about$200 billion of debt that these tech companies are going to issue in regular bonds and sell to you and me and other people out there.
• 7:41
  SPEAKER_00: Then there is another market called the Sue Securitized Market, where they can get about another 150 billion asset-backed securities and commercial mortgages essentially tied to those data centers.
• 7:53
  SPEAKER_00: It's like a mortgage on a data center.
• 7:55
  SPEAKER_00: Then you've got to go one step lower into the cockroach area.
• 7:59
  SPEAKER_00: Sorry, did I say that out loud?
• 8:01
  SPEAKER_00: The private equity of the venture capital funds and sovereign money too.
• 8:06
  SPEAKER_00: Nothing unclean about that either.
• 8:08
  SPEAKER_00: $350 billion, you could possibly get there.
• 8:10
  SPEAKER_00: This is based on invest in bankers' research.
• 8:13
  SPEAKER_00: So the gap is still$800 billion.
• 8:17
  SPEAKER_00: So even after adding up all of those sources, we're still$800 billion short.
• 8:22
  SPEAKER_00: Some estimates say it's as much as a trillion and a half.
• 8:25
  SPEAKER_00: That's missing.
• 8:26
  SPEAKER_00: Depends a little bit on how much you're willing to fudge your numbers.
• 8:30
  SPEAKER_00: Now, private credit was supposed to be the hero that fills the gap.
• 8:34
  SPEAKER_00: Wall Street plan was to fill it with private credit.
• 8:38
  SPEAKER_00: These are firms like Blackstone, Blue Owl, Apollo, Ares.
• 8:43
  SPEAKER_00: They raise money from pension funds, insurance companies, wealthy individuals, and then they lend it out at higher interest rates to companies that can't access traditional financing.
• 8:55
  SPEAKER_00: The private credit industry has grown massively over the past decade.
• 8:59
  SPEAKER_00: They were supposed to be the solution, the white knight who would fund this AI infrastructure bonanza and earn nice returns for their investors.
• 9:08
  SPEAKER_00: Here's the problem nobody's talking about.
• 9:11
  SPEAKER_00: While NVIDIA hit a record market cap, and AI stocks continue to soar, something very strange is happening in private credit.
• 9:19
  SPEAKER_00: Blackstone Secured Lending Fund, ticker symbol BXSL, well, it's tanking.
• 9:26
  SPEAKER_00: It's massively underperforming the SP.
• 9:29
  SPEAKER_00: It's at the lowest levels in over two years.
• 9:31
  SPEAKER_00: Blue Hour Capital, another one of those big private lenders, ticker symbol OWL.
• 9:36
  SPEAKER_00: Well, again, they're falling off a cliff while tech stocks are soaring.
• 9:41
  SPEAKER_00: And that's your canary and the coal mine.
• 9:43
  SPEAKER_00: These are the companies that are supposed to provide that extra$800 billion in funding, and the market is telling you they're in serious trouble.
• 9:52
  SPEAKER_00: Why are they collapsing?
• 9:53
  SPEAKER_00: Well, there are several problems hitting private credit all at once.
• 9:57
  SPEAKER_00: One, consumer credit exposure.
• 9:59
  SPEAKER_00: So private credit firms are just lending, aren't just lending for AI infrastructure, they're heavily exposed to consumer credit.
• 10:07
  SPEAKER_00: Buy now, pay never, sorry, later, you know, auto loans, personal loans, and guess what?
• 10:13
  SPEAKER_00: The non-performing loans are skyrocketing because the low-income crowd, they got crushed by inflation.
• 10:19
  SPEAKER_00: And now they're gonna start repaying student loans again as well.
• 10:22
  SPEAKER_00: So they're really screwed.
• 10:23
  SPEAKER_00: And then number two, there's a little problem.
• 10:26
  SPEAKER_00: It's called a$5 trillion problem.
• 10:28
  SPEAKER_00: According to the Financial Review, private equity is sitting on$5 trillion of existential dread.
• 10:34
  SPEAKER_00: A staggering 18,000 private capital funds are trying to raise trillions of dollars simultaneously.
• 10:41
  SPEAKER_00: And when anyone's trying to raise money at the same time, it's usually a sign something is about to break.
• 10:49
  SPEAKER_00: The problem is that they promised very high interest rates, high returns from high interest loans.
• 10:56
  SPEAKER_00: And they're not materializing as expected because default rates are rising.
• 11:01
  SPEAKER_00: Refinancing is becoming difficult with higher interest rates, and the whole model is just under stress.
• 11:06
  SPEAKER_00: So what does it mean for you?
• 11:08
  SPEAKER_00: Well, if private credit can't fill that 800 billion gap, one of three things has to happen.
• 11:14
  SPEAKER_00: Option A, AI spending gets cut dramatically, companies slash their projections, data centers don't get built, and the entire AI infrastructure boom slows down.
• 11:26
  SPEAKER_00: What happens to Nvidia's 4 trillion market cap if spending drops like 30 to 40%?
• 11:31
  SPEAKER_00: Well, you do the maths.
• 11:33
  SPEAKER_00: Option B, hyperscalers, so your Microsoft's, your Amazons, they take on massive debt themselves.
• 11:40
  SPEAKER_00: So they start leveraging up their balance sheet like Oracle did.
• 11:44
  SPEAKER_00: This would be unprecedented and risky because remember, Oracle has like 500% debt to equity ratio.
• 11:51
  SPEAKER_00: The hyperscaler goes down that route.
• 11:53
  SPEAKER_00: What happens when the next recession hits?
• 11:56
  SPEAKER_00: Problematic for the Max 7.
• 11:58
  SPEAKER_00: The third option, the government steps in, massive government subsidies and guarantees to keep the AI boom going.
• 12:06
  SPEAKER_00: And this could work, but it creates a huge moral hazard for taxpayers and risk for taxpayers.
• 12:12
  SPEAKER_00: So none of these options are really very bullish for your portfolio in the traditional sense.
• 12:17
  SPEAKER_00: Option A crashes tech stocks.
• 12:19
  SPEAKER_00: Option B creates massive leverage risk.
• 12:22
  SPEAKER_00: And option C might keep things inflated for longer, but it creates a huge systematic risk.
• 12:28
  SPEAKER_00: But we've seen this movie before.
• 12:30
  SPEAKER_00: Go back to 1998.
• 12:32
  SPEAKER_00: The internet was revolutionizing everything.
• 12:34
  SPEAKER_00: Companies like Global Crossing were building massive fiber optic networks across the world.
• 12:39
  SPEAKER_00: The stocks soared.
• 12:40
  SPEAKER_00: Everyone knew the internet was the future.
• 12:43
  SPEAKER_00: And you know what?
• 12:44
  SPEAKER_00: They were right.
• 12:45
  SPEAKER_00: The internet was the future.
• 12:47
  SPEAKER_00: But Global Crossing still went bankrupt in 2002.
• 12:50
  SPEAKER_00: Why?
• 12:51
  SPEAKER_00: Because they built too much, too fast, funded with too much debt before the revenue could possibly catch up.
• 12:58
  SPEAKER_00: The infrastructure was real, the technology was real, the potential was real, but the financing, well, they couldn't afford it.
• 13:05
  SPEAKER_00: The capital cycle always turns.
• 13:09
  SPEAKER_00: And here's what's happening in these infrastructure build-outs.
• 13:12
  SPEAKER_00: Stage one, you get new technology, emerges revolutionary potential technology.
• 13:19
  SPEAKER_00: Early investors make huge returns.
• 13:21
  SPEAKER_00: That was 2022-2023 for AI.
• 13:24
  SPEAKER_00: Stage two, the money fluts.
• 13:26
  SPEAKER_00: Returns look so good, everybody pouts, and spending accelerates, valuation, so that's right now, by the way.
• 13:33
  SPEAKER_00: Stage three, the competition intensifies.
• 13:36
  SPEAKER_00: More players enter.
• 13:37
  SPEAKER_00: Everybody's building the same thing, and you get overcapacity.
• 13:41
  SPEAKER_00: We're getting that, right?
• 13:43
  SPEAKER_00: Remember DeepSeek?
• 13:44
  SPEAKER_00: And then you get a stage four.
• 13:46
  SPEAKER_00: The promised returns, well, they collapse because we have too much supply, not enough demand, prices fall, debt comes due, and the weakest players fail.
• 13:57
  SPEAKER_00: That's the next step.
• 13:58
  SPEAKER_00: Stage five, you get consolidation.
• 14:01
  SPEAKER_00: Only the strongest survive.
• 14:02
  SPEAKER_00: Debt gets restructured or written off.
• 14:05
  SPEAKER_00: Investors take massive losses, and eventually the technology succeeds, but most investors lose money.
• 14:11
  SPEAKER_00: The dot-com parallel is striking.
• 14:13
  SPEAKER_00: Check out these comparisons then.
• 14:15
  SPEAKER_00: The internet changes everything.
• 14:17
  SPEAKER_00: Valuations hit record highs, companies are spending billions on infrastructure, vendor financing propped up the entire ecosystem, and everybody said it's different this time.
• 14:29
  SPEAKER_00: Bubble peaked in March 2000.
• 14:31
  SPEAKER_00: Where are we right now?
• 14:32
  SPEAKER_00: What are the headlines?
• 14:33
  SPEAKER_00: AI changes everything.
• 14:35
  SPEAKER_00: The SP valuations are near.com levels, and companies are planning to spend almost$3 trillion on infrastructure.
• 14:42
  SPEAKER_00: Vendor financing is propping up the ecosystem.
• 14:44
  SPEAKER_00: Everybody is saying it's different this time.
• 14:47
  SPEAKER_00: So are we near the peak?
• 14:48
  SPEAKER_00: Well, according to Deutsche Bank, web searches for AI bubble peaked in August this year and then plummeted.
• 14:56
  SPEAKER_00: And you know what happened around the dot-com bubble?
• 14:58
  SPEAKER_00: Concerns peaked in late 1998, well before the actual crash, which was in 2000.
• 15:04
  SPEAKER_00: Bloomberg put a story out in late 1998, quoting investment managers saying this is a serious bubble.
• 15:12
  SPEAKER_00: Nastack was at 2000.
• 15:13
  SPEAKER_00: It went to 5,000 16 months later, and then it collapsed.
• 15:19
  SPEAKER_00: So when everybody stops talking about the bubble, that's often when you are closest to the top.
• 15:25
  SPEAKER_00: Right now, concerns about the AIBO bubble have dropped to just 15% of the August concerns.
• 15:32
  SPEAKER_00: So what am I saying to you?
• 15:33
  SPEAKER_00: I'm not saying run out and sell all your tech stocks because I think we could potentially go a lot higher.
• 15:37
  SPEAKER_00: What I'm saying to you is make sure that your gains don't become losses.
• 15:44
  SPEAKER_00: Because if you let that happen, then this entire rally that you've been part of, and that's hopefully been making you wealthier, well, you will give all that away.
• 15:52
  SPEAKER_00: And we don't want to do that.
• 15:53
  SPEAKER_00: So what I'm saying to you is learn when to sell the way the smart money sells.
• 15:58
  SPEAKER_00: It's much simpler than you think, but it is also not what you think.
• 16:01
  SPEAKER_00: Do you want to come learn that?
• 16:03
  SPEAKER_00: Join me live next week at FelixFriends.org slash training.
• 16:06
  SPEAKER_00: That's our mission here to spread the in-depth education.
• 16:09
  SPEAKER_00: We can't always do that on YouTube, so we do it in a private setting.
• 16:12
  SPEAKER_00: And I want you to grab yourself a seat for that.
• 16:15
  SPEAKER_00: And the second thing you might want to do is stay abreast on the AI news.
• 16:22
  SPEAKER_00: How do you do that?
• 16:23
  SPEAKER_00: Sign up to TradeVision, there's a link down below.
• 16:26
  SPEAKER_00: You make a watch list with all the AI stocks.
• 16:28
  SPEAKER_00: I think we've already done it for you.
• 16:30
  SPEAKER_00: And you just turn on a little thing which says, get me news notifications.
• 16:34
  SPEAKER_00: We will send you news pop-up notifications on your phone, only relevant to your stocks, the ones you select, and only the news that actually move the market.
• 16:44
  SPEAKER_00: We don't give you all the noise.
• 16:45
  SPEAKER_00: We don't give you the general gibber.
• 16:48
  SPEAKER_00: We don't give you all the work bollocks that doesn't affect your stock prices.
• 16:51
  SPEAKER_00: So you no longer have to read financial news, watch CNBC, or any of the other dross out there.
• 16:56
  SPEAKER_00: You will just be informed.
• 16:58
  SPEAKER_00: And there's a free trial for that down there as well.
• 17:01
  SPEAKER_00: It's a free week after that, I think it's$19 a month or something.
• 17:04
  SPEAKER_00: It's insanely cheap.
• 17:05
  SPEAKER_00: And there's a ton of stuff extra in there.
• 17:08
  SPEAKER_00: So if you got some value out of this, share it with a friend.
• 17:11
  SPEAKER_00: Because I tell you what, people weren't listening in 1998 and 1999 and in 2000.
• 17:16
  SPEAKER_00: They're not listening now.
• 17:17
  SPEAKER_00: So let's change that.