Advertising is the driving force behind the market-driven AI boom. It’s also an existential risk.

OpenAI’s recent release of its AI browser could, if possible, further accelerate historic levels of capital investment in the current AI arms race.

Some say this is a bubble because of the reciprocal and cyclical nature of hundreds of billions of dollars in investment commitments tied to future chip purchases and the extent to which GDP growth is dependent on this boom. Harvard economists estimate that 92% of US GDP growth in the first half of 2025 will come from investments in AI.

But much more needs to be understood about the relationship between the tremendous investment in AI and the business model that underpins the entire economy: the advertising technology (adtech) industrial complex.

For the past 25 years, the internet’s infrastructure has been designed to extract advertising revenue. Search engine marketing, core advertising business model googleprobably the best business model of all time. meta Advertising businesses based on engagement and attribution are a close second. And right behind both of these is Amazon’s advertising business, which leverages its position as the largest online retailer. Although it is a smaller part, AmazonAmazon’s top line, highly profitable advertising business accounts for a disproportionate share of Amazon’s profits. That’s why nearly every major retailer has launched their own version of a retail media network, all of which have significantly boosted revenue and market capitalization for giants such as: walmart, kroger, Uber (and UberEats), door dash And so on.

In fact, these platforms have been using AI for years to refine their advertising business models in the form of algorithmic models that power their search and recommendation engines, increase engagement, better predict purchase decisions, and aim to capture an ever-increasing share of all commerce, not just what is commonly thought of as “advertising.” These three multi-trillion dollar market capitalization companies are
Profits entirely or substantially from advertising. And now they are using some of their historically lucrative advertising revenue to fuel infrastructure investment at levels the world has never seen outside of government wartime spending.

But at the same time, the latest wave of AI has the potential to destroy the same trillions of dollars of market capitalization that is driving it. AI will undoubtedly change the way people search (Google), shop (Amazon), and entertain (meta). Answers are provided without you having to click on the web. Shopping with AI. Endless personalized content creation.

If AI presents such a potential existential risk, why are Google, Meta, and Amazon such a big part of the current arms race to invest in AI? A “moonshot” outcome would be to achieve artificial general intelligence (superintelligence), an AI that can do anything or even better than humans, unlocking so much value that it would dwarf any investment.

But there is a more urgent need for someone to protect, or even destroy, the advertising business model that fuels trillions in market capitalization and hundreds of billions in current investments. While the seminal paper that started this phase of AI, “Attending is All You Need,” was written primarily by Google researchers, it was OpenAI, Microsoft, and now Grok that started the current AI arms race. And they are less dependent on the current advertising industrial complex. in fact,
Sam Altman called the feeds of major platforms that use AI to maximize ad spend “the first large-scale misaligned AI.” He has been clear about which businesses he believes OpenAI is disrupting.

This time is different, but it also comes with different risks. The big difference between the current infrastructure spending frenzy and the dot-com bubble of 2000 is that the companies funding it are largely among the most profitable in the world. And so far, there’s no sign of cracks in the advertising business model that provides both their investment capital and their market capitalization (plus some companies are so big that people don’t even think about being in the advertising business).

But if AI disrupts, or even disrupts, current advertising models, the economic and market shocks will be far greater than most imagine.

Google, Meta, and Amazon are still in the best position to create new business models, and as mentioned earlier, they have been leveraging AI to support their advertising business models with great success for much longer.

But fundamentally changing the way people search, transact, and interact with content online will require entirely new revenue models, and perhaps connected revenue models that are preferably not ad-based. But whatever the model, justification in AI can be helpful by considering the following:
Infrastructure spending may be done not simply to generate new revenue, but to protect business models that represent a much more important part of a public company’s market capitalization than most people realize.