AI and the Next ‘Too Big to Fail’? The Looming Bailout Debate

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Are today’s AI giants becoming the next Wall Street banks — too powerful, too connected, and too big to fail? The Trump administration says no bailouts for AI companies, but as data centers expand and national security arguments grow louder, that promise may not hold. In this episode of Watchdog on Wall Street, we examine how the AI boom mirrors past bailouts — from banks to automakers — and why true capitalism depends on letting creative destruction work. From Florida’s pushback on data centers to the specter of taxpayer-funded rescues, we ask: is AI innovation paving the way for another moral hazard?

Episode Transcript

Speaker 1 (00:00):
The Watchdog on Wall Street podcast explaining the news coming
out of the complex worlds of finance, economics, and politics
and the impact it will have on everyday Americans. Author,
investment banker, consumer advocate, analyst, and trader Chris Markowski.

Speaker 2 (00:16):
Tell you a little bit more about AI and Too
Big to Fail. A lot of videos out and about
in regards this and concerns. Trump administration says, no, there's
not going to be any bailout for any AI companies.
If some go by the wayside, someone else will replace them.

(00:38):
The reality is that these companies are becoming massive, massive,
without really any profits or any numbers. Open Ai, for example,
open AI's annual revenue is two percent of Amazon's sales.

(01:02):
It's again a lot of uncertainty surrounding this. Again that
they usher in some sort of super intelligence that cures cancer,
whatever it may be, and that's what we're kind of
hoping for. But again, there's still a lot of hope
that's out there. I don't know if the bailout is

(01:24):
going to go towards the actual AI companies themselves, or
it's going to be for the infrastructure that goes along
with this. My fear is this, my fear is that again,
these companies, they've got a wide reach, they've got a

(01:45):
wide reach, and they can get out to people and
they you know, they can move and push a narrative
with the best of them. And for example, okay, we
are we're artificial intelligence company, we are data center company.
We need energy prices certain things because China is an

(02:06):
existential threat. They love that word existential, existential threat, and
it is a national security priority that we can't fail.
We've seen this movie before. We saw this happen with
the big banks that became too big to fail. Existential threat. God,

(02:32):
it's the plumbing system for the entire world. You can't
let that fail. We've got to entrench their power. And
look at where we're at today. They're omnipo they are
they're omnipotent. I could very well see the same exact
thing happening with this even that they're saying, oh no,

(02:54):
that can't happen. Okay, here in the where I live,
in the state of Florida, our governor has basically said, nah, nah,
those data Now, we're not doing that. We're not gonna
do that here. We're we're not gonna cut you some

(03:15):
ridiculous sweetheart deal as far as property taxes are concerned,
and we're not gonna let you use our water and
our electricity and drive up the electricity prices for our residents.
And people are quite happy about that down here they are.
But who's to say later on down the line. Again,

(03:36):
it could be a Democrat, could be a Republican in
the White House say hey, look at this, that's national
security concern. You're gonna have to You're gonna have to
put those data centers up and use eminent domain of
some sort, whatever it may be. I could see it happen,
and I can also very well see it happen, and
that taxpayers will pay it out, just like we build
out the automakers made them too big to fail you

(04:00):
at some point in time. Again, I know I talk
a lot about this lately. Yeah, I said, I love capitalism.
I do. That's actually the title of Ken Langone's book,
which I happened to love. But we're getting to a
point in time where these guys are so entrenched and again,
like their military, another great examples popped in my head.

(04:23):
I've gone off on a before, and I'm sorry, you know,
my train of thought goes off a little bit. Boeing.
Boeing is too big to fail. Let's a big time
defense contractor for all intents and purposes based upon their track.
I mean, if they weren't a defense contractor, they would

(04:44):
have been gone by now. And the problem with too
big to fail is it doesn't allow for creative destruction.
It doesn't allow for competition to come in and improve
productivity or come up with something better. The old concept
to build a better mouse trap. People will be the
path to your door. Okay, this is my concern. Watchdog

(05:05):
on Wall Street dot Com