AI’s "Free Software" Boom Just Showed How the Bubble Dies

YouTube · Watch/Read · (gathered 2026-10-18)

• The AI boom is characterized by two conflicting bets—that AI will make software worthless, and that AI companies won’t earn enough to repay their debts—which cannot both be true, with financial markets increasingly signaling caution on the latter.
• Claims of AI “one-shotting” software like Photoshop (e.g., Brandon Thomas’s PhotoCraft) are largely exaggerated; PhotoCraft covers only 25-35% of professional needs, and historically, free alternatives like GIMP or LibreOffice have never made established software worthless due to embedded user habits and reliability.
• Lender confidence in AI companies is rapidly declining, evidenced by a drop in AI borrowing from $113 billion to $23 billion in months, and record-high costs for credit default swaps (debt insurance) for major players like Oracle and Coreweave, indicating significant repayment concerns.
• If AI’s value doesn’t make software worthless or fully accrue to AI companies, it may instead disappear into lower prices for users or land with model makers, leaving companies that borrowed heavily to build computing infrastructure (the “middle”) vulnerable to a “business model-driven sell-off.”