The fuel for the AI boom driving the markets is advertising. It is also an existential risk.

The recent release of OpenAI’s AI browser has sparked a new wave of excitement in the AI arms race, with unprecedented levels of capital expenditures being made in this field. Some experts are even questioning whether this boom is sustainable or if it’s just a bubble waiting to burst. A Harvard economist has estimated that a staggering 92% of US GDP growth in the first half of 2025 was driven by investments in AI.

One aspect that is often overlooked in this frenzy of AI investment is the role of the advertising technology (Ad Tech) industry. For the past 25 years, the internet has been optimized to extract advertising revenue, with companies like Google, Meta, and Amazon leading the charge. These tech giants have built highly profitable advertising businesses that have become a significant source of their revenue and market capitalization.

AI has played a crucial role in refining these advertising models, with algorithms powering search and recommendation engines to increase engagement and predict consumer behavior. However, as AI continues to evolve, there is a looming threat to the very business models that have fueled the AI arms race. The potential for AI to disrupt industries like search, e-commerce, and entertainment is real, posing a significant risk to companies heavily reliant on advertising revenue.

Despite the risks, Google, Meta, and Amazon are at the forefront of the race to invest in AI, driven by the promise of unlocking unprecedented value through Artificial General Intelligence. However, there is also a sense of urgency to protect or disrupt the current advertising model before someone else does. OpenAI, Microsoft, and other players in the AI space are challenging the status quo, aiming to create more aligned and sustainable business models.

The current wave of infrastructure investment in AI presents a different scenario compared to the dotcom bubble of 2000, with profitable companies leading the charge. However, the potential disruption of the advertising model could have far-reaching implications for the economy and markets. Companies like Google, Meta, and Amazon are well-positioned to adapt and create new business models, but the shift towards non-advertising-based revenue streams may be inevitable.

In conclusion, the justification for investing in AI infrastructure goes beyond unlocking new revenue streams. It’s also about protecting the business models that underpin the market capitalization of public companies. As the AI arms race intensifies, the future of advertising technology and AI integration will shape the next chapter of the digital economy.