One possible explanation for this is that it’s basically a systemic failure of the market. Shareholders are pricing companies as if being a winner in the AI boom is the most important thing. Company leadership then must position themselves as a winner, or the market responds by devaluing their share price and they lose their jobs and probably their incentives. The most legible way for leaders to show they’re in the AI race is to spend money on AI infra, even if it means taking on debt to do so.

So if this is in fact a bubble, nobody can really act differently until the market stops treating AI spending as a winning strategy.

> That was a bunch of companies who had so much profit that all they could think to do with it was buy their own stock back.

If you or your retirement is a shareholder in one of these companies, you'd rather they return $100 billion to you with boring buybacks or dividends than put it in an exciting AI investment that returns $1-$10 billion. Even though it didn't end up completely worthless, it's still a bad investment.

> If AI blows up in Microsoft or Google’s face they’re just going to write it off and spend a decade paying zero income tax

As a shareholder, you'd also rather they return $100 billion to you than put it in a bad investment that returns $0 -- even if that bad investment lets them write off $20 billion in taxes over the next 10 years you'd still be $80 billion better off.

> how much it’s actually going to matter. If AI blows up in Microsoft or Google’s face

An AI winter shouldn't be an existential threat to these companies -- but "the share price is 10% - 20% lower than the counterfactual where they didn't make these questionable investments" still represents a lot of lost wealth for shareholders -- billions (or trillions for the industry as a whole). A lot of that wealth is the hands of ordinary people, often through retirement investments in index funds.

> Tech giants before the AI boom made a heck of a lot of cash that they had nothing they could do with it. Remember before AI when the existential crisis was stock buybacks? That was a bunch of companies who had so much profit that all they could think to do with it was buy their own stock back.

I'm just spitballing here, so bear with me, but maybe increasing the value returned to the people doing the actual work that created the profit in the first place.

I think the that they feel the need to do these off balance sheet shenanigans is the issue. They're obviously extremely worried that their credit rating is going to be downgraded otherwise, why bother?

I cynically suspect there's an expectation of a bailout, and that it may have even been engineered.

"Take a look at your 401(ks). And when you're 68% up or whatever you may be, you are up a lot... under Sleepy Joe you were 25% down."

[1]: https://www.youtube.com/watch?v=iJ84XMTugFs

It isn't to your original question but in terms of giving a cost to misunderstandings of finance one needs look no further then American politics.

401k growth is wrongly the face of the American Economy when it should be more tangible attributes like the understanding of debt at the macroeconomic level.

"I imagine they understand exactly what’s going on."

You'd also reasonably imagine that every major financial institution on the planet in combination with several sovereign governments would collectively have a handle on the market and yet CDOs nearly bricked the global economy in 2008. History suggests your faith here is likely misplaced.

> I imagine they understand exactly what’s going on.

Maybe they are counting on taxpayers to bail them out if they crater in a 2008-scale failure.