Ultimately it will be when the credit dries up and circular nature of the “investments” breaks down.

A Couple things that come to mind:

• data centre operators borrowing money to buy GPUs and then using those GPUs as collateral for loans to buy more GPUs
• nVidia investing money into companies contingent on their purchase of GPUs worth an order of magnitude greater than than their investment
• Microsoft selling Copilot below cost, provided by OpenAI selling GPT services below cost, in exchange for compute offered below cost
• A consensus that the cost of scaling users is not going to be the same as it has been with e-commerce and software (ie one user using Amazon.com vs 1 million users is roughly the same cost to build the software that runs Amazon.com while the cost scales directly with number of users of chatbots)
• a consensus that hallucinations are not a solvable problem

One way could be a failure to deliver on a contractual obligation with regards to a payout (eg company X will receive $100 billion when Y is complete) will lead to the failure to make a debt payment (company X has borrowed money based on the money promised by company Y), which will precipitate a scramble as investors try to recoup the money they’ve put in the firms, which will crash them.

For example, and I don’t know what happened here, CoreWeave had a balloon payment to make on a loan in October; if they didn’t make that payment, it could lead to a panic. But it didn’t