California is one of the few states with building codes that require using fire-resistant materials in places prone to wildfires. The release of new maps outlining fire hazard zones throughout the state mean that for some homeowners in the urban center of Altadena, the rebuilding requirements are about to change in the coming months.
Expanded wildfire zones: California fire officials just released long-awaited maps that expand the areas where wildfire building codes apply and that show fire risk is only increasing. In the footprint of the Eaton Fire that hit Altadena, the expanded zone for wildfire building codes now includes more than 500 additional homes and buildings, according to an analysis by NPR.
More changes to come: Beginning in 2026, building requirements will expand again to include any properties in the "high" hazard category of the wildfire maps. That will mean about 1,000 additional properties in the Eaton Fire area will be required to use wildfire building codes, if their permits are approved next year.
Read on . . . to learn more about the construction of fire-resistant homes.
Homeowners in Los Angeles have started the long process of rebuilding after the destructive wildfires in January. Some are constructing homes that are much less likely to burn when the next wildfire hits. That's because California is one of the few states with building codes that require using fire-resistant materials in places prone to wildfires.
Still, thousands of other homeowners in the urban center of Altadena are about to rebuild without wildfire-resistant materials, because they live outside a state-designated wildfire zone.
For some of those people, the rebuilding requirements are about to change in the coming months.
California fire officials just released long-awaited maps that expand the areas where wildfire building codes apply and that show fire risk is only increasing. Under the new maps, an additional 1.4 million acres statewide is now considered at high or very high risk on land for which local governments are responsible.
In the footprint of the Eaton Fire that hit Altadena, the expanded zone for wildfire building codes now includes more than 500 additional homes and buildings, according to an analysis by NPR. Los Angeles County must adopt the new zones by late July, which means those property owners have roughly four months before the more stringent rules take effect.
The move is a rare example of a community strengthening rebuilding rules after a disaster, in the hope of preventing similar destruction in the future. Governments often loosen construction and permitting rules after disasters, facing immense pressure to speed up the rebuilding process.
Patrick and Ruth Fong's home burned home still shows signs of the toys their kids used to play with. After late July, rebuilding it will require meeting wildfire building codes, based on new state regulations.
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Research shows fire-resistant construction can dramatically improve the chances that a house survives. Many of the building materials are commonly available, like fiber cement siding, and overall, construction costs can be roughly the same as a standard house.
Still, even with the newly expanded zones, more than 7,800 buildings in the area burned by the Eaton Fire fall outside those zones and won't have to follow the more protective wildfire building codes. Wildfire experts say with so many houses to rebuild, Los Angeles is facing a critical moment to ensure communities are better prepared for future disasters. Wildfires are getting more intense and are spreading faster as the climate gets hotter, and across the Western U.S., many homes rebuilt after fires aren't constructed to withstand future ones.
"If homes are being rebuilt, they should be built with wildfire in mind because unfortunately we do know that risks are increasing," says Kimiko Barrett, senior wildfire researcher at Headwaters Economics, a non-profit think tank. "History repeats itself. This will not be the only time that L.A. experiences a catastrophic wildfire."
Weighing how to rebuild
When Patrick and Ruth Fong look over the charred debris that used to be their Altadena home, they still see where their three kids used to play. The burned frames of the kids' bikes are visible under the crumbled garage door. A blackened, metal ring in the backyard shows where the trampoline once was.
"This is the only house our kids remember," Ruth says. "We were only able to recover some mugs and the kids' clay objects they made in art class at school."
Now, two months after the disaster, they're also starting to envision what could be. They've met with a contractor to plan what they'll rebuild and are now finalizing the floorplan.
"There's been so much grief and sadness, but then you have some glimmers of hope," Ruth says.
Ruth and Patrick Fong debated whether to stay in Altadena after they lost their house in the Eaton Fire. It's the second time a wildfire has burned the property.
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Just after the fire, the Fongs weren't sure they wanted to stay. Altadena sits next to the dry shrubland of the San Gabriel Mountains and this was the second wildfire to hit their property. Before the Fongs owned it, the Kinneloa Fire also destroyed the home in 1993.
"We had in our heads, we have to build it and sell it, because what if it happens again?" Patrick says. "You know, all these terrible things we're thinking about."
But like many Altadena residents, the Fongs feel connected to their community and especially close to neighbors on their cul de sac. So, they've started talking to their contractor about ways to make the house better able to withstand a wildfire by using fire-resistant building materials. That cost has to be balanced with the other financial constraints of rebuilding, as the Fongs figure out how far their insurance settlement will go.
"With fireproof construction, how much more is that going to be and how much can we really afford?" Patrick says. "Because we're already maxing out our policy."
Newly expanded fire zones show homes at risk
Like thousands of other Altadena residents, the Fongs so far are not required to rebuild with fire resistant materials. That's because California's wildfire building codes, known as "chapter 7A," only apply in areas that are deemed to be at risk. Those "wildfire hazard zones," as they're known, are mapped by California's Department of Forestry and Fire Protection.
California's wildfire hazard maps are the bedrock of the state's wildfire policies. In addition to determining where wildfire building codes apply for new construction, property owners in very high risk zones must clear flammable vegetation around buildings. Wildfire hazard zones must also be taken into consideration in land use planning by local governments, including ensuring there are enough evacuation routes.
The maps were first released in 2008, putting California on the forefront of wildfire planning. Many Western states still lack statewide fire risk maps. But as wildfires have become more extreme, fire experts pushed California to update the maps, since the original maps only forecast fires under fairly weak wind speeds and don't take into account high wind conditions that can drive bigger infernos. (Insurance companies typically have their own wildfire risk maps that they use to determine rates for customers.)
The newly released wildfire zones include properties that burned in the Eaton Fire. Pacific Palisades, where the other major fire burned in January, was already in a high risk wildfire zone, so wildfire building codes apply to the more than 6,800 buildings destroyed there.
Under state law, Los Angeles County must adopt the new wildfire hazard maps by July 22nd. According to the Los Angeles County Fire Department, that means if residents in the newly expanded zones get their building permits approved after the maps are adopted, the wildfire building codes will apply.
Beginning in 2026, the requirements will expand again to include any properties in the "high" hazard category of the wildfire maps. That will mean about 1,000 additional properties in the Eaton Fire area will be required to use wildfire building codes, if their permits are approved next year.
Still, even with the new wildfire maps, the majority of homes destroyed in the Eaton Fire won't be required to be built to resist future wildfires. California's maps calculate the hazard from fires spreading in wildland areas, but don't take into account what happens when fires spread from house to house.
"I thought the very high fire severity zones were really going to reach deep, deep down into Altadena, and they haven't," says Los Angeles County Fire Department deputy fire chief Albert Yanagisawa.
The costs and benefits of wildfire building codes
The change in the maps is causing some nervousness in Altadena.
"Some people I see rushing to decide what their rebuild is before that map comes out, which puts into question whether they're thinking about the community or their bottom line," says Nic Arnzen, a member of the Altadena Town Council.
Researchers have shown that using fire-resistant materials makes homes less likely to burn, especially since most homes are ignited by tiny embers carried by the wind. Even in an extreme wildfire, fire inspectors find some houses remain seemingly untouched, like in the Los Angeles fires as well as the wildfire in Lahaina, Maui.
One study found houses built with California's wildfire building codes are 40% more likely to survive. An analysis by FEMA found using California's building codes could save $24 billion in damages to single-family residences over a 75-year timeframe.
California's wildfire building code calls for fire-resistant roofs and siding, as well as using attic vents that don't allow embers to be blown inside a house. It also calls for enclosing roof eaves so the undersides are less prone to igniting. They only apply for new construction or when houses have a major renovation.
Altadena is likely to face more wildfires, experts say, so rebuilding after the Eaton Fire is a crucial time to make the community more resilient to fires.
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"These are often materials commonly used on the market, widely available," Barrett says. "Things like asphalt roofs. Things like Hardie plank fiber cement siding. Very, very common, very affordable."
The additional cost of meeting the codes can be a few thousands dollars, according to a study from Headwater Economics and the Insurance Institute for Business & Home Safety, a research group funded by the insurance industry. Adding even more fire-resistant features, or more costly options like metal roofing, can add up to 13% to the overall construction cost.
Some Los Angeles homeowners could find the additional costs will be paid by their insurance company, if the policy specifies it covers bringing a house up to code. Still, not all policies cover those costs.
Los Angeles County officials say they're looking for funding options for homeowners who might struggle with the costs.
"One of the commitments I've made is looking at grant opportunities to see where we can allow people to apply that may not be able to afford it, to harden or do things that would benefit in case of future fires, and see how we can offset the cost," says Los Angeles County supervisor Kathryn Barger.
Rebuilding Los Angeles with wildfires in mind
With a history of frequent wildfires, Los Angeles has long understood how vulnerable many neighborhoods are. Some homeowners rebuilding after the Eaton Fire aren't likely to follow wildfire building codes if they're not required to, especially given that some are underinsured.
"Even if they're not going to have to comply, we're going to be strongly encouraging it for future resiliency," says Amy Bodek, director of regional planning for the County of Los Angeles. "We've been on this trajectory to look at long range plans that will prevent future disasters from affecting so many people. We're certainly not going to prevent the disasters, but how can we minimize strategically the harm to individuals and properties?"
Los Angeles County recently limited the amount of housing that can be built in the foothills of Altadena, where wildfire risk is highest. The region is facing a massive housing shortage, but considering the fire risk, is directing development to denser urban corridors closer to public transit.
Altadena officials say they're hoping to rebuild a much safer community, including putting electric power lines underground so they pose less of a risk. Utility lines have started wildfires in high winds and are still being investigated as a cause of the Eaton Fire.
"We have an opportunity to show people how to create a community that can live in peace and harmony with the natural disasters around them," Arnzen says. "I don't want to waste the opportunity."
Brent Jones contributed to this story. Copyright 2025 NPR
Artist Shepard Fairey will have more than 400 prints on display at Beyond the Streets
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Courtesy Gold Atlas
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In this edition:
Meet a turkey, eat a turkey, trot like a turkey, and more Thanksgiving events for your holiday week.
Highlights:
Is scaring the living daylights out of your extended relatives a good game plan for your holiday weekend? If so, Paranormal Activity, inspired by the movie, is now a stage show that’s been a success in London and just opened in the U.S. in Chicago. Now, it’s here at the Ahmanson. Center Theatre Group made its first foray into the horror-theater category with 2:22 in 2023, and I was pleasantly surprised (well, OK, totally scared, but in a good way) that one could translate a movie jump-scare to the stage. The L.A. Times said the new production of Paranormal Activity is "brilliantly pulled off” — you’ve been warned!
On the more traditional end of the holiday entertainment spectrum is the utterly wholesome and ethereal music of the Vienna Boys Choir. Talk about a lasting impact — for six centuries, their renditions of holiday classics have defined the Christmas season. Kick your holidays off by catching their angelic voices when they come to Orange County at the Soka Performing Arts Center in Aliso Viejo.
Whether you have one mile, 5K or 10K in you before Thanksgiving dinner, there’s a run for you at the annualL.A. Turkey Trotin downtown L.A. Put on your sneaks and head to City Hall for an early start before you dig in to all that apple pie later in the afternoon. There’s an afterparty near the finish line in Grand Park so you can hang with your fellow runners, and money raised goes toward local organizations like the Midnight Mission.
Shepard Fairey’s prints are synonymous with activism and social change, from his original OBEY posters to the iconic Obama HOPE image (which was just an answer on Jeopardy! last week). This new exhibit at Beyond the Streets showcases over 400 of Fairey’s prints and works inspired by print, commenting on the power of mass communication.
We here at LAist wish all our listeners, readers and members a Happy Thanksgiving! If you’re still looking for a great place to eat this weekend and don’t want to go the turkey route, Gab Chabrán has a list of unique ways to celebrate with cuisine, from Caribbean to Korean.
It’s also a big week for sports locally ahead of the holiday, with Tuesday’s Clippers vs. Lakers game at Crypto.com arena — and the 2026 World Cup isn’t that far away, as more teams move toward qualifying, so keep a lookout for which games will be played in L.A. this summer. Music-wise, Licorice Pizza recommends singer-songwriter and former Moldy Peaches member Kimya Dawson (of Juno soundtrack fame) at the Troubadour, indie-rock comic Fred Armisen is at Largo and psychedelic trio Khruangbin is playing two nights at the Fonda. Tuesday, Damiano David of Italian rockers Maneskin goes solo at the Wiltern, and Icelandic indie-rockers Of Monsters And Men play the Palladium. Thanksgiving eve has alternative rapper Danny Brown at the Bellwether, and the reunited Mars Volta are at the Pasadena Civic Auditorium.
Through Sunday, December 7 Ahmanson Theatre 135 N. Grand Ave., Downtown L.A. COST: FROM $40.25; MORE INFO
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Kyle Flubacker
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Center Theatre Group
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Is scaring the living daylights out of your extended relatives a good game plan for your holiday weekend? If so, Paranormal Activity, inspired by the movie franchise, is now a stage show that’s been a success in London and just opened in the U.S. in Chicago and now is here at the Ahmanson. CTG took its first foray into the horror theater category with 2:22 in 2023 and I was pleasantly surprised (well, ok, totally scared but in a good way) that one could translate a movie jump scare to the stage. The L.A. Times said the new production of Paranormal Activity is "brilliantly pulled off” — you’ve been warned!
Vienna Boys Choir's “Christmas in Vienna”
Monday, November 24, 7:30 p.m. Soka Performing Arts Center 1 University Drive, Aliso Viejo COST: FROM $60; MORE INFO
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Courtesy Philharmonic Society
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On the more traditional end of the holiday entertainment spectrum is the utterly wholesome and ethereal music of the Vienna Boys Choir. Talk about a lasting impact – for six centuries, their music has defined the Christmas season. Kick your holidays off by catching their angelic voices performing Beethoven, Britten, and more as they come to Orange County at the Soka Performing Arts Center in Aliso Viejo.
L.A. Auto Show
Through Saturday, November 30 Los Angeles Convention Center 1201 S. Figueroa Street, Downtown L.A. COST: FROM $45; MORE INFO
An L.A. tradition for car enthusiasts, the annual L.A. Auto Show is in town for 10 days, taking over the Convention Center with new models from all the big carmakers, concept cars that will define the future of the roads, demonstrations and much more.
Gentle Thanksgiving
Thursday, November 27, timed entry from 10 a.m. Gentle Barn 15825 Sierra Hwy., Santa Clarita, CA COST: $75; MORE INFO
Benjamin Franklin wanted to make the turkey our national bird, and with good reason — they are intelligent, courageous and native to America. You can honor the turkey by visiting the Gentle Barn for their annual Thanksgiving meet and greet with turkeys, where you can feed them treats and spend some time with these special birds.
Turkey Trot Los Angeles
Thursday, November 27, 8 a.m. L.A. City Hall 200 N. Spring Street, Downtown L.A. COST: FROM $45; MORE INFO
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Courtesy Generic Events
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Whether you have one mile, 5K or 10K in you before Thanksgiving dinner, there’s a trot for you through downtown L.A. Put on your sneaks and head to City Hall for an early start before you dig in to all that apple pie later in the afternoon. There’s an after-party near the finish line in Grand Park so you can hang with your fellow runners, and the money raised goes towards local organizations like the Midnight Mission.
Have a few days off this week? Staying in town? Consider volunteering for one of the many local organizations that need your help to reduce food insecurity during the holiday season. LA Works has a huge list of options, including this one working the annual Thanksgiving Feast at the L.A. Boys & Girls Club.
Thanksgiving Gratitude Meditation with Heather Hayward
Thursday, November 27, 9 a.m. Online COST: DROP-IN $39; MORE INFO
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Courtesy Unplug
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We all need a moment of zen before dealing with holiday stress. Take 45 minutes out of your morning for this online meditation session with Unplug Santa Monica teacher Heather Hayward.
Shepard Fairey: Out of Print
Through Sunday, January 11 Beyond the Streets 434 N. La Brea Ave., Hollywood COST: FREE; MORE INFO
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Courtesy Gold Atlas
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Shepard Fairey’s prints are synonymous with activism and social change, from his original OBEY posters to the iconic Obama HOPE image (which was just an answer on Jeopardy! last week). This new exhibit at Beyond the Streets showcases over 400 of Fairey’s prints and works inspired by print, commenting on the power of mass communication.
L.A. Times Feature Documentary: Out of Plain Sight
Monday and Tuesday, November 24 and 25, 1:30, 4:20, 7:10 p.m. Laemmle NoHo 5240 Lankershim Blvd., North Hollywood COST: $14.50; MORE INFO
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Courtesy LA Times
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Built off the deep environmental reporting of LA Times investigative journalist Rosanna Xia, the new documentary Out of Plain Sight follows Xia’s reporting on a toxic waste dump off the coast of L.A. Her reports found that as many as half a million barrels of toxic waste had been quietly dumped into the ocean decades ago. The film follows Xia as she searches for answers at sea, in the lab and up and down the California coast. The evening screenings are followed by a Q&A with the filmmakers and special guests.
Thanksgiving Potluck
Thursday, November 27, 12 p.m. Weary Livers 2819 Pico Blvd., Santa Monica COST: FREE; MORE INFO
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Los Angeles Fun Events
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Eventbrite
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Games, karaoke and drinks (of course) are all on tap at Weary Livers for this untraditional (but sure to be fun) Thanksgiving potluck. Meet some new friends and sing your heart out if you’re staying in town this weekend.
Voodoo Doughnut Thanksgiving Pie Box
Through Sunday, November 30 Various locations COST: CALL TO CONFIRM; MORE INFO
The Portland-based donut chain developed four holiday-themed creations to include in a special Thanksgiving Pie Box. Call 661-786-6366 to pre-order your Thanksgiving Pie Box to pick up between November 24 and 30. Partial proceeds from the limited-edition box will go to support local food banks and food pantries.
Elly Yu
reports on early childhood, including how it intersects with homelessness.
Published November 24, 2025 5:00 AM
Wayne and his family have had to live in their car as they haven't been able to find housing resources.
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LAist
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Topline:
L.A. County is proposing cuts to homeless services next year, at a time when families have already been struggling to find shelter.
A family’s struggle: Since October, L.A. resident Wayne has had to stay in his car with his partner and young child after being told by service providers there’s no housing assistance available. “A lot of the days is trying to make sure we can get a meal or two in limited funds, is trying to think outside the box and see if there's any other organizations to connect to,” he said.
Wayne hands over a toy car to his son, A, at a park in Mid-City. The 4-year-old rolls it across a bench near the playground and watches it fall onto the pavement below.
“He'll find fun in most things,” Wayne said. “He’s pretty happy all the time. Nothing really bothers him very much — just going to bed.”
Bedtime, recently, has been a lot harder for A, who’s on the autism spectrum. Since mid-October, Wayne, alongside his partner and their son, have been staying in their car. (We’re using A’s first initial and Wayne’s first name only to protect their family’s privacy.)
“He does not like it, he hates it,” Wayne said. “The only way he'll sleep in the car is if he's literally on, usually my lap.”
They’re one of the many Los Angeles families who have struggled to find housing over the past several months as options dry up. And now it’s likely to get even harder for families like theirs, in the face of more funding cuts.
Wayne and his family lost their apartment in June after falling behind on their rent. They stayed in motels across L.A. county with about 40 days worth of vouchers — 32 days from the CalWorks program and 8 days through 211.
Despite touting progress on helping unhoused individuals over the last year, the city and county Los Angeles has not made progress on helping unhoused families.
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But they haven’t been able to get any more since, and the family shelters they turned to have been full. They pawned off some items, like a guitar, to help stay indoors, but that only helped in the short-term. He says it’s been a struggle to find a safe place to sleep with a young child.
“The first time we slept in the car it was really, really hot, and he ended up with heat rashes all over his back,” he said.
They had money saved up
In April of last year, Wayne was laid off from his job in A/V tech support. His partner has a chronic illness so he’s the sole earner. Up until then, he had saved up for a rainy day situation. He’d invested in retirement, and even had some stock.
“I’m a dad now — obviously it’s such a different way of thinking about the short term, future term, long term,” he said.
He had $30,000 saved up, enough to stay afloat for about six months to eight months… but then, he couldn’t find a job. By November of last year, they had run out of money.
“It's been awful. Most of the jobs now are like part-time or temporary positions,” Wayne said. The jobs didn’t offer enough to sustain a one-bedroom apartment in L.A.
Wayne's family got a stack of papers to resources from a recent visit to PATH, a homeless services provider. Providers say they haven't been able to offer housing assistance to new families seeking help because of recent cuts.
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In order to reasonably afford a one-bedroom in the L.A. area, workers need to earn at least $40.02per hour, according to the National Low Income Housing Coalition.
Aside from the job searching process, Wayne has spent most of his days trying to find a meal or two for his family — and on the phone trying to find any other resources. He’ll also take his son to the park or the library.
“The most important thing is trying to make sure he basically is comfortable as much as possible, that he's [having] fun, that he's not really understanding what's going on — which I think we're doing a good job [at] so far,” Wayne said.
Trying to find housing
Recently, they went to a family solutions center at PATH, a homeless services provider in LA. There was no housing assistance available, so they gave Wayne a list of other places to try. He and his family had already tried those resources.
Wayne’s car has a stack of papers like these ones, pointing to laundry services and food banks and Medi-Cal resources.
Sasha Morozov, regional director of services at PATH, says that’s what her agency has had to do in recent months, as they’ve been unable to take on new families due to recent funding cuts. She said they’ve had to change their strategy from trying to get people housed imminently to connecting them to other resources — such as childcare or school-based help.
“ That really has shifted, not because people don't want to help, but the resources aren't there. It’s heartbreaking.”
Recent funding cuts include a 71% reduction in state dollars that have helped families experiencing homelessness. Morozov saidshe’s worried the situation will get even worse with new federal cuts as well as a proposed cut of $300 million to county funding for homeless services next fiscal year. LAist reported in August that homelessness among families with children has been rising.
Data from 211 LA show that calls for emergency shelter from January this year to early September were up by more than 20,000 calls, compared to the same time period last year.
For Wayne and his family, they’re now looking to move out of state. After a year and a half of job searching, he recently got a job offer from a company out in the Midwest. Though he’s grown up in California, he says he has to leave.
“It felt like a slap in the face,” he said. “Most people can't afford a one-bedroom on a full-time job here. There's nothing to celebrate. Everyone is closer to homelessness than they are to stability. Most people who are working class, especially young people, probably 40 and under, cannot afford a one bedroom by themselves.”
His new job is supposed to start in January. He said as soon as he can save up enough money for a security deposit and rent a new place out of the state, they’ll be driving out there.
Wayne says his son doesn't understand what's going to happen next, but says he'll adjust quickly.
“As long as he has, like, ice cream and the snacks that he wants, he's happy to go anywhere,” he said. “He loves when we drive around. I already know on the road he would absolutely love to see all the change in the scenery and he's gonna be excited.”
Tech companies are pouring billions into AI chips and data centers.
Why it matters: Increasingly, they are relying on debt and risky tactics.
Why now: Financial analysts are worried there's a bubble that will soon pop.
Perhaps nobody embodies artificial intelligence mania quite like Jensen Huang, the chief executive of chip behemoth Nvidia, which has seen its value spike 300% in the last two years.
A frothy time for Huang, to be sure, which makes it all the more understandable why his first statement to investors on a recent earnings call was an attempt to deflate bubble fears.
"There's been a lot of talk about an AI bubble," he told shareholders. "From our vantage point, we see something very different."
Take in the AI bubble discourse and something becomes clear: Those who have the most to gain from artificial intelligence spending never slowing are proclaiming that critics who fret about an over-hyped investment frenzy have it all wrong.
"I don't think this is the beginning of a bust cycle," White House AI czar and venture capitalist David Sacks said on his podcast All-In. "I think that we're in a boom. We're in an investment super-cycle."
White House AI adviser David Sacks speaks onstage during The Bitcoin Conference at The Venetian Las Vegas in January.
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Ian Maule
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AFP via Getty Images
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"The idea that we're going to have a demand problem five years from now, to me, seems quite absurd," said prominent Silicon Valley investor Ben Horowitz, adding: "if you look at demand and supply and what's going on and multiples against growth, it doesn't look like a bubble at all to me."
Appearing on CNBC, JPMorgan Chase executive Mary Callahan Erdoes said calling the amount of money rushing into AI right now a bubble is "a crazy concept," declaring that "we are on the precipice of a major, major revolution in a way that companies operate."
Yet a look under the hood of what's really going on right now in the AI industry is enough to deliver serious doubt, said Paul Kedrosky, a venture capitalist who is now a research fellow at MIT's Institute for the Digital Economy.
He said there is a startling amount of capital pouring into a "revolution" that remains mostly speculative.
"The technology is very useful, but the pace at which it is improving has more or less ground to a halt," Kedrosky said. "So the notion that the revolution continues with the same drum beat playing for the next five years is sadly mistaken."
The huge infusion of cash
The gusher of money is rushing in at a rate that is stunning to financial experts.
Take OpenAI, the ChatGPT maker that set off the AI race in late 2022. Its CEO Sam Altman has said the company is making $20 billion in revenue a year, and it plans to spend $1.4 trillion on data centers over the next eight years. That growth, of course, would rely on ever-ballooning sales from more and more people and businesses purchasing its AI services.
There is reason to be skeptical. A growing body of research indicates most firms are not seeing chatbots affect their bottom lines, and just 3% of people pay for AI, according to one analysis.
"These models are being hyped up, and we're investing more than we should," said Daron Acemoglu, an economist at MIT, who was awarded the 2024 Nobel Memorial Prize in Economic Sciences.
"I have no doubt that there will be AI technologies that will come out in the next ten years that will add real value and add to productivity, but much of what we hear from the industry now is exaggeration," he said.
Nonetheless, Amazon, Google, Meta and Microsoft are set to collectively sink around $400 billion on AI this year, mostly for funding data centers. Some of the companies are set to devote about 50% of their current cash flow to data center construction.
Or to put it another way: every iPhone user on earth would have to pay more than $250 to pay for that amount of spending. "That's not going to happen," Kedrosky said.
To avoid burning up too much of its cash on hand, big Silicon Valley companies, like Meta and Oracle, are tapping private equity and debt to finance the industry's data center building spree.
Paving the AI future with debt and other risky financing
One assessment, from Goldman Sachs analysts, found that hyperscaler companies — tech firms that have massive cloud and computing capacities — have taken on $121 billion in debt over the past year, a more than 300% uptick from the industry's typical debt load.
Analyst Gil Luria of the D.A. Davidson investment firm, who has been tracking Big Tech's data center boom, said some of the financial maneuvers Silicon Valley is making are structured to keep the appearance of debt off of balance sheets, using what's known as "special purpose vehicles."
An aerial view of a 33 megawatt data center with closed-loop cooling system in Vernon, California.
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Mario Tama
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The tech firm makes an investment in the data center, outside investors put up most of the cash, then the special purpose vehicle borrows money to buy the chips that are inside the data centers. The tech company gets the benefit of the increased computing capacity but it doesn't weigh down the company's balance sheet with debt.
For example, a special purpose vehicle was recently funded by Wall Street firm Blue Owl Capital and Meta for a data center in Louisiana.
The design of the deal is complicated but it goes something like this: Blue Owl took out a loan for $27 billion for the data center. That debt is backed up by Meta's payments for leasing the facility. Meta essentially has a mortgage on the data center. Meta owns 20% of the entity but gets all of the computing power the data center generates. Because of the financial structure of the deal, the $27 billion loan never shows up on Meta's balance sheet. If the AI bubble bursts and the data center goes dark, Meta will be on the hook to make a multi-billion-dollar payment to Blue Owl for the value of the data center.
Such financial arrangements, according to Luria, have something of a checkered past.
"The term special purpose vehicle came to consciousness about 25 years ago with a little company called Enron," said Luria, referring to the energy company that collapsed in 2001. "What's different now is companies are not hiding it. But having said that, it's not something we should be leaning on to build our future."
Enormous spending hinging on returns that could be a fantasy
Silicon Valley is taking on all this new debt with the assumption that massive new revenues from AI will cover the tab. But again, there is reason for doubt.
Morgan Stanley analysts estimate that Big Tech companies will dish out about $3 trillion on AI infrastructure through 2028, with their own cash flows covering only half of that.
"If the market for artificial intelligence were even to steady in its growth, pretty quickly we will have over-built capacity, and the debt will be worthless, and the financial institutions will lose money," Luria said.
Twenty-five years ago, the original dot-com bubble burst after, among other factors, debt financing built out fiber-optic cables for a future that had not yet arrived, said Luria, a lesson, it appears, tech companies are not worried about repeating.
"If we get to the point after spending hundreds of billions of dollars on data centers that we don't need a few years from now, then we're talking about another financial crisis," he said.
Circular deals raise even more concern
Another aspect of the over-heated AI landscape that is raising eyebrows is the circular nature of investments.
Take a recent $100 billion deal between Nvidia and OpenAI.
Nvidia will pump that amount into OpenAI to bankroll data centers. OpenAI will then fill those facilities with Nvidia's chips. Some analysts say this structure, where Nvidia is essentially subsidizing one of its biggest customers, artificially inflates actual demand for AI.
"The idea is I'm Nvidia and I want OpenAI to buy more of my chips, so I give them money to do it," Kedrosky said. "It's fairly common at a small scale, but it's unusual to see it in the tens and hundreds of billions of dollars," noting that the last time it was prevalent was during the dot-com bubble.
Open AI CEO Sam Altman speaks during Snowflake Summit 2025 at Moscone Center in June.
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Justin Sullivan
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Getty Images
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Lesser-known companies are getting in on the action, too.
CoreWeave, once a crypto mining startup, pivoted to data center building to ride the AI boom. Major AI companies are turning to CoreWeave to train and run their AI models.
OpenAI has entered deals with CoreWeave worth tens of billions of dollars in which CoreWeave's chip capacity in data centers is rented out to OpenAI in exchange for stock in CoreWeave, and OpenAI, in turn, could use that stock to pay its CoreWeave renting fees.
Nvidia, meanwhile, which also owns part of CoreWeave, has a deal guaranteeing that Nvidia will gobble up any unused data center capacity through 2032.
"The danger," said the MIT economist Acemoglu,"is that these kinds of deals eventually reveal a house of cards."
Some high profile investors see bubble-popping on the horizon
Some influential investors are showing signs of bubble jitters.
Tech billionaire Peter Thiel sold off his entire stake in Nvidia worth around $100 million earlier this month. That came after SoftBank sold a nearly $6 billion stake in Nvidia.
And in recent weeks, AI bubble pessimists have rallied around Michael Burry, the hedge-fund investor who made hundreds of millions of dollars betting against the housing market in 2008. He was the subject of the 2015 film The Big Short. Since then, though, he's had a mixed reputation for market predictions, having warned about imminent collapses that never came to pass.
For what it's worth, Burry is now betting against Nvidia, accusing the AI industry of hiding behind a bunch of fancy accounting tricks. He's homed in the circular deals between companies.
"True end demand is ridiculously small. Almost all customers are funded by their dealers," Burry wrote on X. He later wrote: "OpenAI is the linchpin here. Can anyone name their auditor?"
As tech companies sink billions into data centers, some executives themselves are freely admitting there looks to be some over exuberance.
OpenAI CEO Sam Altman told reporters in August: "Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes. Is AI the most important thing to happen in a very long time? My opinion is also yes."
And Google chief executive Sundar Pichai told the BBC recently that "there are elements of irrationality" in the AI market right now.
Asked how Google would fare if the bubble burst, Pichai responded: "I think no company is going to be immune, including us."
A record number of people are expected to travel within the U.S. for Thanksgiving, be it plane, train or automobile.
Why it matters: Nearly 82 million are projected to travel at least 50 miles from Nov. 25 to Dec. 1, an increase of 1.6 million people compared to last year's holiday, according to an AAA report released on Monday. Most of them will be hitting the road in a car, with about 73.2 million people expected to drive, AAA said.
Read on... to find out when's the best time to hit the road.
A record number of people are expected to travel within the U.S. for Thanksgiving, be it plane, train or automobile.
Nearly 82 million are projected to travel at least 50 miles from Nov. 25 to Dec. 1, an increase of 1.6 million people compared to last year's holiday, according to an AAA report released on Monday.
Most of them will be hitting the road in a car, with about 73.2 million people expected to drive, AAA said. That's 1.8% more car travelers compared to the 2024 holiday period.
AAA projected 6 million people to travel by plane within the country for the holiday, a 2% increase from last year. Due to concerns over recent flight delays and cancellations, however, AAA also said that number could end up dropping slightly if travelers make last-minute arrangements to use other forms of transportation. Staffing shortages during the prolonged government shutdown earlier this month resulted in mass flight disruptions.
The FAA lifted its directive that called for an emergency reduction in flights, allowing airlines to return to operating normally. Aviation experts warned it could take some time before flights return to normal, but industry leaders appeared confident that airline operations would return to normal pre-shutdown levels in time for the Thanksgiving travel frenzy. Weather forecast to bookend the holiday in some parts of the country could cause flight disruptions and delays.
The Federal Aviation Administration (FAA) said Friday it expected the upcoming holiday rush to be the busiest Thanksgiving travel time for air travel in 15 years, with Tuesday being the busiest flying day.
Travel across other transport modes — bus, train and cruise — was forecast to increase 8.5% this year, with a likely uptick in last-minute bus and train bookings
"People are willing to brave the crowds and make last-minute adjustments to their plans to make lifelong memories, whether it's visiting extended family or meeting up with friends," Stacey Barber, vice president of AAA Travel said in a statement on Monday.
Here is what else to know:
Driving in the afternoon? Think again
Tuesday and Wednesday afternoon are expected to be the most congested times for drivers in major metro areas, according to INRIX, a transportation analytics firm.
If driving, the best times to hit the road for the holiday will be before noon on Tuesday and 11 a.m. on Wednesday to avoid backups, according to the firm. Thanksgiving Day will have minimal road traffic impacts.
When returning home after the holiday, travelers are advised to start driving before noon on any day except Monday. The Sunday after Thanksgiving will likely have heavy traffic most of the day and the best time to travel Monday will be after 8:00 p.m., INRIX said.
Weather could be messy, but should clear up for your trip back
During peak travel times, from Monday through Wednesday, rain extending from Southern Texas up to Minnesota will move across the country to the east, according to the National Weather Service (NWS).
"Monday into Tuesday will probably be a little problematic anywhere from Texas, eastern Oklahoma, into Arkansas and northwestern Louisiana," Bob Oravec, lead forecaster for the NWS, told NPR.
By Thanksgiving Day, things will be a little drier across the U.S. Temperatures will be colder than average for a majority of the country on Thanksgiving morning, with central parts of the U.S. seeing temperatures in the teens. On Black Friday, there will be warmer than average temperatures from the Great Plains to the West Coast, with places like Denver, Colo., seeing temperatures in the mid-50s, Oravec said.
Some of the worst weather will be across much of the central and eastern U.S. where there will be lake-effect snow showers coming off the Great Lakes, Oravec said.
For holiday travelers returning home on Friday and Saturday, the weather should be decent for a large portion of the country, he said. But a storm system is expected to develop over the weekend.
On Saturday and Sunday, the system could bring heavy snow across western Nebraska, South Dakota and North Dakota as well as parts of Minnesota into Wisconsin, according to Oravec. On Sunday, from Texas up into Missouri and Illinois, chances of rain are forecast to increase.
