U.S. Immigration and Customs Enforcement said Huabing Xie, an immigrant from China, had a seizure Friday at the Imperial Regional Detention Facility in Calexico and died that afternoon.
Second CA death: Xie is the second immigrant to die in the custody of federal immigration authorities in California, raising new questions about the care of detainees amid the Trump administration’s historic mass deportation campaign. On Sept. 21, 39-year-old Ismael Ayala-Uribe died inside ICE’s detention center in the High Desert city of Adelanto
Seventeen deaths, six months: The incidents come amid what several Democratic senators have called the deadliest six-month period for immigrants in federal detention nationwide since 2018. ICE has publicly reported that at least 14 people have died in its custody since January. ICE has publicly confirmed a 15th death at a county jail in New York State. Ayala-Uribe and Xie bring the total to 17.
Another immigrant died in the custody of federal immigration authorities in California, raising new questions about the care of detainees amid the Trump administration’s historic mass deportation campaign.
In an announcement, U.S. Immigration and Customs Enforcement said Huabing Xie, an immigrant from China, had a seizure Friday at the Imperial Regional Detention Facility in Calexico and died that afternoon.
Xie had been detained at the Calexico detention center since last month. ICE alleged that Xie was in the U.S. without legal status and said federal agents arrested him on Sept. 12 in Indio.
Staffers at the center gave Xie CPR and used a defibrillator, a medical device typically used to shock a patient’s heart, according to ICE. But Xie was later pronounced dead at El Centro Regional Medical Center.
Imperial County immigrants’ rights advocates said they were saddened and angered by the news. Imperial Liberation Collaborative organizer Marina Arteaga said Xie’s death fit into a pattern marked by dwindling oversight and increasingly harsh conditions at federal detention centers across the country.
“This is not an isolated incident,” Arteaga told KPBS on Monday.
Arteaga and other immigrants’ rights advocates are demanding that ICE release more details and calling on state and county authorities to investigate Xie’s death.
On Monday, ICE said an investigation was underway but declined to answer further questions.
More immigrants are dying in federal detention
Xie’s case was the second reported death of an immigrant in ICE custody in California in two weeks.
On Sept. 21, 39-year-old Ismael Ayala-Uribe died inside ICE’s detention center in the High Desert city of Adelanto after developing a cough and fever. ICE has also said they are investigating Ayala-Uribe’s death.
ICE has publicly reported that at least 14 people have died in its custody since January. In a letter earlier this year, Georgia Sens. Jon Ossoff and Raphael Warnock said the agency had also failed to acknowledge a fifteenth death at a county jail in New York State.
(ICE has since publicly confirmed that death but has yet to list it on the agency’s official detainee death tracking page as of Monday.)
Ayala-Uribe and Xie bring the total to 17.
That string of in-custody deaths comes as ICE races to expand its massive detention network. Flush with $45 billion in new funding from Congress, the agency is building new tent camps and expanding its use of military bases in a mad rush to fulfill President Donald Trump’s vow of mass deportations.
In Imperial County, Arteaga said that rush has also come with a crackdown on transparency.
Arteaga and the Collaborative have been visiting the Imperial County detention center since 2022 to spend time with detainees and document their experiences. They were completely shut out as of this August, she said.
“We have not been able to go inside the facility,” Arteaga said. “We don't know what's going on.”
What we know about Xie’s death
Beyond what ICE has already described, the circumstances of Xie’s death are unclear.
A spokesperson for El Centro Regional Medical Center reached by phone Friday also declined to comment.
One important question, Imperial Valley Equity and Justice Coalition executive director Daniela Flores said, is whether immigration agents used force against Xie during his arrest or detention.
Another question, she said, is whether Xie had any existing medical conditions that could lead to seizures — and whether he reported any symptoms to staff at the detention center.
“That is putting myself into his family's shoes,” Flores said. “Knowing that they probably want answers.”
Earlier this year, the California Attorney General’s office found that the Imperial County detention center was struggling to hire a medical director, leading to “delays in addressing clinical errors by lower-level health staff.”
Flores is asking state Attorney General Rob Bonta and the Imperial County public health officials to investigate.
In its statement Friday, ICE said U.S. Border Patrol agents first arrested Xie in 2023 near the eastern San Diego County town of Tecate. The agency said Xie was placed in removal proceedings and released.
KPBS could not locate any criminal records for Xie.
Local officials face calls for accountability
To Flores and Arteaga, Xie’s death highlights a lack of oversight of the Imperial Regional Detention Facility by elected officials.
The detention center is run by Management and Training Corporation (MTC), a private, for-profit company based in Centerville, Utah. The facility holds up to 782 detainees. In 2022, ICE reported that it spent more than $44 million on the facility every year.
The detention center has faced allegations of abuse in the past. In 2021, Carlos Murillo Vega, who grew up in Imperial County, sued MTC for holding him in solitary confinement for over a year. In 2022, nine detainees said in a civil rights complaint that their cells were moldy and the water tasted like bleach.
California has given county officials the power to inspect ICE detention centers in their jurisdiction. But Imperial County and most others have not used that power, Calmatters reported earlier this month.
In an email to KPBS, Calexico Mayor Diana Noricumbo said the detention center is located in an unincorporated part of the city, outside their jurisdiction.
KPBS also reached out to Imperial County’s five supervisors and a county spokesperson. None responded to questions by publication time.
Many experts say recent immigration and health policies are only making it harder — and less appealing — for foreign-born talent to augment the short-staffed American health system.
Some background: Immigrants make up about a quarter of all the country's doctors, and the U.S. health care system depends heavily on them. There are roughly 325,000 physicians — not including nurses or other critical health care workers — living and working in the U.S., who were born and trained elsewhere.
Why it matters: Immigrant physicians have historically found jobs in U.S. communities with serious health care staff shortages to begin with, so those places also stand to see more impact from curtailed international hiring, says Michael Liu, the Boston medical resident.
Read on... to learn more about what this means to patients.
Michael Liu grew up in Toronto, Canada, then moved to the U.S. for college and medical school because, to him, America was the premiere destination for fulfilling his aspirations to become a physician and researcher.
"You know, in chase of the American Dream, and understanding all the opportunities — that was such a draw for me," says Liu, who attended Harvard University. He is now 28 and has deep personal and professional roots in Boston, where he's an internal medicine resident at Mass General Brigham.
But this spring, he was shaken by the Trump administration's cuts to scientific research at the National Institutes of Health and staff at the Department of Health and Human Services. "That was a really striking moment for me," Liu says. "It made me question where, professionally, it made most sense for me. I still have strong connections to Toronto and mentors."
Then, in September, Liu was doing rounds with two doctors from Mexico and Costa Rica, when the administration hiked fees nearly 30 fold for H1B visas, which are for highly trained professionals, to $100,000. He watched his colleagues' tearful reactions to the sudden uncertainty that thrust on their careers, knowing that employers like hospital systems are unlikely to be able to afford to pay for such dramatic increases.
"It was terrible to see," Liu says. He has a green card, having married an American citizen earlier this year. But, he says, the Trump administration's actions affect him.
"It feels like my contribution is — just because I was not born in this country — less valued," Liu says. "I really hadn't thought so deeply about going back home before, but definitely it's been much more top of mind."
A rural workforce
Immigrants make up about a quarter of all the country's doctors, and the U.S. health care system depends heavily on them. There are roughly 325,000 physicians — not including nurses or other critical health care workers — living and working in the U.S., who were born and trained elsewhere.
In rural communities, and in some subspecialties of medicine, the reliance on immigrant physicians runs much higher. In primary care and specialties like oncology, for example, foreign-born doctors account for about half of the workforce.
Meanwhile, health care is already burdened by retirements and burnout. Many experts say recent immigration and health policies are only making it harder — and less appealing — for foreign-born talent to augment the short-staffed American health system.
She says policies defunding everything from scientific research to public health have damaged the U.S.'s reputation to the point where she hears from hospitals and universities that top international talent are no longer interested in coming to America. "Up until this year, it was a dream — a wish! — that you could get a job and you could come to the U.S. And now nobody wants to come."
Gralow says, meanwhile, other countries like China, Denmark, Germany and Australia are taking advantage by recruiting international talent away from the U.S. — including American-born doctors and medical researchers — by promising stable grant funding and state-of-the-art facilities abroad.
American patients will feel the rippling impact from that, Gralow says, for generations.
Immigrant physicians have historically found jobs in U.S. communities with serious health care staff shortages to begin with, so those places also stand to see more impact from curtailed international hiring, says Michael Liu, the Boston medical resident.
He points to his own recent co-authored research in JAMA estimating that 11,000 doctors, or roughly 1% of the country's physicians, currently have H1B visas. "That might seem like a small number, but this percentage varied widely across geographies," he said, and they tend to congregate in the least-resourced areas, reaching up to 40% of physicians in some communities.
"High poverty counties had a four times higher prevalence of H1B physicians; we also saw that same pattern in rural communities," he says. (Many physicians and physician residents may have different kinds of visas, such as J1Bs, and others.)
For the past six decades, immigrants have contributed heavily to the U.S.'s reputation as the undisputed world leader in health research and practice. In pay and prestige, the U.S. has been unparalleled, helping attract the world's best talent — at the expense of their home countries.
That began in 1965, during a period of expanding federal investment in public health and scientific research, spurred by international competition and fueled by Cold War rivalries over events like the Soviet launch of Sputnik. That year, Medicare and Medicaid were created, and with them, sudden demand for doctors, says Eram Alam, a professor of science history at Harvard.
Over the following decade, the U.S. granted visas to 75,000 physicians, and by 1975, roughly 45% of all U.S. doctors were immigrants, Alam says. The U.S.'s first-rate reputation allowed it to attract more physician talent than America could educate and train: "There were more immigrant physicians that were entering the labor force per year than there were U.S. trained physicians that were joining," she says.
Now, Alam says, the U.S. is undoing a lot of that, as it dismantles its global leadership role in medicine and science, and narrows its borders.
Artist Shepard Fairey will have more than 400 prints on display at Beyond the Streets
(
Courtesy Gold Atlas
)
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
(
Kyle Flubacker
/
Center Theatre Group
)
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
(
Courtesy Philharmonic Society
)
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
(
Courtesy Generic Events
)
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
(
Courtesy Unplug
)
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
(
Courtesy Gold Atlas
)
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
(
Courtesy LA Times
)
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
(
Los Angeles Fun Events
/
Eventbrite
)
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.
(
Elly Yu
/
LAist
)
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.
(
Elly Yu
/
LAist
)
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.
(
Elly Yu
/
LAist
)
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.
(
Ian Maule
/
AFP via Getty Images
)
"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.
(
Mario Tama
/
Getty Images
)
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.
(
Justin Sullivan
/
Getty Images
)
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."
