On the Eve of the AI Bubble Bursting: Hardware Price Increases, Token Price Declines, and the Tech Stock Selloff

The Eve of the AI Bubble Bursting Huxiu.com October 31, 2026 10:30:55 From Jilin

Today is Saturday, October 31, 2026. The US markets just closed on Friday.

The Nasdaq fell 2.86%, which isn't a particularly terrifying number, yet the internet was filled with wails of anguish.

Intel fell 28.58% on Friday, its biggest single-day drop in forty years. Its Q3 EPS was 0.52, far exceeding the market expectation of 0.40.

Just yesterday, Google fell 12.64%, closing at $283.82, its worst day since its 2004 IPO. Nearly five hundred billion dollars of market value evaporated in a single day. Yet its revenue only missed market expectations by 0.2% to 0.4%. Its cloud revenue doubled, and search query growth was the highest in five years.

SanDisk's revenue rose 23% quarter-over-quarter, adjusted EPS was $49.51, up more than 40-fold year-over-year, and it holds $91.1 billion in signed orders. Earnings beat expectations, and the stock still fell 13.47%.

This article does not constitute any investment advice, and investing is not the topic I want to discuss today.

This year, what has affected us the most is probably the rising prices of memory and flash storage.

Hardware price increases directly resulted in declining PC and phone sales.

Memory now accounts for 40% of the cost of Apple phones. The standard iPhone is simply no longer being released.

The new iPad mini sells for 5,499, but only comes with 128G of flash storage—not even enough to install two large games.

Many Android manufacturers have also stopped releasing low-end thousand-yuan phones.

Intel predicts the PC market will shrink 12% in 2026 and another 10% in 2027, with the downturn continuing.

At least as of this point in time, October 31, 2026, I haven't seen it.

If we must name an exception, the only exception is Hongguo Short Dramas, but that matter is also quite bizarre—I'll discuss it at the end of the article.

I know this conclusion will be rebutted by many people. Let's look at the strongest area of AI, Coding. AI Coding is so powerful—how can you say it hasn't created incremental value?

Yes, AI Coding capabilities are beyond doubt. Every software company has boosted its coding productivity thanks to AI, and every company's code volume is exploding—one year now equals the past ten.

But productivity does not equal value.

AI Coding boosts productivity 10-fold, but it hasn't increased product revenue 10-fold—even a 2-fold increase is very, very rare.

This principle is easy to understand if we swap in something else.

Yunnan's blueberry production this year grew 39% over last year, yet prices fell 50% compared to last year.

The official conclusion was: "A large volume of fresh fruit flooded into the market in a concentrated manner, and the change in supply-demand structure led to a cliff-like drop in prices."

Supply increased, but revenue didn't necessarily increase, because things sold cheaper.

Economics is just that ruthless—only scarcity has value, and humans pay for scarcity.

Price is determined by supply and demand; if demand stays the same, the more supply there is, the cheaper it gets.

Last year, you ran a business and could earn $1 million a year.

This year, you have more powerful AI, and you think: great, productivity is up, this year I can earn $10 million.

But don't forget, AI lets your competitors build your business in a single day, so the number of your competitors has increased 10-fold. The result is fiercer competition, and consumers get cheaper goods and services.

Consume 10 times the tokens, produce 10 times the products, work 10 times as hard.

And you can still barely maintain a balance of value.

Products come out one after another.

But did they make money? Not a single one.

I ask my friends whether your vibe coding counts as saving time or killing time, and everyone says killing time.

No wonder some say the essence of AI is neither 2B nor 2C, but 2me—for your own enjoyment.

The basic principle of economics is about transactions. Transactions make everyone's life better.

A person obtains money through transactions and spends it, so others obtain money, and they spend it too, and so on in an endless cycle.

Even the logic of content consumption has changed.

Reddit just experienced its worst day since going public today, with its stock falling 29%.

On the conference call, Reddit CEO Steve Huffman summed up the reason simply:

Google's AI Mode now gives answers directly, and no one clicks links anymore.

For the past 25 years, the internet's protocol has been this:

Websites provide content to Google, and Google sends users back to the websites.

But now AI Mode summarizes it, users get the result directly, and they leave.

The number of daily users entering websites in the US has dropped 2% over the past year, the first decline since Reddit's 2024 IPO.

Reddit is just a microcosm. It is widely recognized as the most human-feeling community, and even it is affected this way—let alone other websites.

When the nest is overturned, how can any eggs remain intact.

But aren't relay stations still quite profitable? How can you say there are no middlemen?

From Claude Opus 4.5 to DeepSeek Flash 4.1, the price of tokens for completing the same task has dropped 50 to 100-fold this year, and it is foreseeable that it will drop at least another 10-fold next year.

There are now few relay stations offering low-priced models like Luna. A friend who runs a relay station told me that their revenue looks okay, but after deducting costs, there isn't much profit left.

Tokens are so cheap that they are already cheaper than the cost of relay servers.

There was another big event this week: Microsoft opened voluntary buyouts to 60,000 employees, more than a quarter of its total workforce.

Everyone knows this is a gentle form of layoffs.

Has Microsoft run into some problem? Why would it want to cut a quarter of its employees?

Speaking of this, we come to ByteDance's big closed loop: Hongguo Short Dramas.

It must be said that Hongguo is an even more formidable product than Douyin—short dramas for everyone, suitable for all ages.

Fanqie Novel's text + Seedance's video generation + Juliang Engine's smart advertising + Hongguo's DAU and watch time.

ByteDance earned about $50 billion last year, and this year it plans to spend up to $70 billion building AI infrastructure.

Looking through history, in every tech cycle, a technology must first bubble, then there is a big crash to deflate the bubble, and only then does everyone apply it to places of real value.

This is the cycle, and behind the cycle is human nature.

Technology keeps changing, but human nature never changes.

From ChatGPT's release in November 2022 to today, AI is about to complete a full four years.

Anthropic is going public next month, and many say that will be the peak of the AI bubble.

What do you think?

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