Introduction
Is artificial intelligence the next investment gold rush—or are we watching another government-subsidized bubble inflate before our eyes? With Ford Motor Company writing down $19.5 billion on electric vehicles and tech giants pouring hundreds of billions into AI infrastructure, investors over 50 face a critical question: how do you separate genuine opportunity from dangerous speculation?
In this episode of The Tom Dupree Show, Tom Dupree, Mike Johnson, and James Dupree examine the dramatic collapse of EV investments and the explosive growth in AI and data center buildouts. Drawing on research from Dupree Financial Group’s six-person investment committee—including direct calls with data center developers—they reveal how to evaluate hot investment trends without getting burned.
With 47 years of investment experience, Tom brings hard-earned skepticism to separate sustainable opportunities from the kind of government-backed disasters that just shut down Kentucky’s Blue Oval battery plant.
Ford’s $19.5 Billion EV Disaster: A Cautionary Tale
Kentucky’s Battery Plant Shuts Down
Ford Motor Company shocked investors with a $19.5 billion write-down on its electric vehicle business, abandoning ambitious plans for full-size EVs like the Ford Lightning pickup truck. The casualty? Kentucky’s Glendale Blue Oval Plant near Elizabethtown—once promised to employ 5,000 workers—has laid off all 1,500 current employees indefinitely.
“Ford takes a 19 and a half billion dollars write down on their EV business,” Mike Johnson reported. “Essentially they are getting away from full-size electric vehicles.”
Tom Dupree had predicted this outcome over a year ago: “I think it might be that guy named Tom Dupree who said a year and a half ago that that thing would never happen.”
Government Mandates vs. Market Demand
The Blue Oval failure illustrates a critical investment principle: government subsidies create artificial markets that collapse when support ends.
“All of this was coming from government mandates. This was not driven by market demand for electric vehicles,” Mike explained. “The demand was not there because the infrastructure is not there yet. It was this heavy hand of government forcing the market to accept this product that they didn’t want.”
What went wrong:
- Political mandates drove investment, not consumer demand
- EV infrastructure remains inadequate for mass adoption
- Manufacturing costs exceeded profitable pricing
- When subsidies decreased, the business model collapsed
Why Toyota Won and Ford Lost
While Ford chased government EV subsidies, Toyota focused on hybrid technology—matching actual consumer readiness and avoiding financial catastrophe.
“You know who didn’t do that? Toyota,” Mike noted. “Toyota was focusing on hybrid. That was their core focus. And so they’re not taking a 19 and a half billion dollars write down.”
Investment lesson for retirees: Companies building products consumers actually want—rather than products governments mandate—create sustainable returns.
From Battery Hype to AI Hype: History Repeating?
The 18-Month Investment Shift
“A year and a half ago it was all about batteries,” Tom observed. “Look up some of these battery stocks, James. I bet a lot of ’em are just in the doldrums.”
The investment landscape shifted with stunning speed from battery plant euphoria to AI infrastructure mania. The question: is AI different, or are investors making the same mistake twice?
Inside Dupree Financial Group’s Data Center Research
James Dupree coordinates research for the firm’s six-person investment committee, scheduling calls with company management and conducting initial analysis. The entire committee recently participated in a research call with Applied Digital, a data center developer leasing facilities to tech giants.
“We talked about Applied Digital on the last show,” James explained. “They’re the data center landlord. They build and rent out the data centers.”
The Hyperscaler Spending Analysis
James’s research revealed critical distinctions between sustainable AI investment and dangerous speculation.
“The first thing that the guy showed us was he pulled up a list of the hyperscalers—Microsoft, Amazon, Meta, Oracle, OpenAI, all these guys,” James reported. “And he was showing their sales and then he told us how much they’re gonna spend.”
James’s assessment:
“Amazon good, Microsoft good, Meta okay—they’re kind of getting on that bubble where they’re spending a little bit too much. Meta does 160 billion in sales and they’re supposed to spend 70 billion,” James detailed. “And then where it really gets dicey is Oracle. They do 50 billion in sales and they’re supposed to spend 500 billion. So that’s a red alert there.”
This granular analysis—comparing capital spending to revenue—separates professional investment management from amateur speculation chasing headlines.
Data Centers: Real Demand or Another Subsidy Bubble?
The Power Shortage Reality
Unlike EVs, data centers address a genuine infrastructure shortage: 40-90 gigawatts of power capacity needed in the United States.
What makes data centers potentially valuable:
- Legitimate power shortage driving demand
- Long-term triple-net leases (Applied Digital secured 15-year, $11 billion lease)
- Potential conversion to REITs for steady income
The critical risk—chip obsolescence:
“Inside that data center, you’ll literally have $3 billion in chips in that building,” Mike explained. “And right now we don’t know exactly what the useful life of those chips are. Who’s gonna take the liability if these things only have a use life of three years instead of five years?”
Government Involvement: Red Flag or Validation?
James reported recent news about Core Weave, Applied Digital’s anchor tenant: “Core Weave had some big news today. That stock’s up 23% on the news. The government came out and said that they would be a part of a program related to energy, so the government’s backing that company.”
But Tom immediately questioned the parallel to Ford’s disaster: “I kind of have a problem with governments picking winners and losers. That’s something that the Democrats were known as doing, and now the Republicans are doing it.”
Examples of government market intervention failing:
- MP Materials: Government backing, stock dropped from $50+ to $15
- Intel: Massive subsidies, uncertain outcomes
- Kentucky’s Blue Oval Plant: Complete shutdown after enormous investment
Tom Dupree’s Investment Skepticism: The Voice of Experience
Learning from 47 Years of Market Cycles
Tom’s experience provides essential counterbalance to research enthusiasm about hot new sectors.
“People are suckers for deals. If they think something’s hot, they jump on it, buy into it. They don’t spend much time thinking about whether it’s feasible or not,” Tom cautioned. “Two and a half years ago people were all over the battery plant thing. It was never gonna work. It was all just hype.”
Historic bubbles Tom has witnessed:
- Dot-com crash (2000-2002)
- Housing bubble (2008)
- Battery/EV hype (2022-2024)
- Potentially: AI overinvestment (2024-?)
The “Bigger Money, Bigger Dummies” Principle
Tom’s most provocative observation challenges assumptions about tech giant spending:
“If the seven largest companies are putting all this money in it, do you think they’re gonna go to zero? No, but the bigger the money, the bigger the dummies sometimes,” Tom warned. “They follow each other. If so-and-so’s doing it, we gotta do it. That’s FOMO. They don’t wanna get left behind.”
The Picks and Shovels Strategy
Rather than betting on which AI platform wins, Tom advocates investing in essential infrastructure.
“I think you invest in not the project itself, but in the people that surround the project—selling picks and shovels to the gold miners,” Tom explained. “Levi’s sold workwear to the gold miners and they became a much bigger company than the gold miners ever did.”
Modern picks and shovels:
- Cooling system manufacturers (like Vertiv)
- Power infrastructure companies
- Industrial automation suppliers
- Data center construction firms
The Investment Committee Advantage
How Six Perspectives Beat One
This episode revealed Dupree Financial Group’s collaborative research process—a six-person investment committee evaluating every opportunity.
“What I think is really interesting about this entire conversation is the listeners have gotten a snapshot of why, how we research companies. What information comes out of research, questions asked, and then you get the snapshot of Tom shooting holes through it.”
The committee process:
- Research coordination (James schedules calls, conducts initial analysis)
- Committee participation (All six members join company calls)
- Analytical framework (Mike examines spending ratios, cash flow)
- Devil’s advocate (Tom stress-tests with historical perspective)
- Risk-based sizing (Committee determines appropriate positions)
“With any investment, you identify what the risks are,” Mike explained. “And when you identify the risks, then you can make a better decision as to, okay, does the potential reward justify those risks? That’s why these are small positions in the portfolio, but they serve a purpose in the overall grand scheme.”
Market Discipline: Encouraging Signs
Investors Punishing Excessive Spending
Unlike past bubbles where markets rewarded unlimited capital deployment, current market behavior shows healthy skepticism.
Recent examples:
- Meta’s stock rewarded for reducing metaverse spending
- Oracle’s stock punished for excessive debt-fueled AI investments
- Market demands cash-flow funding, not leverage
“What was scary is when the market just didn’t care,” Mike noted. “That’s when you get major issues with bubbles and speculation. And now you’re starting to see some discernment there.”
Warning Signs to Watch
🚩 Spending exceeding revenue (Oracle: $50B revenue, $500B AI spending planned) 🚩 Debt-fueled expansion (Markets punishing companies issuing bonds) 🚩 Government subsidy dependence (Kentucky battery plant lesson) 🚩 Unclear profitability timeline (Burning cash for market share)
Key Takeaways: Smart AI Investing for Retirement
Principles from the Investment Committee
✓ Separate demand from mandates – Real demand survives subsidy removal
✓ Follow cash flow, not hype – Profitable operations beat government support
✓ Analyze spending vs. revenue – Warning: spending over 100% of sales
✓ Invest in infrastructure, not platforms – Let the picks and shovels win
✓ Size positions for volatility – Small strategic positions, not portfolio bets
✓ Maintain skepticism – “The bigger the money, the bigger the dummies sometimes”
Questions Before Investing in AI
- Is expansion funded by cash flow or debt?
- What’s the spending-to-revenue ratio?
- Does demand exist without government subsidies?
- Am I investing in infrastructure or speculation?
- What percentage of my portfolio does this represent?
- Do I understand what I own and why?
The Bottom Line
Artificial intelligence represents genuine technological advancement—particularly in automation and data infrastructure. But the line between opportunity and bubble depends on distinguishing sustainable business models from government-manufactured markets.
James Dupree’s research identifies legitimate demand: power shortages, long-term leases, real customers paying market rates.
Mike Johnson’s analysis reveals concerning patterns: excessive spending ratios, debt financing, market punishment of poor capital allocation.
Tom Dupree’s experience provides context: revolutionary technologies always face enthusiasm, overinvestment, shakeout, then rational pricing.
The investment committee’s process ensures multiple perspectives evaluate opportunities before committing client capital.
As James concluded after thorough research: “Demand is really up in the AI space. And as long as people don’t get over their heads of how much they’re gonna spend, then it should be intact.”
But Tom’s caution remains essential: “The big thing isn’t gonna be what everybody thinks it’s gonna be. Never is.”
Learn more about our investment philosophy and committee-based approach to evaluating opportunities.
Schedule Your Complimentary Portfolio Analysis
Are you overexposed to AI hype? Underexposed to genuine infrastructure opportunities? Not sure if your advisor conducts the kind of detailed research our six-person investment committee performs?
At Dupree Financial Group, we bring 47 years of experience separating sustainable opportunities from dangerous bubbles.
Our process includes:
- Direct company research calls with management teams
- Six-person investment committee evaluation
- Analysis of spending sustainability and capital structure
- Risk identification and appropriate position sizing
- Focus on cash-flow positive businesses, not subsidy-dependent speculation
Call us at (859) 233-0400 or schedule your complimentary portfolio analysis directly on our website.
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Frequently Asked Questions
Is AI investment a bubble like the dot-com crash?
AI shows both genuine advancement and bubble characteristics. Our investment committee’s research reveals some companies (Oracle) spending 10x revenue on AI—a classic warning sign. However, companies like Amazon and Microsoft spend more sustainably from cash flow. The key is distinguishing infrastructure from speculation and sizing positions appropriately.
Should retirees avoid AI stocks entirely?
No. Complete avoidance means missing legitimate automation and infrastructure opportunities. Our approach: small strategic positions in profitable, cash-flow positive companies supporting AI infrastructure—not speculation on which platforms dominate. Position sizing protects retirement capital while capturing upside.
How can I tell if AI investment is sustainable or subsidy-dependent?
Compare capital spending to revenue. Our committee analysis: Amazon and Microsoft sustainable, Meta concerning (44% of revenue), Oracle dangerous (10x revenue). Additional indicators: cash flow funding vs. debt, existing customers paying market rates, clear profitability path. Ford’s $19.5B EV write-down shows what happens when subsidies drive investment instead of demand.
What happened to Kentucky’s Blue Oval battery plant?
Ford’s Glendale facility—promised 5,000 jobs—laid off all 1,500 employees and sits shuttered. Built on government EV mandates rather than market demand, the project collapsed when subsidies decreased. May reopen in 2027 with only 2,100 jobs for utility batteries—a classic government-driven investment failure, Tom Dupree predicted.
Are data centers safer than chip manufacturers for AI investment?
Different risk profiles, not necessarily safer. Data center advantages: 15-year leases, REIT conversion potential, genuine power shortage. Risks: $3 billion in rapidly obsolescing chips per facility, tenant financial stability (Oracle’s concerning spending). Diversification across AI-supporting sectors provides better risk management than concentration.
Important Disclosures
Dupree Financial Group is a registered investment advisor with the U.S. Securities and Exchange Commission (SEC). This content is for informational purposes only and does not constitute investment advice or a solicitation. Past performance does not indicate future results. All investments involve risk, including potential loss of principal. References to specific companies are for illustrative purposes only and do not constitute recommendations. Before making investment decisions, consult qualified investment, legal, and tax professionals. For more information about our services, fees, and potential conflicts of interest, review our Form ADV Part 2A at www.adviserinfo.sec.gov or call (859) 233-0400.