Artificial intelligence has proved itself useful in many circumstances (for example, in initiating research on an unfamiliar topic, or in critiquing written documents) but big problems with AI are now looming.

AI is out of control. The exposure of the hacking of the Hugging Face website by OpenAI software this summer has led to the revelations of tens of thousands of hacking incidents, by AI software products from some of the major vendors. All of this was apparently unintentional and initially unrecognized by the companies involved.

It now appears that the AI companies haven’t taken the necessary precautions to make sure their software doesn’t “escape” onto the internet, and (in some cases) they have not even bothered to try very hard.

Regulation is desperately needed, but it’s clear that the federal government won’t do anything. Despite the efforts of Senators Hawley and Murphy, Speaker Johnson’s opposition means that no Senate bill is forthcoming. Donald Trump is a big fan of AI, possibly because of large donations from the “tech bros”. He prefers “voluntary self-regulation”. Does that sound promising?  It’s not even clear whether the AI companies can be held liable for the damage their software creates. It will be up to states and cities (and other countries) to impose regulations, and that is beginning to happen.

The finances don’t work. The big AI companies are planning to pour hundreds of billions into AI development. Venture capital can’t provide that kind of money, so the companies are resorting to borrowing, offering bonds, and making stock offerings to get the money they need.

But lenders and investors are starting to worry that the promised return on their investments will never materialize. Companies with large existing businesses (think Google and Microsoft) will survive even if their AI investments don’t. But startups like Anthropic (Claude) and OpenAI (ChatGPT) could go bankrupt and investments in those companies would then be worthless. Anthropic says it is close to making a (tiny) profit, while OpenAI is losing vast sums.

OpenAI is planning an initial stock offering in early 2027, and that may provide an indication of what investors are currently thinking about AI. If the offering is a failure, the future of AI more broadly (at least the current generation of “large language model” packages) is in doubt.

AI needs too many data centers. Thousands of data centers, most of them intended to serve AI companies, are planned or in construction across the country. That’s creating a backlash. In many cases, local officials have signed non-disclosure agreements, so that residents don’t even know the data centers are coming until construction starts.

Data centers can bring many problems. Of course, they require huge amounts of electricity, which can drive up local rates for consumers. They also produce incessant noise, use of vast amounts of fresh water, and are often creating local pollution problems due to the use of unpermitted gas and diesel generators.

A huge national backlash is forming. One of the organizers is Erin Brockovich, whose data center website lists 9,683 communities that are reporting potential data center construction. (Many, of course, will never be built.) You may remember Brockovich from Julia Roberts’ powerful portrayal of her in the 2000 movie “Erin Brockovich”. Politicians are reading the tea leaves and starting to talk about reining in the data center builders.

If data-center development slows, so will the development of AI. The vast majority of the market for these data centers is AI.

It’s headed for a crisis. The specter of regulation, the dubious investment situation, and the backlash against data centers are all arising at once, and the consequences for the AI companies could be dire. So, too, could the consequences for the stock market, which is currently heavily dependent on a small number of tech companies, most of them involved in AI in one way or another.

It seems likely that Trump’s government will intervene to support the AI companies and the stock market if a collapse becomes imminent. But in this situation, even the federal government would have limited tools to deal with a problem of this size.