AI bubble giving dotcom crash vibes

I’m going to move into dangerous territory, where I say that I listened to Professor Scott Galloway and I thought he had a point. In a recent podcast, he and economic wunderkind Ed Elson tackled the idea that AI is a bubble. Their conclusion: it’s uncanny how similar it is to the dot-com bubble.

That’s why headlines like this one: “Everyone’s wondering if, and when, the AI bubble will pop.” are emerging in places like this Yahoo Finance piece (with, by the by, an interesting disclaimer that it’s first draft was written by AI). With the large majority of growth in the US made up of five companies, investors, analysts, and founders are wondering if we’re building something with foundations of sand.

FOMO + déjà vu

We’re in a moment where capital is desperately hunting scale, narrative, and “AI” stamps of legitimacy. Many investments are being made defensively. Motivation is more  “I can’t risk being left behind” rather than “this business is grounded.”

That’s classic bubble behaviour: valuations outrunning utility, hype running ahead of deliverables.

But this isn’t to say AI is purely vapour. Some parts are genuine, and sectors are already transforming, such as chips, data engineering, and workflow automation.

Investment before demand

The internet tycoons of the early 00s weren’t wrong about the internet being a disruptive technology that would become integral to our way of life. What they got wrong was how quickly it would be adopted and become profitable. They overinvested in infrastructure, and the revenue wasn’t there yet.

We’ve had enough shocks in recent years. Let’s maybe all get together and agree not to have another financial crisis just yet.

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