Is the Artificial Intelligence (AI) Boom Turning Into a Bubble or Just Getting Started?

Core Insights - The AI arms race has been ongoing for three years, with recent massive deals raising concerns about a potential stock market bubble [1] - There is a possibility that current investments in AI could lead to long-term economic gains, prompting investors to consider their strategies [2] Investment Concerns - Circular investing, a significant factor in the dot-com crash, is re-emerging, where companies invest in each other without substantial consumer demand backing these investments [4] - OpenAI, a leader in generative AI, has made multiple deals with major companies like Nvidia, AMD, Broadcom, and Oracle, which are financed without cash payments or debt, raising fears of an AI-driven stock market bubble [5] Market Resilience - Not all companies would be adversely affected by a market crash; for instance, Alphabet's core business through Google Search would remain stable even if AI investments were halted [7] - Major AI hyperscalers like Amazon, Microsoft, and Meta Platforms would similarly be insulated from a crash due to their diversified revenue streams [7] Investor Sentiment - OpenAI's recent deals have attracted scrutiny from seasoned investors, indicating a cautious approach towards the current investment climate in AI [8]