this time it's different…
Whenever someone insists that this time is different, I'm immediately skeptical.
The AI bubble is a case in point. Insiders insist: THIS TIME IS DIFFERENT! It's not a bubble, but for the most part, those making this argument are talking their book.
They're invested. They're biased.
But for the sake of argument, let's say this time isn't different. The general contours of AI look like the dot-com boom of the nineties, when companies like Pets.com famously landed landed investment wildly disproportionate to any revenue they could credibly deliver.
From a distance, it's obvious that the investors' "irrational exuberance" (as then-Federal Reserve Chairman Alan Greenspan put it) was not a question of if the internet would be profitable, but when.
If the same principle applies to AI (i.e. the bubble is not a question of if these companies are profitable, but when they will be profitable), we should prepare for another market "correction" (i.e. stock market crash).
And with AI accounting for something like 30% of GDP growth, the consequences will be devastating.
who will be blamed?
Tech.
As I wrote yesterday, the techlash is already in its second round, this time with the focus being on data centers rather than social media. I knew tech was unpopular, but I was honestly surprised to find out just how badly they are polling.
With the Democrats running against data centers, and Republicans threatening to do the same unless tech can convince the public their businesses will benefit the communities that house them, a bubble popping seems all the more likely.
How can Big AI build out the infrastructure they need to achieve profitability on a reasonable timetable if the general public is in opposition? Was this level of opposition priced into the huge investments already made into AI?
I doubt it.