To say whether it's a bubble, we need to know the value of the technology.
The value of modern AI seems very high. That nobody knows how high, that they still haven't figured out applications, and that the technology and its tools are still far from refined, is normal for any new technology.
If you add the value of the potential political power gained by controlling AI, then the value to the owners and investors is astronomical. Many of the investors have demonstrated a strong motivation to sacrifice money for political power, for example by supporting nationalism that undermines a global economy that they benefit enormously from. Somewhere, I read someone explaining their investment by saying 'it's the greatest transfer of power in (modern) history'. Also see: https://news.ycombinator.com/item?id=45983700
the real answer is that the applications for the military, surveillance, and population control are proven, and the pathways to scale those capacities are clear, so the money will pour in no matter what. the implication is that we had better come up with some more consumer/humanity friendly applications that create comparable value, or that is all we will get.
This sort of reactionary post is a tiring as the motivating situation. Here's a big difference: aside from all the circular investments the companies at the root of AI have huge earnings and did so before the boom as well.It's convenient to say "Look at all these declines in the past month! The end is nigh!" - maybe expand your chart to 12 months or even 5 years. You can argue against Nvidia but if you do they've made you look foolish 3 pivots in a row. Are companies very expensive right now? Absolutely. Are there a lot of frothy valuations and looming failures? Probably - I think so. Is this just like the Internet bubble? Beyond the generic basics, no.
The internet was monumental and valuable, offering instant conveyance of media and data. AI is monumental, allowing instant access to near infinite data; but whether instant access is as valuable as instant conveyance yet alone five times the value, appears to be the question
Honestly anyone who thinks AI has intrinsic value to rival the GDP of nations is a bagholder in denial and I'll be happy to buy your puts.
"instant access to near infinite data" is Google search.
AI if it gets better will be thinking / intellectual work which is a different category.
I remember in the 90s people would say the internet will bring instant conveyance of media including video and people were like yeah right I can just about get one page of crappy text in a minute over the unreliable dial up modem. It's like that now with AI thinking.
Ok, so if that prediction is true what actions did you take?
Identify the therefore part of the prediction and enumerate the three highest priority steps.
Have you determined that the stock market will crash and bought positions accordingly? Have you sold all your nvidia stock?
What are the implications in the broader economy and what steps have you taken?
Idk, we seem to be the at the cusp of autonomous driving. Transportation is like ~8% of world's GDP. Payroll is, what, 30% of that? It seems like we can already have the return on all AI investment by just conquering this one application.
Maybe guard your investments, but the big question back then was "is the internet really that good, will it stick around" and the reality is it won argument hands down. The same thing will prove true about AI.
I grew up in the 90's and remember being a computer nerd BEFORE the .com bubble, and starting my career precisely after it burst. Let me tell you one difference I personally am experiencing that differentiates the two. Note, this is a pro-'we're in a bubble' stance:
In the late 90's and early 2000's, businesses were SALIVATING to get online, individuals were finding new ways to benefit and profit from it, and massive investment was being made to facilitate what was inevitable: an interconnected network of everything. Do you remember faxing things ? Paper mail? People half in the know were pushing the Boomers and older Gen-X types to get on with it and modernize.
Now? Not only are people not CLAMORING for more AI, it's that The Powers that Be are forcing it down our throats. At work, we have mandatory AI training, we have people getting promoted for promoting extremely dubious AI solutions both internally and on our product. I log into ANY web site now, whether I'm shopping for a vacuum cleaner or logging into a vendor website, and I get AI shoved in my face, from from "assistant" I have to interact with before typing "agent" to new features I don't care about.
Is there some truth, some merit? Absolutely. But my red flag I'm trying to raise is this: never did it feel FORCED in the 90's, there was a salivation from individuals to get more online, and a reluctance from institutions like elementary and high schools to get with the program.
Now? Corporations large and small are shoving it down our throats. Why? Well, to justify the crazy spending.
I'm no prophet and the world (and economy) are fundamentally unpredictable. But I'll say this. I'm putting my money where my mouth is, and I've put in an order to buy a 5 digit dollar amount of puts on a big 'AI' type ETF, that'll expire in the Spring. It's already wobbling and if you can't beat them, profit off of them when they stumble.
There's absolutely something wrong in the current moment, even if AI is somehow the future. For one thing, the U.S. economy would probably be in a recession right now if it weren't for this insane AI spending. It's wobbled with the recent Nvidia earnings release, and I think it is going to dip (not crash, but start dipping) soon.
The author wrote:
"None of these companies has proven yet that AI is a good enough business to justify all this spending. But the first four are now each spending $70 billion to $100 billion a year to fund data centers and other capital intensive AI expenses. Oracle is spending roughly $20 billion a year. "
In my opinion it's a theoretical arms race 'just because my competitor might win', and not based on anything certain.
What’s really scary is the money that’s being invested vs the .COM bubble. In the end 90s 100 million was a huge investment. Now it seems every AI company immediately a billion dollar and more valuation. There was a time when this was called “unicorn”.
One difference is most of the companies listed are old, long standing, well-performing businesses. Pets.com had potential, Apple, Amazon, and Google had large amounts of revenue even 3 years ago.
The bubble may deflate but every company mentioned will still be standing, whereas in 1999 many of them were basically Ponzi schemes relying on further investor dollars to subsidize losses. All this AI spending will hurt some investors if the bubble pops but just make for a few bad quarters for the big tech cos.
Hmm. The comparison makes sense in some ways, but the thing is - as much as I dislike AI, I think AI will stay, whereas the internet bubble seemed to subside without that much left from it, more or less. While I hate most of AI, it does have some use cases - the current hype will eventually subside or collapse, but I think the core use cases will most likely remain.
"All but Alphabet have seen big share declines in the past month. Microsoft is down 12 percent, Amazon is down 14 percent, Meta is down 22 percent, Oracle is down 24 percent"
That fluctuates anyway and profits are made by some - nothing new here.
I think the world needs to detach from the stock markets though. That may not seem realistic right now, but if you look at the current US president and the ties to superrich, we really have a huge problem now. A few parasitize on the masses. That can not be sustained. It is not ethical.
"It will spark a generation of innovations that we can’t yet even imagine."
I am not so sure. So far I successfully avoided AI, including becoming dependent on AI - I am not. So that is good.
I can not really see what "innovation" would make me want to embrace AI. Perhaps I can be forced into it, but right now I am happy avoiding it.
"Because we humans are pretty good at predicting the impact of technology revolutions beyond seven to ten years."
No, we really are not.
"Not only does the AI bubble in 2025 feel like the internet bubble in 1999"
It is still not the same.
I feel the article is falling apart there. It tries too much to compare to the 1999, but it is not the same.
I'm not sure it's sensible but I have a lot of cash at the moment. I think there'll be a bit of a crash and then it'll be good to invest in stocks bitcoin or whatever. Non crazy might be income generating boring companies like utilities.
I wonder if we need a new term rather than bubble for these types of short-term over-invested sectors.
The Tulip mania (if it existed) was a bubble. It popped, it's never coming back.
BeanieBabies was a bubble for the same reason. NFT art remains to be seen, but I think it was likely a bubble.
The internet was over-invested and decreased significantly when looking on a timeline of 5-7 years.
But outside of that, if you were to take the valuation of internet companies, it is greater than during the period we call the bubble.
We'll see the same with AI. There will most likely be a drop in valuations when looking at a medium term timescale, but long-term, I expect AI companies will be worth far more than they are today.
When the markets drop on a monthly scale, but then rebound, we don't call that a bubble, so why do we call this sub-decade decline a bubble?
Do you think we should have another term for this?
Same with the housing bubble, yes, it popped and lots of people got hurt, but those who were able to hang-on, I think, ended up ok, and on a moderately decent timeline.
Poor old much maligned tulips. The mania isn't coming back but the tulip industry had endured for nearly four hundred years and Holland produces billions of tulip bulbs each year. Some of the more conservative tulip buyers in mania days probably even did ok out of it.
This is another doomer article about AI. The author openly admits to using AI for the article and the irony isn't lost on me. How long will we be hearing about the AI bubble?
From what I remember, in past bubbles that burst, everyone thought stocks will go up forever.
So, if people are wondering out loud (with widespread traction) if there's a bubble, there's probably not one. It may be self-fulfilling. The awareness of a potential bubble influences us to be more cautious.
The dot-com bubble didn’t prove the internet was a fad — it proved the internet was inevitable, but the valuations assumed adoption would happen in 2 years instead of 15–20. To me it feels like the AI inevitability will be much quicker.
Technology for all the above existed in rudimentary form, faster Internet, faster machines and adoption was missing. But Current bets are assuming AGI. No one knows how soon. To predict that would be foolish.
Aside from a belief that the AI adoption will happen very quickly, which maybe that’s your main point, you’re not really disagreeing with the article:
> All this means two things to us: 1)The AI revolution will indeed be one of the biggest technology shifts in history. It will spark a generation of innovations that we can’t yet even imagine. 2) It’s going to take way longer to see those changes than we think it’s going to take right now.
> To me it feels like the AI inevitability will be much quicker.
Based on what? We're only seeing linear improvements for increasing spending. There's no new algorithm ideas on the horizon, just more and more hardware, in the hopes that if we throw enough RAM and CPU at the problem, it will suddenly become "AGI."
No one has their eye on power budgets or sustainability or durability of the system. The human brain has such a high degree of energy efficiency that I don't think people understand the realities of competing with it digitally.
The main problem "AI" seems to solve is that humans get bored with certain tasks. The language models obviously don't, but they do hallucinate, and checking for hallucinations is an exceedingly boring task. It's a coffin corner of bad ideas.
A lot of those early .com companies could have been profitable. They chose to go for rapid growth instead. Some people here probably remember discussion of users mattering more than revenue.
You see that same pattern with AI now. Products are being provided for free or nearly free, and plenty is being spent on marketing.
The fact that I'm getting rate-limited every day even though my company has enterprise-level subscriptions to gemini, chatgpt, etc. tells me this bubble is far from popping. I predict within a year 80%+ of devs will be using LLMs to write most of their code for them.
I know this is semantics pedantry, but there has never been an „Internet bubble“, only an „Internet-related stock market bubble“.
It’s not as if there were ten million people using and/or building on the Internet, and then this bubble popped and for some years there were only ten thousand people on the Internet.
And I think the same is true for „AI usage/adoption“.
> And Coreweave, the former crypto miner turned data center service provider, unveiled in its IPO documents earlier this year that it has borrowed so much money that its debt payments represent 25 percent of its revenues.
Wow, what a sentence. It starts out bad and just gets worse.
51 comments
[ 3.0 ms ] story [ 77.2 ms ] threadThe value of modern AI seems very high. That nobody knows how high, that they still haven't figured out applications, and that the technology and its tools are still far from refined, is normal for any new technology.
If you add the value of the potential political power gained by controlling AI, then the value to the owners and investors is astronomical. Many of the investors have demonstrated a strong motivation to sacrifice money for political power, for example by supporting nationalism that undermines a global economy that they benefit enormously from. Somewhere, I read someone explaining their investment by saying 'it's the greatest transfer of power in (modern) history'. Also see: https://news.ycombinator.com/item?id=45983700
the real answer is that the applications for the military, surveillance, and population control are proven, and the pathways to scale those capacities are clear, so the money will pour in no matter what. the implication is that we had better come up with some more consumer/humanity friendly applications that create comparable value, or that is all we will get.
Honestly anyone who thinks AI has intrinsic value to rival the GDP of nations is a bagholder in denial and I'll be happy to buy your puts.
AI if it gets better will be thinking / intellectual work which is a different category.
I remember in the 90s people would say the internet will bring instant conveyance of media including video and people were like yeah right I can just about get one page of crappy text in a minute over the unreliable dial up modem. It's like that now with AI thinking.
Identify the therefore part of the prediction and enumerate the three highest priority steps.
Have you determined that the stock market will crash and bought positions accordingly? Have you sold all your nvidia stock? What are the implications in the broader economy and what steps have you taken?
In the late 90's and early 2000's, businesses were SALIVATING to get online, individuals were finding new ways to benefit and profit from it, and massive investment was being made to facilitate what was inevitable: an interconnected network of everything. Do you remember faxing things ? Paper mail? People half in the know were pushing the Boomers and older Gen-X types to get on with it and modernize.
Now? Not only are people not CLAMORING for more AI, it's that The Powers that Be are forcing it down our throats. At work, we have mandatory AI training, we have people getting promoted for promoting extremely dubious AI solutions both internally and on our product. I log into ANY web site now, whether I'm shopping for a vacuum cleaner or logging into a vendor website, and I get AI shoved in my face, from from "assistant" I have to interact with before typing "agent" to new features I don't care about.
Is there some truth, some merit? Absolutely. But my red flag I'm trying to raise is this: never did it feel FORCED in the 90's, there was a salivation from individuals to get more online, and a reluctance from institutions like elementary and high schools to get with the program.
Now? Corporations large and small are shoving it down our throats. Why? Well, to justify the crazy spending.
I'm no prophet and the world (and economy) are fundamentally unpredictable. But I'll say this. I'm putting my money where my mouth is, and I've put in an order to buy a 5 digit dollar amount of puts on a big 'AI' type ETF, that'll expire in the Spring. It's already wobbling and if you can't beat them, profit off of them when they stumble.
There's absolutely something wrong in the current moment, even if AI is somehow the future. For one thing, the U.S. economy would probably be in a recession right now if it weren't for this insane AI spending. It's wobbled with the recent Nvidia earnings release, and I think it is going to dip (not crash, but start dipping) soon.
The author wrote:
"None of these companies has proven yet that AI is a good enough business to justify all this spending. But the first four are now each spending $70 billion to $100 billion a year to fund data centers and other capital intensive AI expenses. Oracle is spending roughly $20 billion a year. "
In my opinion it's a theoretical arms race 'just because my competitor might win', and not based on anything certain.
Crazy amount of funding, little to no revenue, no competitive moat, no demand.
Compare that to today, and you see only the crazy amount of funding part is the same.
AI literally does people's jobs for them. There's not much imagination required.
The bubble may deflate but every company mentioned will still be standing, whereas in 1999 many of them were basically Ponzi schemes relying on further investor dollars to subsidize losses. All this AI spending will hurt some investors if the bubble pops but just make for a few bad quarters for the big tech cos.
"All but Alphabet have seen big share declines in the past month. Microsoft is down 12 percent, Amazon is down 14 percent, Meta is down 22 percent, Oracle is down 24 percent"
That fluctuates anyway and profits are made by some - nothing new here.
I think the world needs to detach from the stock markets though. That may not seem realistic right now, but if you look at the current US president and the ties to superrich, we really have a huge problem now. A few parasitize on the masses. That can not be sustained. It is not ethical.
"It will spark a generation of innovations that we can’t yet even imagine."
I am not so sure. So far I successfully avoided AI, including becoming dependent on AI - I am not. So that is good.
I can not really see what "innovation" would make me want to embrace AI. Perhaps I can be forced into it, but right now I am happy avoiding it.
"Because we humans are pretty good at predicting the impact of technology revolutions beyond seven to ten years."
No, we really are not.
"Not only does the AI bubble in 2025 feel like the internet bubble in 1999"
It is still not the same.
I feel the article is falling apart there. It tries too much to compare to the 1999, but it is not the same.
I'm not a real "investor" (index funds only) but I am feeling more willing to forgo gains to be more risk averse just based on my own neuroses.
Maybe I cash out and buy T-bills? Gold? Bullets? What's the non-crazy person equivalent?
Particularly as it seems contagion is more AB’s more likely. That the implosion won’t be limited to the mag 7.
The Tulip mania (if it existed) was a bubble. It popped, it's never coming back. BeanieBabies was a bubble for the same reason. NFT art remains to be seen, but I think it was likely a bubble.
The internet was over-invested and decreased significantly when looking on a timeline of 5-7 years.
But outside of that, if you were to take the valuation of internet companies, it is greater than during the period we call the bubble.
We'll see the same with AI. There will most likely be a drop in valuations when looking at a medium term timescale, but long-term, I expect AI companies will be worth far more than they are today.
When the markets drop on a monthly scale, but then rebound, we don't call that a bubble, so why do we call this sub-decade decline a bubble?
Do you think we should have another term for this?
Same with the housing bubble, yes, it popped and lots of people got hurt, but those who were able to hang-on, I think, ended up ok, and on a moderately decent timeline.
Poor old much maligned tulips. The mania isn't coming back but the tulip industry had endured for nearly four hundred years and Holland produces billions of tulip bulbs each year. Some of the more conservative tulip buyers in mania days probably even did ok out of it.
So, if people are wondering out loud (with widespread traction) if there's a bubble, there's probably not one. It may be self-fulfilling. The awareness of a potential bubble influences us to be more cautious.
Webvan → Instacart, DoorDash, Amazon Fresh
Kozmo.com → Postmates, Uber Eats, Gopuff
Boo.com (fashion) → Farfetch, Net-a-Porter, ASOS
Broadcast.com → YouTube, Netflix, Twitch
The dot-com bubble didn’t prove the internet was a fad — it proved the internet was inevitable, but the valuations assumed adoption would happen in 2 years instead of 15–20. To me it feels like the AI inevitability will be much quicker.
> All this means two things to us: 1)The AI revolution will indeed be one of the biggest technology shifts in history. It will spark a generation of innovations that we can’t yet even imagine. 2) It’s going to take way longer to see those changes than we think it’s going to take right now.
Based on what? We're only seeing linear improvements for increasing spending. There's no new algorithm ideas on the horizon, just more and more hardware, in the hopes that if we throw enough RAM and CPU at the problem, it will suddenly become "AGI."
No one has their eye on power budgets or sustainability or durability of the system. The human brain has such a high degree of energy efficiency that I don't think people understand the realities of competing with it digitally.
The main problem "AI" seems to solve is that humans get bored with certain tasks. The language models obviously don't, but they do hallucinate, and checking for hallucinations is an exceedingly boring task. It's a coffin corner of bad ideas.
The internet is a medium, an interconnection of autonomous computer networks
A "web" of hyperlinked HTML pages is one use of an internet
However this internet is more than a handful of popular websites incorporated as companies
Perhaps that's why it was called the "dot-com" bubble and not the "internet" bubble
You see that same pattern with AI now. Products are being provided for free or nearly free, and plenty is being spent on marketing.
It’s not as if there were ten million people using and/or building on the Internet, and then this bubble popped and for some years there were only ten thousand people on the Internet.
And I think the same is true for „AI usage/adoption“.
Wow, what a sentence. It starts out bad and just gets worse.