“Is the AI Industry in a Bubble?” by Yarrow Bouchard 🔸
Description
This post has two parts: first, a (non-exhaustive) survey of some indications that the AI industry might be in a financial bubble. Second, an analysis that combines these indications with technical considerations relevant to whether the AI industry is in a bubble.
Definition of a "bubble"
Here's the Wikipedia definition of a bubble:
An economic bubble (also called a speculative bubble or a financial bubble) is a period when current asset prices greatly exceed their intrinsic valuation, being the valuation that the underlying long-term fundamentals justify. Bubbles can be caused by overly optimistic projections about the scale and sustainability of growth (e.g. dot-com bubble), and/or by the belief that intrinsic valuation is no longer relevant when making an investment (e.g. Tulip mania). They have appeared in most asset classes, including equities (e.g. Roaring Twenties), commodities (e.g. Uranium bubble), real estate (e.g. 2000s US housing bubble), and even esoteric assets (e.g. Cryptocurrency bubble). Bubbles usually form as a result of either excess liquidity in markets, and/or changed investor psychology.
If we were to operationalize the concept of an AI bubble and whether such a bubble has popped, we could look at several financial measures, including investment in datacentre construction. [...]
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Outline:
(00:27 ) Definition of a bubble
(02:13 ) Opinions on a potential AI bubble
(10:47 ) Suggestive evidence: circular financing
(12:16 ) Direct evidence: small effects on productivity and profitability
(18:51 ) Analysis: can AI companies catch up to expectations?
(30:05 ) Conclusion
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First published:
November 16th, 2025
Source:
https://forum.effectivealtruism.org/posts/im59y2Au7zC5ofuKe/is-the-ai-industry-in-a-bubble
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Narrated by TYPE III AUDIO.
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