News AI bubble is worse than the dot-com crash that erased trillions, economist warns — overvaluations could lead to catastrophic consequences

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Well yeah, when the Ai bubble bursts it's guaranteed to trigger the second Great Depression because of the companies involved, the sheer number of major funds and ETFs tied to them, and literal entire towns and cities built around Ai infrastructure, basically touching on every facet of the economy from energy to real estate and beyond.

For a bit there it looked like there'd be a (relatively) slow deflation, but it's only getting larger, and more dangerous.
 
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The all-time high for Amazon's stock (AMZN) was $242.06, which was reached on February 04, 2025. Sure, some dot-com stocks crashed — but Amazon didn’t just survive, it became a pillar of the global economy. If you bought in the 90s, you’re not licking wounds, you’re sitting on a fortune!

AI isn’t just hype —it changed my daily routine and replaced internet search. It continues to be integrated everywhere. It's a huge deal. The P/E ratios may be high but weren't not talking Tesla (180) level projections for the big 7. The real question isn’t whether AI is transformative — it’s whether investors are pricing in that transformation too early.
 
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alrighty_then said:
The all-time high for Amazon's stock (AMZN) was $242.06, which was reached on February 04, 2025. Sure, some dot-com stocks crashed — but Amazon didn’t just survive, it became a pillar of the global economy. If you bought in the 90s, you’re not licking wounds, you’re sitting on a fortune!

AI isn’t just hype —it changed my daily routine and replaced internet search. It continues to be integrated everywhere. It's a huge deal. The P/E ratios may be high but weren't not talking Tesla (180) level projections for the big 7. The real question isn’t whether AI is transformative — it’s whether investors are pricing in that transformation too early.
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Exactly. Anyone who thinks AI is overvalued has no idea what is coming. AI is rapidly building tools that will deliver trillions in productivity and is priced at mere hundreds of billions today. It is undervalued because investors are waiting on the sidelines to see a more confident winner emerge, today it's mostly angel capital taking riskier bets.
 
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AI is definitely going to change our lives (and it already shows in some areas), even more so than the Internet did. But the stock valuations and infrastructure spendings are way ahead of the results/returns. It's like we skipped 5 or 10 years ahead. And just like in the case of the Internet companies, there will be just a few winners and hordes of losers. Hopefully, people's retirement accounts are not going to get devastated too much from this.
 
He's absolutely right, the crash will be extremely painful. In the end, GenAI/LLM's are just a very advanced search engine, and nothing more than that. Grok 4, 5 or 10 won't change this situation. Companies today are investing billions in giga-server farms the size of a city and electricity consumption of a nuclear power plant , not realizing it contributes a little practical economical value to humanity.
 
DougMcC said:
Exactly. Anyone who thinks AI is overvalued has no idea what is coming. AI is rapidly building tools that will deliver trillions in productivity and is priced at mere hundreds of billions today. It is undervalued because investors are waiting on the sidelines to see a more confident winner emerge, today it's mostly angel capital taking riskier bets.
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The idea is not the same as the companies, they don't overvalue A.I. they overvalue the companies because everybody thinks that because of how big A.I. will be in the future any company that does it will become big, that's the same thing that happened with dot com, yes there are a few companies that got super huge but for every one of them there are many that have failed completely.
DougMcC said:
It is undervalued because investors are waiting on the sidelines to see a more confident winner emerge
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And that's how it should be, nobody want's their investment to be pumped into a company that will not exist in a year.
 
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USAFRet said:
And having seen, first hand, people relying on and acting on crap output from the AI models....yes, it IS a big deal.
Not necessarily a good one, though.
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Thus far my experience with "copilot" in Visual Studio is it's complete nonsense at least 50% of the time.

Of the other 50%, I have to look real close at what it suggests, as there are regularly subtle problems with what it suggests. It's real good at detecting patterns, but it's clearly not intelligent.

Now for Search 2.0, "AI" is fantastic. As long as you realize the output is usually filtered and biased. As someone here has pointed out a few times, he who controls the output controls the narrative.

I'm in the AI is a bubble group. (Along with "quantum computers".)
 
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AI doesn't pass the smell test.
The bubble came off the heels of NFTs, which itself came off the heels of crypto and blockchain.

At the very least, AI is useful to a minor degree when used right. For example it's decent at summarizing well documented books, help guides, etc. but it'll still throw you a wrench when you ask it obscure questions.
But it's far too easy to abuse so you can make a profit.
You only need to look at the massive misinformation that came soon after Air India 171 crashed. The interm report came out recently, but that didn't stop scum from fabricating stories with AI slop before that.
 
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tamalero said:
Problem is that this will also leads to massive layoffs while CEOs happily scurry away with golden parachutes while blaming anything else but their own work.
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That is my biggest concern. Sorry I should have articulated that better in my first post. I rather it bust now before it gets so huge it does even more damage than need be. If AI is sustainable it be a whole other thing, I just don't believe it is. From a jobs stand point I'd love to be wrong but from my suss feelings on AI as a whole, not so much.
 
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Yes it is but like that bubble this too is necessary to build the infrastructure for the 'next generation' to build off and create something better.

The VC culture is bad but it has 1 benefit and that's absurdly fast rollout of the bones needed for what comes next.
 
Sorry, but anyone denying the 4th industrial revolution is an idiot. The numbers are there.

These idiots think that the INDUSTRY will leverage AI for profit, while what they don't understand is that it is the GOVERNMENTS that are going to leverage it for their own over complicated business processes.

Anything that is relative to cognitive analysis is targeted. Not to mention that AI is link to the evolution of robotics and cyber wares.

AI is not for selling ADS, it is for advancing science. If all the big tech are throwing money at it is because they know that the people controlling it will control the world.

Welcome to the world of Cyberpunk and the Corpos.
 
Just think about it... every government of the world will need to leverage their own AI infrastructure...

Not mere companies... do you understand now the scale of things?

If you want a good indicator, just look at TSMC Quarter results and guidance...

The only bubble there is, is Nvidia, nothing else.
 
redgarl said:
Just think about it... every government of the world will need to leverage their own AI infrastructure...

Not mere companies... do you understand now the scale of things?

If you want a good indicator, just look at TSMC Quarter results and guidance...

The only bubble there is, is Nvidia, nothing else.
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redgarl said:
Not to mention these analysts are just trying to short their position, so their input are biased.
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You're looking at the profit aspect.

Many of us out here are looking at the information, or misinformation, that comes out of these things.

If a company can make a profit by saying 2+2 = 5, that is not a good thing (except for their shareholders).
 
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