2 months ago
- The AI bubble is driven by hyper-rich corporations, not retail investors, and occurs despite high interest rates, making it unusual.
- It consists of two overlapping bubbles: massive capital expenditure on infrastructure (data centers, chips) and soaring company valuations.
- Tech companies are spending over $700 billion on AI infrastructure, which is propping up GDP growth, but they need huge future revenues to justify valuations.
- The bubble could burst if AI companies fail to generate profits, if communities ban data centers, or if Chinese competition reduces computing needs.
- The insularity of the bubble means ordinary people are not directly participating, but they could still be affected through retirement funds, credit access, or job displacement.