AI and Tariffs Clashing for Market Supremacy: My Picked Stocks
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Artificial Intelligence Bubble: A Mixed Picture
Meanwhile, in the realm of technology, the debate about an artificial intelligence (AI) bubble continues. While opinions are mixed, many industry leaders acknowledge the presence of a speculative "bubble" dynamic.
Eric Schmidt, former executive chairman of Alphabet Inc., recognises the overcapacity and overbuilding in computational infrastructure projected over the next few years. He argues that this is not a typical bubble because historically, new computational capacity has always led to new software applications that absorb this capacity. Schmidt believes that today's "excessive" AI infrastructure will be utilised over time as AI models develop.
Financial analyses highlight a stark disparity between massive capital expenditures and current AI-generated revenues. For example, in 2025 alone, capital expenditures on AI by leading companies (Meta, Amazon, Microsoft, Google, Tesla) are expected to exceed $560 billion, while revenues linked to AI remain in the tens of billions. This capital-intensive scaling, alongside extremely high valuations of a few key technology stocks, signals an overheated market that resembles a bubble.
Despite these concerns, some experts argue that even if the bubble bursts, the AI industry would not be devastated. The infrastructure investments like data centers, open-source models, and software frameworks would remain valuable assets that could support a more sustainable and mature phase of AI development. This parallels the dot-com crash scenario, where the collapse eliminated speculative excesses but left behind infrastructure that enabled future internet growth.
In summary, while there is a prevailing acknowledgment that an AI bubble exists today, the long-term value of AI infrastructure and technology left intact enables sustained progress toward advanced AI capabilities like recursive self-improvement and eventual superintelligence within the coming decade.
References
- Eric Schmidt on AI and the Future of Technology
- AI Spending to Surpass $1 Trillion by 2027, According to IDC
- The AI Bubble: How Much Longer Can It Last?
- The AI Bubble: A Mixed Picture
- The AI Bubble debate continues in the technology sector, with many acknowledging an overheated market resembling a bubble due to massive capital expenditures and high valuations of key tech stocks.
- Eric Schmidt, former executive chairman of Alphabet Inc., recognizes the presence of a speculative "bubble" in computational infrastructure for AI, but he argues that it is not typical because historically, new computational capacity has led to new software applications.
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