"The concerns around an Artificial Intelligence bubble basically center on whether the massive investments flooding into artificial intelligence can justify their enormous costs and deliver on their transformative promises. Critics worry that the sector is experiencing irrational exuberance reminiscent of the dot-com boom, with tech companies spending hundreds of billions on AI infrastructure, startups commanding sky-high valuations based on potential rather than actual profits, and enterprises rushing to implement AI solutions without clear use cases or a clear return on investment."
"Although devastating, a market crash or severe correction is manageable if you are in your 40s and at your peak earning potential. However, for Baby Boomers who have enjoyed unprecedented gains over the last 35 years, being overweight in the stock market now is like picking up nickels in front of a bulldozer, and it could be a fatal blow to their retirement savings."
Massive investments in artificial intelligence raise questions about whether current spending and valuations are sustainable given present capabilities. Critics compare the situation to the dot-com boom, noting huge infrastructure expenditures and startups valued more on promise than profits. Many investors may be overestimating near-term impact while underestimating the time and resources required for true industry transformation. A burst in AI expectations could severely weaken dominant tech stocks and pull down the broader market. Historical crashes demonstrate recoveries can take decades, and Baby Boomers with large equity allocations face substantial retirement portfolio risk.
Read at 24/7 Wall St.
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