#bubble-risk

#bubble-risk

I told Lee that artificial intelligence might be the most overfunded "free product" in modern business. We both use AI tools every day, and like most people, we don't pay a dime. That's the problem. Trillions have been spent on data centers, chips, and training models, yet the vast majority of users aren't customers. Venture-backed firms like OpenAI and Anthropic depend on free traffic and vague enterprise plans.

Indeed, valuations are quite high on select AI stocks that have gained high double-digit percentage points so far this year. And the S&P 500 is certainly skewing towards the higher end of the valuation range. But above-average valuation metrics do not necessarily mean that the stock market is about to blow up in devastating fashion, with tech stocks imploding as they did just a quarter of a century ago.