Keeping an Open Mind

I think it's important in investing, or really with anything in life, to challenge what you think you know and listen to other opinions. AI has given me life changing returns and time and time again I hear "it's a bubble!", "it's a bubble!" I don't believe this is a bubble, but I want to keep an open mind.

So, please tell me why you believe the AI buildout is a bubble, provide facts and statistics if you can. My intention is not to argue or debate, I just want to hear what people have to say.

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2 Comments

Scott S@scottsinvesting · 21m

I'll play... Let me first say I don't believe there's a single 'AI bubble', I think there are at least a few. I'll do my best to separate...
Semiconductors - The current level of spending won't last forever, nor does it need to, and when the spending spigot is turned down, the chip companies benefiting from the current massive spend will feel the pain in a big way... Yes, even $NVDA!
AI Datacenters - Much like traditional datacenters being a commoditized service at the baseline, I expect AI datacenters will be at some point as well. Commoditization almost always means lower margins than desirable margins.
Models / Labs - Think OpenAi, Anthropic, SpaceX AI, etc., etc... Will there be a leader like there was in traditional search? TBD... If not, there's a lot of competition in the space and long term ROI on massive CAPEX is still very uncertain IMO.
To be clear, this doesn't mean the AI market is going to die and all companies go away. It simply means the majority of AI stocks will crash at some point, resulting in the best of the best surviving and the also-rans disappearing.
I know you don't want to hear this, but much like we saw in the DotCom era (Cisco survived / Nortel failed, Microsoft survived / Netscape failed)... I expect we'll see comparisons like this from today's AI companies at some point.

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