🔮 Everyone’s looking for a bubble. No one sees the stampede.

The boring phase is coming to an end…

Everyone’s distracted by bubbles and missing the stampede. Generated using Midjourney

This post originally appeared in Exponential View.

“The real risk isn’t that we’ve invested too much in AI. It’s that we haven’t invested nearly enough.”

Five months ago, we offered the only evidence-based framework to answer the question that was taking way too much space: is AI a bubble? To get to the bottom of it through evidence rather than vibes, we tracked the five areas we believe are crucial to understand the AI investment cycle. Our indicators are: economic strain,¹ industry strain,² revenue momentum,³ valuation heat,⁴ and funding quality.⁵

Our analysis at the time – contrary to many alarmists – concluded that generative AI is a boom, not a bubble. But at the core of our approach is evidence. If evidence changes, we change our minds.

The Financial Times has published over a hundred articles invoking the “AI bubble.” Michael Burry, the famed hedge fund investor, disclosed shorts on Nvidia and Palantir, hardening his view earlier this year: “almost all AI companies will go bankrupt, and much of the AI spending will be written off.”