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We had the dot com bubble but it didn’t end the tech sector which is bigger than it ever was during that bubble. The same is likely with AI. If the reality doesn’t match the hype then the bubble may burst but the technology will eventually find its place.

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The dot com bubble ended when the ecosystem of fairy tales and lies which built up around a technology were generally decided to be nothing but hot air. It is true that the technology sticks around but the wildly inappropriate estimates of future finance, social behaviour and technological capability subside after these bubbles burst. Plus a bunch of too-willing-to-believe investors lose a bunch of money.

This makes the bubble dangerous for investors though. For example those who think nvidia will keep going up.

Most bubbles are based on over-investment and mania about worthwhile ideas but that doesn’t mean any bubble companies will survive.

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