Tomorrow? Next year? In 5 years? Nobody can say. But we do know that AI is overvalued, so it WILL pop.
I can tell you it will pop in 10 years and when it pops, it will still be 20x bigger than in 2026. Does that even make any sense?
People said AI bubble will pop soon in 2024 and that it was overvalued. Turns out, many AI stocks 10x, 20x since 2024. Actual usage has gone exponential as well. Anthropic revenue went from $100m ARR at start of 2024 to $80b ARR today.
Debt-backed investors have to pay up eventually. =3
Well, given the literal trillions being spent, the only ways this pays off are:
1. AI replaces a non-trivial fraction of human employees.
2. Someone builds a Culture Mind, and humans become (hopefully) pampered pets of AIs we don't understand. Seems unlikely, but it would arguably count as a payoff even if it made money meaningless.
Or maybe the AIs don't want pets, and you get SkyNet. Which definitely doesn't care about paying off anyone's investments.
When you look at various news articles about investors, yeah, there are definitely a lot of rich people who think that they're going to automate all human labor or just bring about the Singularity. Possibly with them in charge of the rest of us. If you don't make these kinds of wild assumptions, then yeah, this is looking like one of the biggest bubbles ever.
Interest alone, at assumed 5%, amounts to about $150 billions per year. That's probably higher than the combined AI revenue of the top 3 providers.
Now let's build the model out more. What is the projected revenue, backlog, improvements in existing big tech businesses such as AI helping Meta's ad business?
Can you now analyze backlog? For example, Microsoft and Amazon have backlogs of $1.45 trillion. Not including Google, Oracle, Meta.
I mean, it's pretty clear that's going to happen. How could it not?
The only question is whether resources are optimally allocated at the moment to prepare for this. That seems unlikely at best. So yes, there is probably a bubble, and if so, then yes, it will pop, and then life will go on, with resources better allocated. Just like when the dot-com bubble popped.