We are not at the top of this trend yet so I do not see this as over investment.
I remember the criticism Microsoft got for investing in Facebook/Meta that gave them a whooping $15B valuation and getting 1.7% in 2007. Not all deals will turn out that prescient but a few will and make up for any duds. This is a real market.
No, it's a high risk gamble.
If the market grows enough they will win the bet, but if the market doesn't or we get a recession that dries up capital they will be holding the bag.
Even in a recession I think the shift towards AI would just accelerate since it is usually cheaper than humans.
The real risk I feel if what if AI is too successful and there is a lack of human demand because of dropping wages/employment?
(Then I wonder if sentient robot demand will make up for it? Although I realize that veers into science fiction futures.)
So for this to become true there are some number of jobs that that pay $N salary are replaced completely by LLMs that do the job for $N-0.01?
Is that what you mean by "market grows enough"
What else should they be buying? US bonds, housing?
And then the following trend will be humanoids and similar and they are barely getting started.
as long as things go up people conveniently ignore the lessons from the past.
we are long overdue for a correction and given the fear mongering oligopoly shenanigans we must be very close.