this post was submitted on 11 Oct 2025
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I don't think it's a bubble, first there is absolutely zero comparison to the housing bubble, which was a financial problem that caused housing prices to inflate, while the inherent value of housing stayed the same. This alleged AI bubble is mostly driven by companies that have lots of money, so it is not credit based, and there are underlying products that actually have increasing value.
The better comparison would be the dot com bubble, which was dominated by companies that didn't even have a product and didn't make any money. The frenzy is similar, but the fundamentals are different.
AI investments may cool down because obviously there is a frantic race in an attempt to get ahead.
But the reason I don't think the AI bubble will burst is because it is driven by companies that actually make money.
They may lose money investing too heavily in this, but the most companies investing in this can afford it.
I think the most AI bubbly company isn't even in the diagram, because that is Tesla. Tesla might actually go down, because Musk is insane.
But in general if it is a bubble, it is a very very long one, Nvidia value has been exploding since 2016 based on their AI product dominance. If this is a bubble, I think it will go down in history as the longest living bubble ever.
Is the market frantic? Yes absolutely.
Is the value of some AI companies extremely high? Yes absolutely.
Is it a bubble that will burst? No if it's a bubble, this one will be more like deflating to a less frantic level, because ALL the main players have the money to weather losses.
And the main AI companies have actual products that make money for them rolled out already. So it is not like the dot com bubble.
Last I looked, the big AI companies are all hemorrhaging money.
It's perfectly normal for a growth business to invest more than they make, I didn't say they were profitable yet, but they are making money.
It is not "normal" to run a 4 year money loser and claiming to be worth billions.
Only in made up financial land does that work, and causes cyclic depressions where the working class loses wealth, and the oligarchs further concentrate wealth in their hands.
And you said its driven by companies making money... the big AI companies driving this bubble are losing money.
The market can remain delusional longer then you can remain solvent.
A delusional market, is, by definition a bubble.
Maybe not, but it is absolutely normal to lose money for years to make a profit later.
Microsoft was ready to lose money on Xbox for 10 years to take a place in the console market. And it's a very profitable market for them now.
Microsoft tried some of the same with Windows Phone, where they invested billions for years before they gave up.
One of the most hyped AI companies is probably OpenAI, and they absolutely have products that makes them money. They are not profitable yet.
But among the bigger stock holders are Nvidia and Microsoft, and if OpenAI goes under, they will absolutely survive just fine. But I don't think they will.
OpenAI is owned by companies that know how to make money, and apparently OpenAI knows how to do it too, and has been quicker to make money on for instance ChatGPT than Google was on making money on YouTube.
Some AI companies will go down, that's the nature of being in a cutting edge business, and it's the nature of competition. But I think the AI business will mature and stabilize like most businesses have, not burst like a bubble.
Nobody called it a bubble when the smartphone market exploded. Because everybody could see the value of the product, although it's not quite the same, many companies have been forced out of the smartphone market due to competition. I think the AI market will be mostly similar.
Is it? They recently had mass layoffs in the Xbox division and had to jack up prices for gamepass. Compared to Sony and Nintendo, their console sales are pitiful. This is after pouring billions of dollars into the Xbox brand.