Everyone is asking: is AI a bubble? The question aims at the wrong target.
AI cannot be falsified. It genuinely works, and far too many people use it — the productivity gains are real. What can be falsified is profit. The thing people call “AI being falsified” is the falsification of earnings, not of productivity.
Separate the two and the bubble question resolves itself. Stocks trade on earnings expectations, not on productivity itself. So AI stocks can be in a bubble while AI is not. Bundle them together and the whole thing looks like collective hysteria.
On direction, I have no hesitation. The winners in AI will be the big companies — this is a game of burning capital. Even if everyone loses, the survivors are still the big companies; the small ones simply die. Human society is going to run on AI — that’s a certainty. But big companies winning doesn’t mean shareholders win: in between sits nearly nine hundred billion dollars a year of capex from the big nine cloud vendors, and a return that hasn’t been cashed yet.
And if the return really does fail? There’s still a floor: central banks will ease. No policymaker wants to preside over a recession triggered by AI capex contraction. The real disease is that money supply hasn’t kept up with AI’s productivity gains — that’s where the deflation feeling comes from. Easing will be late. It won’t be absent.
So next time someone asks whether AI is a bubble, split the question: the technology is fact; the stock is narrative. Facts don’t need your belief. Narratives do.
