Is there an AI bubble?

The answer to that question is a simple yes. Of course there’s an AI bubble; there always is when a game-changing technology is adopted so quickly and so widely.

These kinds of phenomena are predictable and can be modeled: expectations grow to a point where the pressure to launch products or services around the new technology is unstoppable, both for established companies and for those created specifically for it. Piling on further pressure are investors, including institutional investors, and even public money, who start a race to get their money in the companies involved, and of course the media, who contribute to the whole inflationary process by pumping up our expectations. That’s how innovation works in capitalist societies.

In fact, the AI bubble is already underway, with many tech companies enjoying dangerously inflated valuations, to the point that it’s affecting a stock as safe as Nvidia, the company that makes the tools that make AI work, which on Friday shed 10% in response to fears by some investors that the bubble is expanding too quickly, too soon. Needless to say comparisons are being made with the dot.com or cryptocurrencies bubbles, forgetting that even if the bubble started leaking, all that would happen would be a Darwinian elimination of the weaker players; the important thing here is that the technologies involved are solid, and destined to play a…