LONDON: This is getting faintly ridiculous now. Yet again, tech stocks are being hit hard - the third shakeout in just the past few weeks. But this is more worrisome than previous outbreaks of nerves. Once more, but this time with feeling, investors are asking: “Is this the big one? Is the AI bubble finally bursting?”
I don’t claim to know the answer. Ask me again in a week or so, and we will know if this wobble deepens and broadens or if it is yet another head fake. But the fact that we’re all asking the same question yet again is very telling in itself.
It is clear that AI technology works. No argument there. But the internet worked out pretty well, and it still crashed the markets a quarter of a century ago. (Sorry if that makes you feel old.)
Any reasonable person can see the hallmarks of an unsustainable party in AI assets, perhaps most conspicuously in AI-related stocks, which truly dominate US and global markets. Pick from a list of possible sources of stress, including high levels of increasingly creatively structured debt, questionable levels of true revenue potential, and head-scratching examples of circular financing.