The rapid surge in artificial intelligence (AI) investment has sparked debate: are we witnessing a sustainable revolution, or an overinflated bubble? Experts like James van Geelen, CEO of Citrini Research, argue that history suggests the latter is almost certain. Transformative technologies, from railroads to the internet, have consistently led to speculative bubbles before settling into long-term growth. The current AI frenzy, accelerated by OpenAI’s ChatGPT in late 2022, follows this pattern.
The Historical Precedent for Tech Bubbles
Van Geelen points out a simple truth: when capital rushes into a disruptive innovation, an asset bubble is the usual result. This isn’t a prediction of if but when the correction will occur. The question isn’t whether a bubble will form, but how large it will become before it bursts. The scale of investment in AI, driven by the belief that it will reshape economies, echoes previous tech booms.
The AI Boom: 2025 and Beyond
The year 2025 has been pivotal. AI is no longer a theoretical concept; it’s actively reshaping markets and the global economy. This rapid transformation fuels further investment, creating a self-reinforcing cycle that intensifies the bubble-like conditions. The market’s current enthusiasm mirrors past manias, where valuations outpace fundamental value.
The Inevitability of Correction
While AI has genuine potential, the current investment levels are unsustainable. History suggests that overvaluation will eventually trigger a correction. Investors should approach the AI market with caution, recognizing that the current boom may not last. The long-term value of AI will emerge after the speculative phase subsides, leaving behind only the most resilient companies.
The cycle of hype, investment, and eventual correction is inherent in disruptive technologies. AI is no exception; a bubble is not just possible but probable, given historical trends and the current market dynamics.
