- It is difficult to know exactly how much demand there will be for AI products
- There are similarities in the winners of the dotcom and AI booms: infrastructure players
- Interest rates will play an important part
Artificial intelligence (AI) is a novel technology that no one yet fully understands. Generative AI does already have some obvious use cases, but picturing how it is going to develop is difficult. It is this unknown that creates excitement. One observer can argue that the technology will be useless, while another can just as easily imagine an almost endless number of possibilities.
This sense of possibility is what creates investment bubbles, as valuations become detached from reality. It was detachment like this that caused the dotcom bubble in the late 1990s, and there is some concern that the same could happen today given the recent surge in AI stocks.