Practical AI Are we in an AI bubble?
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Nov 10, 2025 The hosts delve into whether the current AI boom is a momentous evolution or a fleeting bubble reminiscent of the dot-com era. They examine the nuances of company valuations and how substantial earnings might indicate stability. Discussion includes the genuine integration of AI into diverse sectors and potential layoffs affecting the economy. Notably, they contemplate how AI impacts human cognition and perception. Ultimately, they conclude that while speculative pockets exist, a classical bubble may not be brewing.
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What Defines A Financial Bubble
- A bubble occurs when market valuation far exceeds actual product or service value.
- Chris frames the dot-com bubble as extreme valuations with little real earnings backing them.
Earnings Concentration Masks Risk
- Jerome Powell argued AI spending isn't a bubble because many firms have real earnings.
- Chris notes earnings are concentrated in a small set of companies, creating uneven effects.
VC FOMO Fuels Valuation Surges
- Valuations and speculation drive bubble concerns, with VC pouring money into AI startups.
- Daniel notes AI startups are raising much higher revenue multiples than typical SaaS firms.