Are AI Bubble Concerns Warranted or Overblown?

99 snips

Nov 11, 2025

Guest

Kash Rangan

Guest

Eric Sheridan

In this discussion, Eric Sheridan, a U.S. Internet Equity Research analyst at Goldman Sachs, and Kash Rangan, a U.S. Software Equity Research analyst, tackle AI bubble concerns. They dive into rising valuations and massive spending in the AI sector. Eric highlights the importance of free cash flow and distinctions from past bubbles. Kash examines software valuation dynamics and raises alarms about leverage risks. They also explore the circular capital flows between chipmakers and cloud firms, drawing parallels to the telecom era that could complicate revenue clarity.

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INSIGHT

Infrastructure Outpaced Expectations

Infrastructure spend has surprised to the upside because demand for query-driven compute outstrips available capacity.
Platform winners are few and need scale of capital and talent to build on foundational models.

INSIGHT

Platform Progress Outruns Enterprise Apps

The platform layer is becoming more discernible while enterprise applications lag consumer progress.
Enterprise adoption is behind expectations but has improved significantly over recent months.

INSIGHT

High Spend Raises ROI Scrutiny

Aggregate AI spending has surged and will increase investor ROI scrutiny as it continues.
Sheridan expects a trough of disillusionment is likely before durable winners emerge.

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AI bubble concerns are back amid a rise in AI-exposed companies’ valuations, ongoing massive AI spend, and the increasing circularity of the AI ecosystem. Goldman Sachs Research’s Eric Sheridan and Kash Rangan discuss whether bubble concerns are warranted or overblown.

Date of recordings: September 26 and October 30, 2025

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