1A Fact And Fiction Surrounding The AI Bubble
Nov 19, 2025
Jason Furman, an economist and Harvard professor, teams up with Shireen Ghaffari, an AI reporter at Bloomberg, to dissect the AI hype. They explore the question of whether the trillion-dollar investments in AI signal a financial bubble. Furman explains how rapid market evaluations might lead to a bust, while Ghaffari reveals concerns over massive spending and unprofitable startups. They also discuss the critical challenges of monetization strategies, energy demands, and the potential socio-economic impact of AI on jobs.
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Two-Part Definition Of A Bubble
- A financial bubble has two parts: steep asset price swings and excess real-world investment that proves unprofitable over time.
- Past bubbles varied greatly in timing, so spotting one early risks selling before further gains.
Circular Financing Creates Interdependence
- Bloomberg highlighted circular financing where suppliers also invest in their customers, like NVIDIA investing in OpenAI while selling it chips.
- This creates large-scale interdependencies that amplify risk but can also share venture risk across firms.
Watch For Durable Business Value
- Tech CEOs argue we may be underestimating AI's long-term value and that transformational companies will survive a bust.
- Monitor whether firms deliver durable business value rather than short-term hype before trusting lofty valuations.