Dry Powder: The Private Equity Podcast What Kind of AI Cycle Are We Actually In?
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Jan 20, 2026 Karen Harris, Managing Director at Bain's Macro Trends Group, dives deep into the current AI landscape. She distinguishes between price and quantity bubbles, comparing AI to the dot-com era. Harris reveals how early investors may unintentionally subsidize tech shifts and discusses the risks of a significant valuation correction potentially leading to recession. She reassures that while AI may reshape job functions, it won't eliminate jobs entirely. Karen highlights growth areas in healthcare and crypto, showcasing the potential for new opportunities amidst change.
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Price Versus Quantity In AI Buildout
- Distinguish price bubbles from quantity bubbles when assessing AI investment risk.
- Quantity buildouts (like data centers) can be rational while prices on assets and returns may be inflated.
Real Infrastructure Needs, Unclear Hardware Value
- Infrastructure needs for AI (data centers, cooling, power) look real and logical.
- But the useful lifespan and resale value of specialized components like chips are less certain.
Early Investors Often Subsidize Tech Shifts
- Early investors often unwittingly subsidize major technology shifts through exuberant pricing.
- Historical examples like railroads and dot-coms show quantity can be rational while prices harm early backers.