Wanted to share my thinking around the AI Bubble after months of passive consideration (e.g. "shower thoughts").
Straight to the point - the bubble isn't AI, it's having too much liquidity in the market focused on "the next trillion dollar company". Granted a lot of this is AI related, but I want to look at the space industry which is only adjacent to AI.
Here we have a host of public companies with relatively minimal revenue, albeit growing. On the horizon we see SpaceX IPO with a targeted valuation of $1.5tn. This is rising all boats, so to speak, since everyone sees this insane potential for market cap. But access to space, nonetheless exploration and monetization of it, is a questionable growth vehicle on any timeline, not the least of which is failures are extremely expensive and very high profile. This doesn't question the technological feats companies are achieving, it's a question of how long it takes for them to be cash generating machines.
Other industries such as quantum computing fall into this same category, as does an obsession with small-cap opportunities.
The bubble is when folks realize they need their capital for some other reason and there is a mass exodus from speculative positions. Many, many retail investors will get burned, impacting main street more than wall street or silicon valley. Household value is what's at risk here. It's a setup for an intensification of inequality rather than a broad market crash where institutional investors run for the hills.