https://www.nytimes.com/2025/10/14/opinion/ai-bubb…
Warning: Our Stock Market Is Looking Like a Bubble
By Jared Bernstein and Ryan Cummings, The New York Times, Oct. 14, 2025
…
We believe it’s time to call the third bubble of our century: the A.I. bubble…
In financial markets, a bubble occurs when the level of investment in an asset becomes persistently detached from the amount of profit that asset could plausibly generate. …
A.I. investment fits that pattern. OpenAI says it needs at least $1 trillion to invest in data centers that provide the electricity, computing power and storage to train and run A.I., yet the company’s revenues are expected to amount to a mere $13 billion this year. And since the debut of ChatGPT, an easily accessible A.I. chatbot, in late 2022, the S&P 500 has swelled by nearly two-thirds, with just seven firms — all of whom have invested heavily in A.I. — driving more than half of that growth…
Adoption, both by firms and individuals, is clearly growing, but whether this adoption is generating massive productivity benefits or profits remains to be seen…
There is a bit of a silver lining. As best we can tell, the damage of a potential A.I. bubble would not approach the carnage that resulted from the burst of the housing bubble and the financial crisis of 2007 and 2008. While banks, private credit and private equity are all lending heavily to companies that are building and leasing A.I. data centers, this debt appears less distributed and embedded in global finance than it was back then. … [end quote]
A bubble is sustained by buyers piling into the excitement and FOMO. Historically, bubbles burst when buyers stop pumping in fresh money. Then the leveraged speculators are forced to sell and the bubble collapses.
Seasoned chart watchers with a knowledge of history recognize a bubble when we see one but naive speculators may not.
More and more voices are calling the bubble. When the New York Times prints an explanation by two experienced economists the knowledge will spread.
The game of musical chairs may be coming to a close. Of course, nobody can predict when.
Wendy
