The AI Bubble Nobody Wants to Talk About

**Moshe Popack** (0:00)
Could the AI boom be bigger than we think, or more fragile than we realize?
Right now, trillions of dollars are being bet on artificial intelligence. But beneath the excitement, some investors are asking a difficult question. Are we witnessing the next great technological revolution, or are we watching money circulate through a system that's making growth appear stronger than it really is? Because if they're wrong, AI changes everything. But if they're right, the fallout could reach far beyond the tech sector and impact the entire global economy.
Artificial intelligence is everywhere right now. It's in our news feeds, our workplaces, our schools, our phones, and increasingly, our investment portfolios. Some people believe AI will become the most transformative technology of our lifetime. Others believe we're in the middle of a bubble that will eventually burst. And recently, a debate has started gaining momentum among investors and analysts. The question isn't whether AI is real.
The question is whether the economics surrounding AI are as strong as many people believe. Many of the largest technology companies in the world are investing billions of dollars into AI startups. At the same time, those AI startups are spending billions of dollars on cloud computing infrastructure provided by those same technology companies. In other words, some of the companies funding the AI revolution are also generating revenue from the companies they're funding. Now, that doesn't automatically mean anything is wrong. In fact, there are perfectly legitimate reasons why this happens.
Building advanced AI models require enormous computing power, and only a handful of companies have the infrastructure necessary to support it.
But the arrangement does raise an important question. How much of the growth we're seeing is coming from genuine customer demand, and how much is being fueled by investment capital flowing through the system?
As investors, entrepreneurs, and business leaders, these are the kinds of questions we should always ask.
Not because we're cynical, because we're disciplined. One of the greatest lessons I've learned in business is that excitement and reality often travel at different speeds. The market gets excited first. Reality catches up later. We've seen this movie before. The internet changed the world. That's not debatable. But during the dot-com boom, investors poured money into hundreds of companies that never figured out how to build sustainable businesses. The technology was real. The opportunity was real. The long-term impact was real. But many of the valuations weren't. The same things happened with railroads. The same thing happened with electricity. The same thing happened with countless innovations throughout history. Transformational amount of optimism. Sometimes that optimism is justified. Sometimes it gets ahead of itself. The challenge is figuring out the difference. What I find most interesting about today's AI conversation is that both sides may actually be right.
AI is already creating incredible value. It's helping doctors analyze data faster. It's helping businesses operate more efficiently. It's helping entrepreneurs build products that would have been impossible just a few years ago.
The technology is unquestionably powerful. But powerful technology doesn't automatically create profitable businesses. That's the part many people forget.
A company can have cutting edge technology and still fail. A company can raise billions of dollars and still struggle. A company can dominate headlines and still never generate enough cash flow to justify its valuation. Eventually, every business faces the same test. Can you create enough value that customers willingly pay for what you're offering? Not investors, not venture capital firms, not speculators, customers. Because customers are the ultimate source of sustainable growth. When I evaluate businesses, whether in real estate, technology, hospitality, or any other industry, I always come back to a simple framework. What problem are they solving? Who are they solving it for? And would people continue paying for that solution if outside funding disappeared tomorrow? Those questions cut through a lot of noise. And right now, there is plenty of noise surrounding AI. The headlines are loud. The predictions are massive. The numbers are staggering. Some analysts are talking about trillions of dollars in future value creation. Maybe they're right. Maybe AI becomes even bigger than anyone currently expects. But history reminds us that revolutionary technologies don't move in straight lines.
There are breakthroughs. There are setbacks. There are winners. There are losers. But there are usually periods where expectations become disconnected from reality. When those moments happen, the strongest companies survive because they're built on fundamentals, not hype. That's why I believe the most important question isn't whether AI will change the world. I think it already is. The more important question is which companies are building lasting value, and which companies are simply benefiting from temporary enthusiasm. Because eventually, every market cycle reaches the same destination. The headlines fade, the excitement settles, and fundamentals take over. Revenue matters, profitability matters, customer demand matters, execution matters. The businesses that solve real problems endure. The businesses that rely solely on momentum don't. That's true in technology, that's true in real estate, that's true in investing, and that's true in life. The Common Denominator is that sustainable success is never built on excitement alone. It's built on value. And no matter how much technology changes, that principle never does.