In the 90s we had the dot-com bubble. It was caused by the indefinite optimistic approach of the investors. They saw the internet as the future and invested in every other company which had dotcom in their name. Lot of them failed as they didn’t have any valuable product and they were just using dotcom movement to their advantage.
Then came the cleantech bubble around 2008. Government announced heavy subsidies on companies which work towards green energy. Investors again became indefinitely optimistic and invested heavily on a lot of cleantech companies. Most companies were just selling different versions of the same core product like solar panels. There were few exceptions like Tesla which actually built real cleantech products and succeeded.
Now due to recent advancement in the AI field, every other company wants to use AI so that they are not left behind. AI tech giants are every month or so releasing new features/products so that they are not left behind. Every one wants to grab this opportunity before others. Then why not investers. And yes they are heavily investing on AI based companies.
I think there is a likelihood of an AI bubble. And the reasons are not much different than previous bubbles. The possible reasons are,
Investors will invest out of FOMO so that they don’t lose on opportunity and will take bets on bad investments.
Investors having unrealistic expectations from invested companies which will inflate valuation of the company.
Many wrapper products with very little innovation(which investors will oversee) and still get funded.
What are your thoughts?