AI CapEx boom risks intangible overinvestment
The guest argued that the current AI boom represents a massive overinvestment in intangible and physical capital that mirrors past destructive market bubbles.
The argument
The guest compared the current AI CapEx and talent bidding wars to the 1990s pharma R&D boom and the 2022 SaaS bubble. He argued that these cycles historically lead to poor returns on equity and severe capital misallocation once the bubble bursts.
The thesis, stress-tested
✓ What validates it
- ✓A sharp decline in private AI startup valuations
- ✓Public tech companies reporting lower-than-expected returns on AI infrastructure CapEx
▸ Risks discussed
- ▸AI technology could prove more immediately productive than past tech bubbles
- ▸Abundant leftover liquidity from the COVID era could prolong the current investment cycle
Hear it yourself
"network effects are transforming markets and investment outcomes. In this episode, Kai sits down with Edward Chancellor, one of the world's leading experts in capital cycles. They discuss lessons from past capital cycles and how they can be applied to the current AI cycle. If you would like to continue receiving new episodes of the intangible economy, you can subscribe on all major podcast platforms using the links in this episode description. Thank you for listening. We hope you enjoy the new show. So one of the features of the of the CapEx booms, is is that they as you know, they they actually produce profits."
AFFILIATE LINK · ZORTIX MAY EARN A COMMISSION · NEVER A RECOMMENDATION TO TRADE