My working theory is that the ai bubble is caused by trump. People are too uncertain to want to invest in most industries, but they have to put their money somewhere, so they put it in ai stocks. Since the supreme court is likely to rule trump's tariffs illegal in a week or so, this may lead to a stock market crash. As people reallocate their portfolios, they will sell their ai stocks, which will pop the bubble and cause a crash. Something to watch out for.
Remember the first time you wanted to buy a stock.
You used a product or a service that you liked immensely, realized it had a stock and wanted to be involved.
1 billion people are using AI, not dramatically changing their lives yet of course but for sure they go 'wow incredible I want to be part of this' when they make a video with Sora or generate a pamphlet without having to work
That's not why I bought stocks for the first time. I had extra money and wanted it to grow rather than sit around. I think the same is true of the majority of people.
I don't think we're disagreeing with each other in that we both think that ai will continue to be a successful industry, and furthermore that we both think that investors think the same. I'm simply hypothesizing an origin for the widely acknowledged bubble in ai stocks.
Nor would it have much impact. Retail investors are a tiny part of the market. Sure, we all have 401Ks and IRAs, but are we collectively trading GOOG and MSFT? No. The people managing funds that go into those 401Ks are trading those stocks, but individually we aren't (generally speaking, of course).
Valid theory, and if you look at the prices of assets like gold, the reallocation is already happening. But I feel a near-term crash in AI stocks is just not coming unless we are headed towards catastrophic economic conditions. Lots of market forces are involved in AI now and even people selling stocks (or a major correction) will not pop the AI bubble since the major players have invested way too much cash to just let it go away at this point. (IMO)
Yes, but for now the USD has more or less survived. If Trump forcibly removes the FED chair on a pretext things could go downhill very fast. You can probably kiss the USD as a reserve currency goodbye overnight and China is going to have a real problem given the amount of debt they hold. This could easily knock the last pillar that holds it all up away.
