Have you ever had one of those moments when you realize the world is quietly shifting under your feet — and most people haven’t noticed yet? I had exactly that feeling recently while reading a fascinating conversation with a veteran investor who’s been through multiple market cycles. His take on artificial intelligence wasn’t the usual breathless hype or doomsday prediction. Instead, it felt sober, clear-eyed, and surprisingly urgent.
What struck me most wasn’t the prediction that AI would change everything (plenty of people say that). It was his insistence that this time, the technology really is the real deal — while simultaneously warning that the way markets are pricing it right now carries echoes of one of the most famous bubbles in history.
The Rational Exuberance Behind Today’s AI Frenzy
Let’s be honest: whenever someone compares the current moment to the dotcom bubble, eyes roll. We’ve heard it before. But this comparison wasn’t made lightly or for clicks. The parallel isn’t that AI is fake or overhyped in its potential. Quite the opposite.
The internet really did transform how we shop, communicate, learn, work, date — basically everything. The promise was real. The timeline and the winners were what people got wrong. Valuations became completely untethered from any reasonable expectation of how quickly that transformation would actually happen and who would ultimately capture the value.
That’s the comparison being made today. AI will change our world in more ways than any of us can currently imagine. The disagreement isn’t about whether it will happen — it’s about speed, magnitude, and most importantly, which companies will still be standing when the dust settles ten or fifteen years from now.
“AI is the real deal. There is no ambiguity about that. It will change our world in more ways than we can imagine.”
That’s not a VC trying to raise a fund or a tech CEO pumping their stock. That’s someone who has spent decades studying markets and bubbles — and still believes the transformative power is genuine.
What Makes AI Different From Past Tech Waves?
One of the clearest illustrations of AI’s current power came from a very practical example. A research team finished a complex investment paper and — instead of asking a junior analyst to summarize and critique it — they handed it to the latest language model.
The output was stunning: a cleaner, more elegant summary than the authors themselves had written, a balanced assessment of strengths and weaknesses, and — here’s the kicker — several genuinely valuable citations the human team had completely missed. Four of them were “oh-wow-we-really-should-have-included-that” quality.
That’s not artificial general intelligence. It’s not consciousness. But it is something new and powerful: the ability to instantly process and synthesize vast amounts of existing knowledge in ways that feel almost superhuman — as long as the underlying data is rich enough.
Where the data is thin — say, trying to forecast long-term equity risk premiums or the probability of a recession five years out — the models still struggle mightily. Human judgment, guided by statistical tools and experience, remains far superior in those sparse-data domains.
So AI appears to be a quantity game more than a quality game. Give it oceans of data and it swims beautifully. Ask it to reason deeply in areas where data is shallow, and it quickly hits limits.
The Uncomfortable Truth About Market Leaders
Here’s where history gets sobering. In March 2000, people were convinced that the kings of the internet era — Cisco, Intel, Nokia, Oracle — would dominate for decades. Only one company from the top ten in 2000 remains in the top ten today. The rest were displaced not because the internet failed, but because better execution, new business models, or simply superior innovation came along.
- Cisco was supposed to grow 40% a year forever — it took 25 years to grow six-fold instead of five.
- Nokia owned mobile phones — then didn’t.
- Even mighty Intel lost its unchallenged position in chip manufacturing leadership.
The lesson isn’t that technology fails. It’s that market leadership is shockingly fragile when transformative waves hit. Moats exist, but they rarely last forever.
We’re already seeing flickers of this with AI. The dominant search business model — sponsored links and advert-laden results — is being quietly challenged by tools that deliver clean, direct answers without the commercial clutter. New players have appeared seemingly out of nowhere and rattled established giants within months.
Does that mean the current leaders can’t win? No. They have enormous resources, talent, and data advantages. But it does mean blind faith in their permanent dominance is probably a dangerous bet.
Where Does That Leave Investors Right Now?
If you’re a value-oriented investor, the current spread between growth and value is uncomfortable. In the U.S. it’s flirting with levels last seen at the peak of the dotcom mania and again in 2020. Globally it’s near record extremes.
The temptation is to go all-in on the short side of the bubble or dump growth stocks entirely. History suggests that’s usually painful. Bubbles can stay irrational longer than most value investors can stay solvent.
A more balanced view might be: don’t abandon growth entirely, but don’t overweight it either. Tilt toward value, reduce concentration risk, and look for ways to capture the upside while protecting against the very real possibility that today’s giants aren’t tomorrow’s.
One approach that has historically added value is fundamental indexing — weighting companies by economic footprint (sales, cash flow, book value, dividends) rather than market cap. These strategies have tended to outperform traditional cap-weighted value indexes, especially after periods of extreme concentration.
What About Gold in an AI World?
Gold often gets dismissed as a relic in tech-driven bull markets. Yet the same investor who is excited about AI’s potential is also quietly constructive on gold over the medium-to-long term — not for next year necessarily, but over the next decade or two.
The core argument is simple and hard to refute: developed-world governments (especially the United States) have become addicted to deficit spending financed by debt. At some point, markets may refuse to keep funding that habit at low rates.
When that happens — whether in ten years or twenty — the path of least political resistance will almost certainly be inflation. And inflation is historically one of the best environments for gold to shine.
“The fear is that fiat currencies will create their own financial crisis… I think that’s reasonably likely.”
That doesn’t mean gold goes straight up from here. After a strong run, pauses and pullbacks are normal. But the longer-term setup remains intriguing for anyone worried about currency debasement.
Tariffs, Inflation, and the Trump Policy Experiment
Another hot topic is whether proposed tariffs will reignite inflation. The short answer, according to this perspective: probably not dramatically.
If the effective average tariff rate ends up around 15%, that’s roughly equivalent to a 15% value-added tax applied only to imports. Imports represent about 11–12% of U.S. GDP. So even a full pass-through would add roughly 1.6–1.8% to the price level — once. Not nothing, but not hyperinflation either.
- Foreign suppliers absorb some of the cost to stay competitive
- Supply chains reconfigure and find efficiencies
- Consumers pay the remainder — likely less than half in most models
The bigger inflation risk isn’t tariffs. It’s continued massive fiscal overspending combined with any pressure to keep interest rates artificially low for political reasons.
Negative real rates for extended periods don’t stimulate sustainable growth — they inflate asset prices, widen wealth gaps, and eventually create distortions that are painful to unwind.
Final Thoughts: Balancing Wonder and Caution
Perhaps the most intellectually honest position right now is to hold two seemingly contradictory ideas at the same time:
1. Artificial intelligence is one of the most important general-purpose technologies in a century — its impact will be profound and lasting.
2. Financial markets have a long history of overshooting during the early stages of such revolutions, and many of today’s most beloved names may not lead the next chapter.
That duality doesn’t lend itself to easy portfolio answers. It does suggest humility, diversification, and a willingness to question consensus narratives — even when those narratives are wrapped in very shiny, very expensive technology.
Because if history is any guide, the companies and investors who thrive over the long run aren’t necessarily the ones who shout loudest about the future. They’re the ones who remain realistic about human nature, economic incentives, and the sheer unpredictability of technological adoption curves.
And right now, that future is arriving faster than most of us are prepared for.
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