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The Questions You Should Be Asking About the AI Bubble

Is there an AI capex bubble? And if so, when will it pop?

As total investment in data centers climbs—from hundreds of billions to lately several trillion dollars—the fear of compute overcapacity, low or negative returns, and a recession escalates.

But asking the right question matters. A better approach asks what the current AI capex boom entails, what are its linkages and risks to the macroeconomy, and how can prudent executives realistically navigate such a powerful trend.

A surge in activity carries macroeconomic risks, but a damaging bust is not a foregone conclusion. Despite their universally bad reputation, bubbles can leave a positive legacy—even when they pop.

by Philipp Carlsson-Szlezak and Paul Swartz

Read the full article here

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