Are dot-com bubble mistakes repeating with AI?

Unconventional Silicon Valley finance deals raising eyebrows on Wall Street.

- By SETH FIEGERMAN AND CARMEN REINICKE

THE STARGATE AI data center in Abilene, Texas, is a collaboration among OpenAI, Oracle and SoftBank.

(Bloomberg)

For almost as long as the artificial intelligence boom has been in full swing, there have been warnings of a speculative bubble that could rival the dotcom craze of the late 1990s that ended ina spectacular crash anda wave of bankruptcies.

Tech firms are spending hundreds of billions of dollars on advanced chips and datacenters, not just to keep pace with a surge in the use of chatbots such as Chat-GPT, Gemini and Claude, but also to make sure they're ready to handle a more fundamental and disruptive shift of economic activity from humans to machines. The final bill may run into the trillions. The financing is coming from venture capital, debt and, lately, some more unconventional arrangements that have raised eyebrows on Wall Street.

Even some of Al's biggest cheerleaders acknowledge that the market is frothy, while still professing their belief in the technology's long-term potential. AI, they say, is poised to reshape multipleindustries, cure diseases and generally accelerate human progress.

‘Yet never before has so much money been spent so rapidly ona technology that, for all its potential, remains somewhat unproved as a profit-making — business model. Tech industry executives who privately doubt the most effusive assessments of Al’s revolutionary potential — or at least struggle to see how to monetize it — may feel they have little choice but to keep pace with their rivals’ investments or risk being out-scaled and sidelined in the future AI marketplace.