Ex-Intel chief Pat Gelsinger summed up the AI frenzy in just two words

Former Intel CEO Pat Gelsinger didn’t mince words when quizzed on whether the world is in an AI bubble. His two-word reply on CNBC, “Of course,” effectively cut through months of hype and mind-boggling valuations.

My Take:

The problem we have is leaders and former-leaders in the tech industry making bubbles sound like they are a good thing with very little and clear foresight into how to effectively capitalize on the bubbles aside from the ones creating the bubble (intentionally or unintentionally), and managing risk against the speculation. Let’s face it, bubbles have a large element of speculation or are even speculative in nature. The GenAI bubble was admittedly driven by FOMO by all the hyperscalers. This is not question. None of they knew where this was going. To this day, most have not idea.

This begs the question of sustainability. How sustainable is the bubble? Will speculation be replace by substance? Instead, we see creative financing and “circular investment”. To me, those are not hopeful signs, but rather, efforts to keep sustain the bubble. Unlike prior bubble that were relatively asset-lite. This one is capital and asset heavy. Probably the most intense regime of speculative investment we have seen ever.