WAS IT GOOD FOR YOU? Is the AI boom already over?

Investment bubbles do sometimes involve assets which have little intrinsic value, yet it is remarkable how often they begin as an entirely rational reaction to some new invention or development – an invention which outlasts the collapse of the speculative bubble, as if nothing had happened.

You only have to look at a share chart and you would assume that railways went out of fashion in the 1840s, when a mad speculative umbrella collapsed. See share charts from the early 2000s and you would likewise assume that people took one look at the internet and then swiftly went off it.

Yet the opposite is true. Railways did not just survive railway-mania, but their development accelerated through the 1850s and 1860s to the point that they came to dominate land transport in almost every industrialized country. Their supremacy was only challenged by the development of the internal combustion engine at the very end of the 19th century. Internet usage mushroomed throughout the dotcom collapse. Even tulips survived the mania of 1630s Amsterdam, becoming a popular feature in gardens the world over. This is what makes investment bubbles difficult to spot. Those who get drawn into them are often both very right and very wrong at the same time. They are right that the subject of their affections is, indeed, the future, yet in their enthusiasm they over-estimate the speed at which it will transform the world.

It’s possible to use the Apple iPhone 16 debacle as one sign of AI’s “tulip mania” phase abating. But just as the railroad is still one of the dominant forms of distributing freight across continents, AI is poised to radically reshape our lives. And like trains and the birth of the Internet in 1969 and the World Wide Web in 1989, it could very well be something that becomes taken for granted, rather than something that dominates headlines, as AI did when OpenAI first rolled out ChatGPT in late November of 2022.