Yesterday, the Federal Reserve raised its policy rate by 25 basis points to 3.75%–4.00%. Yet the AI boom is still running. The technology is real, productivity gains may be emerging, and the investment surge is undeniable. The bubble question begins not with whether AI works, but with whether the expected return on the next AI project can keep exceeding the full cost of the capital required to build it. Including myself, investors and market watchers have repeatedly compared today’s AI rally with the Internet boom of 1995–2000. The comparison is useful. But the way most people remember that period is too simple. The Internet boom was not a choice between real innovation and a financial bubble. It was both. Technology transformed the economy. Productivity accelerated, investment surged, and businesses poured capital into information technology and communications infrastructure. Financial excess developed alongside those genuine economic gains. Research by Stephen Oliner and ...
Reshaping the Global Economy. Global Markets, Perspectives and Insights.