AI: boom, bubble or both?

In a sharp and spirited exchange with SiriusXM’s Janet Alvarez, Dr. Linda Yueh, adjunct professor at London Business School, unpacked the paradox of artificial intelligence investing: we may be in a bubble and at the dawn of a transformative era.

Yueh drew parallels to the late ’90s dot-com frenzy, when investors were dazzled by the idea of buying something online, and noted that while valuations soared and then crashed, the underlying innovation ultimately reshaped the economy once the infrastructure caught up. The same, she argued, may hold true for AI: the excitement is real, but the ecosystem, from energy-hungry data centres to clear business use cases, still needs time to mature.

She pointed to Nvidia CEO Jensen Huang's view that even if an AI bubble bursts, today’s hyperscalers like AWS and Microsoft are better insulated and far wealthier than their dot-com predecessors. The twist? Many AI leaders like OpenAI remain privately held, limiting market exposure if public valuations tumble.

Still, Yueh warned that today’s market is far more entwined with the real economy. A sharp correction could ripple through pensions, savings, and GDP growth, much of which is currently being propped up by AI-driven data-centre investment. Echoing economist Joseph Schumpeter, she described the moment as classic creative destruction: a wave of capital building the foundations for the next leap in productivity, even if some of it proves to be misallocated.

As the conversation closed, Yueh pivoted to tariffs, noting they’re already pushing up consumer prices, coffee up double digits thanks to new levies, while the promised revenue relief for households remains uncertain.

Her takeaway: AI’s transformative power is real, but so are the risks of over-exuberance and mis-spent billions. The line between “next big thing” and “too much, too soon” has rarely looked thinner.

Listen to the full interview here: https://tinyurl.com/4mnnwdkr