The artificial intelligence revolution will be only three years old at the end of November. Think about that for a moment. In just 36 months AI has gone from great-new-toy, to global phenomenon, to where we are today – debating whether we are in one of the biggest technology bubbles or booms in modern times.
To us what’s happening is obvious. We both covered the internet bubble 25 years ago. We’ve been writing about – and in Om’s case investing in – technology since then. We can both say unequivocally that the conversations we are having now about the future of AI feel exactly like the conversations we had about the future of the internet in 1999.
We’re not only in a bubble but one that is arguably the biggest technology mania any of us have ever witnessed. We’re even back reinventing time. Back in 1999 we talked about internet time, where every year in the new economy was like a dog year – equivalent to seven years in the old.
Now VCs, investors and executives are talking about AI dog years – let’s just call them mouse years – which is internet time divided by five? Or is it by 11? Or 12? Sure, things move way faster than they did a generation ago. But by that math one year today now equals 35 years in 1995. Really?
We’re also months, not years, from the end of the party. We may be even closer than that. NVIDIA posted better than expected earnings on Wednesday. And it briefly looked like that would buoy all AI stocks. It didn’t.
All but Alphabet have seen big share declines in the past month. Microsoft is down 12 percent, Amazon is down 14 percent, Meta is down 22 percent, Oracle is down 24 percent, and Corweave’s stock has been almost cut in half, down 47 percent. Investors are increasingly worried that everyone is overspending on AI.
All this means two things to us: 1)The AI revolution will indeed be one of the biggest technology shifts in history. It will spark a generation of innovations that we can’t yet even imagine. 2) It’s going to take way longer to see those changes than we think it’s going to take right now.
Why? Because we humans are pretty good at predicting the impact of technology revolutions beyond seven to ten years. But we’re terrible at it inside that time period. We’re too prone to connect a handful of early data points, to assume that’s the permanent slope of that line and to therefore invest too much too soon. That’s what’s going on right now.
Not only does the AI bubble in 2025 feel like the internet bubble in 1999, the data suggests it may actually be larger. The latest estimates for just global AI capital expenditures plus global venture capital investments already exceed $600 billion for this year. And in September Gartner published estimates that suggested all AI-related spending worldwide in 2025 might top $1.5 trillion.
I had ChatGPT (of course) find sources and crunch some numbers for the size of the internet bubble in 1999 and came up with about $360 billion in 2025 dollars, $185 billion in 1999 dollars.
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