WSJ: AI Bubble May Deflate Slowly Rather Than Burst
Brett Decker, a columnist for The Wall Street Journal, writes that the AI bubble may deflate slowly rather than burst suddenly.
The article points out that the economic transformation is still underway, but at a slower pace than the market previously expected. Recently, there has been a sell-off in AI-related stocks, with Nvidia and Micron under pressure, and pessimists quickly warning that the bubble is bursting.
The author believes that naysayers are always waiting for every fluctuation on Wall Street or setbacks in data centers to claim that the technology is about to collapse, but the actual process is closer to a gradual adjustment.
Factors such as China's AI progress showcase have intensified fluctuations in the U.S. stock market, raising doubts about valuation and the pace of return realization.
The gap between capital expenditure and expected returns has sparked discussions, but the foundation for transformation remains. Funds may shift from over-concentrated AI concept stocks to more sustainable applications and infrastructure, with event-driven valuation corrections. Overweight AI stocks are under pressure, while defensive and diversified assets benefit relatively.
Source: Public Information
ABAB AI Insight
The internet bubble ended abruptly in 2000, while early technology waves like railroads and electricity often concluded with a slow digestion after long-term over-investment. Brett Decker's viewpoint continues this historical comparison, emphasizing that while investment in AI infrastructure is substantial, the pace of commercialization lags behind.
Funds are shifting from overvalued chip and model companies to practical applications and energy efficiency optimization, motivated by the need to hedge against short-term return uncertainties, strategically retaining long-term computing power layouts while reducing exposure to bubble risks.
Similar to the transition of cloud computing in the 2010s from excessive hype to gradual implementation, and the capital reallocation during the 5G construction cycle, AI is currently in a transitional phase from "concept explosion" to "grounded validation."
Essentially, this is a rebalancing after capital concentration. The initial influx of massive capital into a few segments inflated valuations, and as returns materialized slower than expected, funds naturally overflowed, reallocating resources through price signals rather than collapse.
ABAB News · Law of Cognition
- Bubbles can deflate without necessarily exploding.
- The speed of technological revolutions is always slower than capital expectations.
- After excessive concentration, there must be a re-dispersion.