Between innovation and overvaluation - The AI Industry
- May 5
- 1 min read
"Given the quite alarming figures and circumstances in the AI industry, I have decided to write a short essay on the topic.
In my essay, I outline several arguments suggesting that the current AI bubble is poised to burst.
Global geopolitical and macroeconomic turmoil acted as catalysts for the bubble, not least because they also distracted attention from what is currently happening in the AI sector.
The Deepseek “stress test” in early 2025 showed just how unstable the market already was at that time.
Some AI (and AI-related) stocks have P/E ratios in the triple digits, and the PEG ratios tell a similarly concerning story for most of these companies..
Earnings figures are inflated by “shuffling” funds in the form of investments, payments, and fees from the players involved in a closed loop.
The only thing that’s hard to say is when the bubble will burst
“Markets can remain irrational longer than you can remain solvent”
Note: This essay represents my personal analytical view and does not constitute financial advice."
Noah D. Schuster
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