https://arab.news/pyaud
Is artificial intelligence transforming the economy in any real sense, or is the promise of rapid growth mere hype? US stock markets certainly favor the former view: Shares of AI and tech companies have accounted for about three-quarters of the S&P 500’s gains this year. Venture capital investors appear equally convinced, having poured $200 billion into the AI sector in 2025 alone, according to one estimate.
It is no surprise, then, that analysts are increasingly asking whether we are witnessing another tech bubble, reminiscent of the dotcom boom of the 1990s, and whether, as before, it might eventually burst and drag equity markets down with it. Yet, as my University of Cambridge colleague William Janeway points out, even speculative bubbles can leave behind vital infrastructure and innovations that sustain long-term growth.
If AI follows that pattern, how powerful could its impact be? The dotcom boom offers some useful lessons. In the second half of the 1990s, emerging digital technologies nearly doubled US productivity growth to 2.5 percent. Although economists’ forecasts vary, some studies suggest that today’s wave of AI investment could produce a similarly significant boost in gross domestic product.
