The AI party keeps roaring: Why it won’t end anytime soon
Yes, there’s an artificial intelligence bubble, no denying that anymore — so the question becomes, “Will it burst, and when?”
You’d be forgiven for thinking it could happen soon, given the continuing, seemingly never-ending funding of and spending by AI model makers, AI processor makers, chip equipment makers — the list goes on. And some of the bets, even or especially by Nvidia, do look risky.
But in his latest Breaking Analysis, Dave Vellante contends that the bubble isn’t likely to burst soon. The reason, as he sums it up, comes down to continuing, cascading shortages of the various components of AI factories that are unlikely to ease before at least 2028 and possibly beyond: “The AI supply chain remains constrained by high-bandwidth memory, advanced packaging, network fabric, power and site readiness,” he writes. “These bottlenecks not only slow deployment, they also delay price discovery (the point at which buyers have more choice); and they postpone the moment when the market discovers whether it has overbuilt.”
This week’s tech earnings results continued to show that investors are mixed in their outlooks. Neoclouds CoreWeave and Nebius as well as server maker Supermicro outperformed and got rewarded, but Cisco Systems, AI chipmaker Cerebras and chip equipment maker Applied Materials outperformed and didn’t. Next week we get an earnings breather before the following week when Nvidia and others report.
