Amid reports of mass layoffs, large-scale destruction of books, sweeping copyright violations, and severe environmental damage caused by AI data centers, an increasingly popular refrain is that the AI bubble cannot burst soon enough. AI-related companies have gained some $27 trillion in market value since November 2022, but investments have been largely circular and increasingly debt-financed, whereas revenues still highly speculative. But while a collapse would cause enormous economic pain, no one should assume that it would spell the end of the AI-driven transformation currently underway.

AI will transform the global economy, but sky-high valuations and soaring costs risk an economic bubble that destroys fortunes.

Shares in AI-related companies have been falling as competition from China, rogue AI agents, complex financing deals and vast capital expenditures stress the markets’ capacity to…