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Wall Street sees AI bubble coming and is betting on what pops it

https://www.bloomberg.com/news/articles/2025-12-14/wall-street-sees-an-ai-bubble-forming-and-is-gaming-what-pops-it
37•simonpure•1h ago

Comments

DivingForGold•1h ago
https://archive.ph/2G0uD#selection-1219.0-1219.64
kryllic•54m ago
If there wasn't an ongoing de facto recession, I would wager that the overvaluation of companies _would_ be at or near dot-com bubble levels. These AI companies have plenty of venture capital, but consumers are probably not as influential as they were back then. I agree we likely won't see a dotcom-like crash, but there will still be fallout that will take months to settle.
omgJustTest•50m ago
IMO what you are describing is distributed choice vs concentrated choice.

It's one of my main arguments against a crash: why would one (1) or a few choose to do that?

finghin•36m ago
Unless I misunderstand your question, isn’t the obvious answer just short-term profit?

No investor has thus far invested something they can’t yet cash out.

miohtama•51m ago
I sincerely hope this would kill Oracle with their karma
oldjim798•50m ago
This can't happen soon enough. AI is a vacuum sucking up a lot of capital and attention that could and should be put to much much better uses
barbazoo•49m ago
Like what? Do you have any insight into what money might be spent on instead?
ishtanbul•48m ago
Real infrastructure and housing
baq•45m ago
Investors don't want 5x revenue valuations, they want 30x growth.

Make 'real infrastructure' and 'housing' companies attractive products for investors to buy and they'll buy. (No idea how to do that, don't ask me! :))

swexbe•38m ago
Most investors have more money invested in their house than stocks.
dwa3592•43m ago
Healthcare research to start with.
schnebbau•47m ago
We could go back to crypto and NFTs being the capital darlings?
dymk•46m ago
Those did not suck up nearly the capital and attention that AI is. They were like GameStop and AMC.
infecto•26m ago
But they also did not create the same amount of value that AI is. Certainly there is hype but also value is being generated.
s1mplicissimus•43m ago
I tried figuring out how to bet on the AI bubble popping since the circle investments - that's by the way the one thing the article does not explain.

Can someone from the dear HN financially savvy users clarify what kinds of specific bets could be placed to that avail?

ebiester•40m ago
Just remember that the market can stay irrational longer than you can stay solvent.

Consider diversification in your portfolio. Maybe you divert a little more away from the US market, for example, which is heavily dependent on 7 stocks largely tied to AI.

nairboon•35m ago
It really depends on what exactly you want to bet on and on what timeframe. More short term bet? Puts on the AI companies or an AI ETF. Do you assume that the rest of tech stays up even if AI pops? Then you could short some AI ETF and hedge with long QQQ. (=betting that the AI subset of Nasdaq will underperform relative to the Nasdaq.
infecto•26m ago
We know over the long term it is exceptionally hard to beat the market, timing the market is near impossible. Everyone keeps talking about a bubble but we don’t know how big of one it is or when/if it will pop.

You are better off being in the market than betting on an idea that you don’t know will even happen or when.

I definitely think there is over enthusiasm in the space but at the same time I am not convinced that the demand for compute has let off yet.

My take is always you could build up some cash reserve in treasuries or somewhere like that and deploy it if a pop does happen. You will miss out on the potential growth but if you wanted to participate that is one way imo.

electroly•21m ago
Just knowing that the bubble will pop at some point in the future isn't enough to trade on. You'll get trounced if this is the only piece of information you have. To a first approximation, everybody knows the bubble will pop. The question is: when and how?
leviliebvin•18m ago
What is missing from the picture with all these articles is the numbers. LLMs already have a few solid use cases as translators, general document processors, coding helpers ...etc. So the first question is, do what extent does this demand support the investment? Would it be enough if basically every SP500 corp provided paid LLM access to their employees? Or is the investment so big, that people are betting on less solid applications, like Agentic AI, with some non-trivial automation?

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Luxuy

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