Everyone Agrees We’re in an AI Bubble - So what’s up?
- Ben Clarke
- 2 days ago
- 3 min read
Not personalized financial advice - your money, your choice
3.3 billion. That’s roughly how many people agree we’re in an “AI bubble.” Coincidentally, it’s also how many people play mobile games globally; maybe half of us are too distracted to care.
It’s in the headlines, it's on podcasts, it’s in our email newsletters. We can’t escape headlines like “The AI gold rush is turning to panic” (The Economist), “Former Intel CEO Says Market Is In AI Bubble” (The Wall Street Journal), or even “What Happens if the AI Bubble Bursts?” (Bloomberg).
If headlines could burst bubbles, AI would’ve crashed three times by now.
And despite all this fear being stoked on TV and social media, the bubble keeps growing. So why hasn’t it popped — and when will it?
The short answer? No one knows. The longer answer: history gives us clues, if not answers.
The dot-com bubble began bursting on March 10th, 2000, but as many as 3–4 years prior, in late 1996, the Chairman of the Federal Reserve used the phrase “irrational exuberance” to describe the stock market mood.
Other headlines read “Tech Stocks Ruled the Roost” (Barron’s, 1998) and “Technology-Stock Investors May Feel More Pain in 1998” (Wall Street Journal, Jan 2, 1998).
These headlines hit more than two years before the top of the market in the dot-com bubble, and then it took about two and a half years for the Nasdaq Composite Index to bottom in October 2002.
If we map today to the late 1990s, we might have anywhere from six months to two years before the peak — putting a possible “top” around early 2026 to mid-2027 (bottom in 2028). And if the past repeats, the unwinding could take another 2–3 years beyond that.
These kinds of predictions make for great debates — and terrible investment strategies.
Does that mean I should sell? Probably not. Timing bubbles is easy in hindsight, impossible in real time. I’m relatively young and have a long investing horizon to ride out market cycles, but it does mean I’m looking more closely at European ETFs and emerging market ETFs.
This is because, historically, investor flows tend to follow three-year relative performance momentum. When international stocks outperform U.S. stocks over a multi-year period, more money moves into global markets and vice versa. A perception of more attractive returns and diversification opportunities in markets like Europe and Asia has driven some capital out of the U.S.
So, should you be investing in international markets? That’s up to you. The one I invest in is the Schwab International Index Fund. This index fund “measures the total return of large, publicly traded non-U.S. companies from countries with developed equity markets outside of the United States.”
That’s French for: “Big companies that just don’t happen to be based in the U.S.”
The other index I’ve been looking at is the MSCI Emerging Markets Index. It captures large and mid-cap companies across 24 Emerging Markets (EM) countries — including Brazil, Chile, China, Colombia, the Czech Republic, Egypt, Greece, India, Indonesia, Korea, Qatar, Taiwan, and the UAE, among others.
The MSCI index is designed to cover 85% of the free float-adjusted market capitalization in each country.
In other words, “It tracks most of the investable companies across those 24 markets.”
By putting a portion of my investments outside of the United States, I’m, in part, hedging against money leaving the U.S. This basically means that if the stock market here starts to falter, I’m guessing money will start to flow elsewhere. I may be wrong, and we could end up with a global recession like in 2008 — but
I’m willing to take that chance.
I don’t see it as betting against America. I see it as betting that innovation and opportunity don’t stop at the U.S. border.
If you learned something, subscribe to my YouTube channel or newsletter. The AI bubble might pop — your financial curiosity shouldn’t.
Whether AI turns out to be the next internet or the next tulip mania, one thing’s certain — the future won’t wait for the bubble to burst.
