Ron Insana says an AI bubble may be forming, but we're not there yet

cnbc.com:

There has been much discussion in the financial media of late as to whether there's another bubble forming in the publicly traded shares of companies involved in the development and use of artificial intelligence.

While it's true that a handful of stocks have enjoyed powerful rallies, from Nvidia, Microsoft, Google-parent Alphabet, to Oracle and Adobe, the intense interest in Generative AI has not yet generated a bubble in said shares.

Let's remember the elements of a bubble, as defined by many market historians who have written about such financial market phenomena (myself included).

Historians and economists such as Charles MacKay («Some Extraordinary Delusions and the Madness of Crowds»), John Kenneth Galbraith («The Great Crash, 1929»), Edward Chancellor («Devil Take the Hindmost») and Charles Kindleberger («Manias, Panics and Crashes»), have written extraordinary books about the recurring tendency for investors to go crazy for stocks.

The bubble books chronicled everything from the 17th Century Dutch tulip mania to the South Sea and Mississippi Bubbles in England and France in the 18th Century to the Jazz Age craze for stocks in the «roaring 20s.»

They also include Japan's stock and property bubbles in the 1980s, the internet frenzy in the 1990s and, most recently, the global real estate and credit bubble that caused the Great Financial Crisis in 2008.

In each case there were several common characteristics that defined the bubbles, from early disbelief that a particular asset or technology has transformational potential to wider acceptance, to rapid advances in asset prices and on to broad public participation in the mania coupled with massive issuance of stock by any company even marginally associated with the