On October 29, Darius joined Yahoo Finance’s Market Hang to discuss, among other topics, why the AI investment boom is supporting earnings and profits today, and whether that will still hold by 2029 in a world of far more abundant compute capacity.
If you missed the discussion, watch a pivotal excerpt here: Shortened Clip
You can watch the full segment here: Full Discussion
Everyone Is Chasing the Same Pot of Gold
Every company in the AI ecosystem is incentivized to invest as aggressively as possible because each sees a pot of gold at the end of the rainbow. The problem is that they are all chasing the same one.
For now, pricing across the AI ecosystem remains highly supportive of profits and earnings. Darius cautioned, however, that those economics may look very different by 2029 if today’s investment boom creates a far more abundant supply of compute.
The Largest CapEx Bubble in U.S. History
Darius described the current AI buildout as by far the largest CapEx bubble in U.S. economic history, and noted that historically CapEx bubbles have ended in a secular bear market. One reason is that these cycles disrupt legacy industries and force painful adjustments throughout the economy.
He does not believe the cycle has peaked yet, but when it does, investors could face a historic secular bear market.
The AI investment cycle may continue to support earnings today, but its eventual consequences could look very different as compute supply expands and legacy industries face disruption.
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