The AI Boom Is Headed For A Reckoning — ft. Aswath Damodaran

Global markets demonstrate remarkable resilience, consistently absorbing geopolitical shocks and economic uncertainty without significant downturns. Earnings growth remains robust, though heavily concentrated in a few technology giants driving massive capital expenditure into artificial intelligence. While AI promises transformative potential, its current business models remain largely unproven, characterized by high cash burn rates and existential risks to traditional corporate life cycles. Valuation concerns persist as companies like Anthropic and OpenAI approach potential IPOs at trillion-dollar valuations, raising questions about sustainable profitability and corporate governance. Meanwhile, the chip sector has seen explosive growth fueled by intense demand for AI infrastructure, though market participants remain divided on whether these gains are durable or speculative. Ultimately, current market stability masks underlying vulnerabilities, particularly regarding the long-term viability of AI-driven revenue streams and the potential for widespread macroeconomic consequences if growth assumptions fail.