Oct 16, 2026 Is There an A.I. Bubble? A Debate. Azeem Azhar and Paul Kedrosky debate whether A.I. will make the economy crash.
In the debate ( Is There an A.I. Bubble? A Debate) on the Ezra Klein Show (Podcast), Paul Kedrosky, a partner at the venture capital firm SK Ventures, argue that there is while Azeem Azhar, a British technology entrepreneur, author and analyst, argues that there isn't. The graphic above (the dashed line is the attractor path for the SP500) shows thatw there isn't. But, let's look at the arguments:
- We are in one of the largest capital expenditure waves of history, echoing the railroad boom, the canal expansions, electrification, and the interstate highway system.
- Everyone is leveraged to AI.
- We are not over-built yet; there is a vast under-supply of AI.
- "Never confuse your early customers for what the real market will look like."
- The major Super-Scalers (Meta, OpenAI, Google, etc.) have a surprisingly small number of customers and are at risk.
- "A general-purpose technology shows up, it continuously improves, and then it starts to create the need for complementary services — whether it’s maintenance or whether it is repair or whether it’s something you can now do with the technology...This is the normal evolution of a general-purpose technology..."
Notes
- Financial Forecast Center SP500 Forecast Same Conclusion.
Financial Forecast Center
NASDAQ Forecast
Notice that the NASDAQ is above the attractor path so a correction is likely. The SP500 is also slightly above the attractor path. Neither result suggests the indees are in Bubble-Territory (ee for comparison the US Economy Debt Bubble).
AIC Statistics
Notice for both the SP500 and the NASDAQ Models, the best short-term model is the Random Walk. For both models, input from the USL20 model provides the best attractor path (Dashed red line in time plots). However, there is not great separation between the AIC prediction intervals so I have chosen to present results from the Business-As-Usual Model (BAU no input) since the graphics are the same. These results suggest that short-term index-fund investing will be risky.
