The Last Phase Of The AI Bubble Is Coming…
Published: 2025-10-07
Status:
Available
|
Analyzed
Published: 2025-10-07
Status:
Available
|
Analyzed
Predictions from this Video
Incorrect: 0
Prediction
Topic
Status
The company controlling AI will control the global economy, indicating a significant future economic shift driven by AI.
"More money is flowing into AI companies than ever before because the company that controls AI is going to control our economy."
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Investment firms were warning about a potential AI bubble in July 2025.
"In July 2025, some investment firms began warning about a potential AI bubble."
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Sam Altman, founder of ChatGPT, stated in August 2025 that AI spending appeared to be building a bubble.
"Then in August 2025, Sam Alman, who was the founder of Chat GPT, said it looks like the AI spending is building a bubble."
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Mark Zuckerberg, founder of Meta, observed signs of an AI bubble in September 2025.
"And then most recently in September 2025, Mark Zuckerberg, who is the founder of Meta, also said that, 'Yeah, I'm seeing the signs of an AI bubble as well.'"
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Massive investment in AI is causing company valuations to skyrocket, a potential indicator of a bubble.
"Because of the countless billions of dollars that are being thrown at AI, causing valuations to soar through the roof."
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The current AI market conditions are expected to create investment opportunities.
"And then I want to show you how this can create investment opportunities for you."
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The internet bubble popped 25 years ago, leading to the collapse of internet companies.
"25 years ago, after the internet started to become popular, we saw the internet bubble pop, causing internet companies around the world to crash."
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There are notable differences between the current AI bubble and the historical dotcom bubble.
"But there are some differences as well."
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VC funding for dotcom companies surged 35-fold from $3 billion in 1995 to $105 billion in 2000.
"VC funding, meaning venture capital investments into dotcom companies, grew from around $3 billion in 1995 to about $105 billion in the year 2000, which is an increase of around 35 times over the course of those 5 years."
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Corporate investment in AI increased 2.5 times, from $103 billion in 2019 to $252 billion in 2024.
"According to Stanford's AI index, we've seen corporate investment in AI grow from around $103 billion in 2019 to $252 billion in 2024, which is a growth of around 2.5 times."
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Significant AI adoption began after November 2022, following the launch of ChatGPT.
"And I should also mention that the big adoption in AI started after the end of 2022 because chat GPT started in November 2022."
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The NASDAQ's average Price-to-Earnings (PE) ratio reached 70 during the dotcom bubble peak.
"And leading up to the dotcom bubble, the NASDAQ had an average PE ratio of 70 times earnings."
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The NASDAQ is currently trading at approximately 35 times earnings, significantly lower than the dotcom bubble peak but higher than its historical average.
"Today at the time I'm recording this video the NASDAQ which again is a group of the 100 largest companies in the stock market that are not financial. So primarily tech companies is trading at around 35 times earnings which is about half where we were during the com bubble peak but still higher than the historical average for the NASDAQ which is around 20 times earnings."
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Tech stocks constituted 33% of the S&P 500's total value during the dotcom bubble's peak.
"Because during the peak of the docom bubble, we saw that tech stocks made up 33% of the total value of the S&P 500."
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The top seven tech companies (MAG 7) now comprise 34% of the S&P 500, exceeding the dotcom era's tech sector dominance.
"Today, this imbalance is even more severe because the MAG 7, which is the largest seven tech companies out there, make up 34% of the S&P 500."
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The dotcom bubble burst due to a combination of high valuations, greed, and rising interest rates.
"There are three main factors that led to the dot bubble bursting, which are high valuations coupled with greed coupled with rising interest rates."
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During the dotcom bubble, companies with minimal profits were valued extremely highly, with the NASDAQ averaging 70 times earnings.
"We saw that the NASDAQ was trading at an average of 70 times earnings, which means companies that had little profits were able to sell for huge high valuations."
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Greed in the dotcom era led to pre-revenue companies raising significant capital and going public without viable business models or revenue.
"And what I mean more specifically by greed is there was a lot of companies that were raising money pre-revenue and were able to raise lots of dollars. Not just that, these companies were then IPOing, meaning they were going onto the stock market and raising many millions of dollars without a viable business model and without making a penny in revenue."
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The Federal Reserve aggressively raised interest rates in the late 1990s to curb economic expansion, contributing to the dotcom bubble's pop.
"And then we had rising interest rates on top of that because in the late 1990s leading up to the year 2000, the Federal Reserve Bank was aggressively raising interest rates as a way to cool down the economy."
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Rising interest rates increased borrowing costs, forcing investors to demand real returns, which dried up funding and burst the dotcom bubble.
"And as interest rates went up, the cost of borrowing money went up, which meant the venture capital firms that were investing money into these.com companies. The investment institutions and the banks that were investing money and lending money into these companies now needed to make a real return on their money because the cost of that debt, the cost of borrowing money went up. And that was when the money stopped flowing in which then caused the bubble to burst."
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The NASDAQ experienced a 78% decline during the dotcom bubble burst, fueled by the belief that the internet was a temporary fad.
"Remember the NASDAQ, which I was talking about a little bit ago, the NASDAQ fell by about 78% from top to bottom because people thought that the internet was over and this whole technology phase was done."
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While AI valuations are high (NASDAQ at 35x earnings, Nvidia at 50x earnings), they are not as extreme as the 70x earnings seen during the dotcom bubble.
"Today we have some similarities, but also some differences. Starting with valuations, we still have high valuations. Remember, historically, the NASDAQ sells for 20 times earnings. Today we're seeing the NASDAQ sell for around 35 times earnings which is higher than normal but lower than the 70 times earnings we were seeing leading up to the dotcom bubble bursting. But there are some exceptions for example Nvidia which is feels like everybody's favorite company currently is trading at around 50 times earnings."
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Smaller AI companies are being valued at 20-30 times revenue, even with no profit, indicating very high valuations for early-stage ventures.
"And we're seeing a lot of startups a lot of smaller AI companies selling for 20 to 30 times revenue not earnings. So if you make a million dollars in revenue with $0 of profit, you might be valued at 20 to 30 times that."
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Unlike the dotcom era's rising interest rates that tightened capital flow, the current environment features falling interest rates.
"Because leading up to the dotcom bubble, money was becoming tighter as interest rates went up, which made banks and institutions and investors much more picky with how they invested money. So less money was flowing into those industries versus today, we are seeing falling interest rates."
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The Federal Reserve cut interest rates in September 2025 and signaled further cuts for late 2025 and throughout 2026.
"In September, the Federal Reserve Bank just cut interest rates for the first time in 2025. They hinted at more interest rate cuts coming later on in 2025. They hinted at more interest rate cuts coming in 2026."
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Falling interest rates promote looser monetary conditions, potentially leading to increased investment flowing into market bubbles.
"Lower interest rates don't mean tighter money. Lower interest rates mean looser money, which would mean easier borrowing for institutions and investors and banks, which could mean more money flowing into the bubble."
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The key difference between the AI and dotcom bubbles is the interest rate environment: rising rates caused the dotcom bubble to pop, while falling rates characterize the current AI market.
"And this is the thing that I really want you to pay attention to because this is the biggest difference between now and the dot bubble because in the dotcom bubble, we were seeing the rising interest rates which caused it to pop. Today we're seeing a lower interest rate environment with interest rates going down."
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Falling interest rates are generally associated with further expansion of market bubbles, rather than their collapse.
"And generally, I say this very cautiously, but generally lower interest rates or falling interest rates don't cause bubbles to pop, they cause more dollars to flow into the bubbles, causing the bubbles to grow even bigger."
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Falling interest rates primarily facilitate increased capital flow into companies rather than improving their underlying business fundamentals.
"Lower interest rates don't change the fundamentals of companies. They don't make companies better. What they do is they allow more dollars to flow into those companies."
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The 'POP' cycle in markets signifies Panic, Overselling, Opportunity, and Profits.
"Poop, P O P stands for panic leads to overselling leads to opportunity leads to profits."
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Market downturns, including the dotcom crash, the 2008 financial crisis, the 2020 pandemic, and the 2022 stock market decline, all followed the POP cycle.
"Poop happens during the 2000.com bubble crashing. Poop happened during the 2008 great financial crisis. Poop happened during the 2020 pandemic. Poop happened during the 2022 stock market pulld down."
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Financially savvy investors recognized an opportunity during the dotcom crash, anticipating the internet's long-term viability and the recovery of strong companies.
"And that was when the financially savvy investors saw the opportunity the second O because they said hm maybe the internet is not going to die. Maybe the internet will come back and the strong internet companies will be able to grow because some of these companies were battered by the market downturn."
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Amazon's stock dropped over 90% during the dotcom crash, presenting a significant profit opportunity for patient, knowledgeable investors.
"Like Amazon stock fell by more than 90% during this dot crash which creates the opportunity for profit with the patient long-term investors that know where to find the opportunity."
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The author began investing in real estate during the 2008 crisis when fear created an opportunity for savvy investors to acquire assets at steep discounts.
"And I know this because that was when I started investing in real estate because a lot of people were scared to touch real estate and that created the opportunity for profit because the financially savvy were able to come in and buy great investments whether it was stocks or real estate at huge discounts."
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In some areas of Michigan, real estate prices dropped by over 90% during the 2008 financial crisis.
"Like in Michigan, real estate was selling in some areas for more than 90% off."
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Bitcoin experienced a 50% decline during the 2020 pandemic, leading to panic and overselling.
"Bitcoin fell by 50% which created panic and overselling."
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Over the past century, there have been 16 recessions and approximately 25 market crashes.
"Over the last 100 years, do you know how many recessions we've seen? It's not five. It's not 10. It's not 15. It's 16 recessions. And we've seen about 25 market crashes over those same 100 years."
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Artificial Intelligence is considered one of the most significant global investment opportunities.
"I think AI is one of the biggest opportunities in the world."
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Briefs Media pivoted in 2025 to develop an AI tool for investors, with more details to be revealed in 2026.
"We made a huge pivot to understand how we can create the best AI tool for investors out there, which again, I haven't announced it yet. We're going to be talking more about it in 2026. We're just developing this right now."
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The company faced bankruptcy by 2030 if it hadn't shifted its direction towards AI.
"I realized that if we didn't pivot our company's direction, we were going to be bankrupt by 2030."
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President Trump is proposing a plan to reduce national debt that incorporates gold and cryptocurrency.
"And this is where President Trump has been proposing a new plan to help pay off this debt involving gold and involving crypto."
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