The AI Bubble Is Necessary

The conversation around AI is increasingly emotional. Some call it the dawn of a new intelligence revolution, while others rush to expose it as a bubble. Both extremes miss the point. Instead of asking whether AI is a bubble, it is more useful to ask why bubbles are inevitable at moments like this.

There is indeed a bubble in AI, but that does not mean it is false. A bubble is not a deviation from reality; it is part of how reality accelerates. It is a structural phenomenon—a way for civilization to release energy and reorganize itself. The bubble is a feature of progress, not a malfunction.

Every transformative technology in history began as a bubble. Railroads, electricity, the internet, and blockchain all went through phases of speculation, overinvestment, and apparent waste. These were not accidents but essential parts of structural evolution. The function of a bubble is financing. It allows society to prepay for the infrastructure of the future. Rational capital seeks certainty, but bubbles attract irrational capital willing to fund what logic alone would reject. Many of the projects labeled wasteful end up leaving behind the most durable foundations. The internet bubble gave us cloud computing and search engines. The crypto bubble produced distributed ledgers and open financial primitives. The AI bubble is following the same pattern. It looks chaotic, but through collective trial and error, it builds the next layer of infrastructure.

The AI bubble is different from those before it. It is not driven purely by narrative but by the convergence of energy, computation, and capital. The market is not buying intelligence; it is buying power and hardware. GPUs, electricity, cooling systems, and data centers are the true assets being priced. The current boom is the financialization of compute. Society has begun to assign monetary value to energy itself, turning computation into a kind of currency. Model training and inference are not only technical processes but also economic ones, translating raw energy into value. This is not a delusion but a historical pattern. Railroads, electric grids, and internet bandwidth all went through similar cycles. Beneath every wave of speculation lies a collective effort to fund new physical and computational foundations.

A bubble is not only a financial event but a civilizational mechanism. When the old system's energy reaches its limits, society needs a new story to redistribute attention and resources. The bubble provides that story. Human greed, belief, and fear converge toward a single direction, pushing the system to reorganize. It channels resources into uncertainty, giving the future the capital, time, and talent it needs to take shape. The bubble does not invent illusion; it amplifies collective intention. The current AI bubble concentrates energy on building compute, optimizing algorithms, and reducing costs. It leaves behind structures that endure. Such irrational investment is necessary because rationality alone never builds frontiers.

When the bubble bursts and the market cools, the infrastructure remains. The data centers, networks, and models built during the hype will not disappear; they will become part of the next normal. History has never stopped because of a bubble. It stagnates only when there is none. The right question is not when the AI bubble will end, but for whom it is building foundations. The bubble is necessary because it is how civilization finances the future. It is noise in the process of evolution, but also a signal of movement. When the illusion fades, what remains becomes reality.