Archive · 28 Aug 2026
History Suggests the Artificial Intelligence Bubble Won’t Burst Soon
The article asks when the artificial intelligence investment boom might end.
It compares AI with earlier periods of rapid technological development.
These include railroads, electricity, industry, and the internet.
In those periods, the United States spent a large share of its economy on new infrastructure.
The article calls this pattern the “rule of 25.”
Railroad spending reached $2.5 billion before a financial panic in 1873.
Internet infrastructure spending reached about $1.5 trillion in the late 1990s.
Based on these examples, the article says the AI bubble may not burst soon.
Historical investment booms appear to follow a recurring pattern, the article says.
The proposed “rule of 25” measures spending as a share of the overall economy.
Railroad investment eventually reached $2.5 billion before the 1873 panic.
Internet infrastructure spending totaled about $1.5 trillion in the late 1990s.
The article argues that artificial intelligence investment may have substantial room to grow before a downturn.
- Who
- The analysis concerns United States investors and the artificial intelligence sector.
- What
- It examines whether the artificial intelligence investment bubble is likely to burst soon.
- When
- The comparisons cover the 1860s, the 1920s, and the late 1990s; no specific forecast date is given.
- Where
- The historical examples focus on the United States.
- Why
- The article uses past technology-investment cycles to estimate how much spending the U.S. economy may absorb before a downturn.
- Proposed pattern
- The “rule of 25” refers to transformational-boom spending reaching about 25% of the overall economy.
- Railroad-era economy
- U.S. gross domestic product was about $10 billion annually at the start of the railroad boom in the 1860s.
- Railroad spending
- Rail spending eventually totaled $2.5 billion before the 1873 panic.
- Internet infrastructure
- About $1.5 trillion was spent on internet infrastructure in the late 1990s.
- Late-1990s U.S. economy
- The U.S. economy was about $6 trillion when that internet spending occurred.
- Historical comparisons
- The article also cites the industrial and electrification buildout of the 1920s.
- AI outlook
- The article’s conclusion is that the AI bubble is not likely to burst anytime soon.