Back in 1994, newspapers at the time wrote that basketball superstar Zarko Paspalj had grown 28cm in a single year as a teenager. With some quick calculations, the "science of numbers" tells us that obviously, now at 59 years old, he is about 14 metres tall.
A similar "logical leap" was made by the companies investing in artificial intelligence platforms. Judging by the sudden demand for AI systems in 2024–2025, they ran the numbers for their future investments.
So right now, investments of 7 trillion euros are being poured into new AI data centres in an unprecedented construction rally. Of course, these investments on companies and datacenters (covering a total area roughly as large as entire island of Ikaria) will require incredible amounts of memory, processors, and so on.
Factories that now sell primarily to those data centres are being forced to sharply raise prices because of the unexpected demand. As a result, increases of up to 4× have been observed in memory prices.
But the memory inventories of computer and smartphone manufacturers will eventually run out, and they will be forced to buy at the new, higher prices. This creates a chain reaction that pushes the prices of all tech products upward.
And the higher prices go, the more consumption will fall. And when consumers stop buying computers (pocket or desktop), they also lose the means to consume the artificial intelligence that those data centres "produce".
So an imbalance is created in the market. The more data centres are built, the fewer data centres are actually needed. That means the investors funding AI companies (without perhaps realising it) are collectively, destroying their own investments. All of this happened because investors fell victims to the so-called "Fear Of Missing Out".
Something similar happened during the 2000–2004 period. The so-called "dot-com bubble". Between 2000 and 2002, the Nasdaq index collapsed from 5.000 points to 1.100. It took the global economy 7 years to return to balance.
Of course, in the long run the market will balance this situation, as it always does when these kinds of "paradoxes" occur. But since the hype is way bigger this time, we are facing a long period of turbulence in the global economy.
So the bursting of the AI-bubble is no longer just another theory. It is already happening, and it will once again be accompanied by relentless scaremongering from professional clickbait-journalists on TV shows and "news websites".
Of course AI is here to stay, just as e-commerce stayed and just as Zarko Paspalj ultimately became a very tall and successful basketball player. Despite never growing past 2,08 metres.
A period of intense turbulence in the global economy is beginning. As if someone threw a huge rock into the small pool in our backyard. The size of this bubble may grow to 3× the dot-com bubble based on the scale of current investments.
But we've seen the story before and we should be prepared for it. No, AI is not a fad. Nor is the AI-hype that many CEOs created real. It is an amazing new tech with huge impact. Just like the ones before it. Like electricity, computers, internet or the airplane.
