By Sergi Basco
Publication Date: 2025-11-12 16:12:00
Booms and busts are a recurring phenomenon in the modern economy, but when the value of an asset rises too much, a boom quickly turns into a bubble.
The two most recent major bubble episodes were the dot-com bubble in the United States (1996–2000) and the real estate bubbles that emerged in various countries around 2006. Both ended in recessions – the first relatively mild and the second catastrophically severe. The recent dizzying rises in the share prices of AI-related companies have now led many investors to ask, “Are we witnessing another asset price bubble?”
It’s important to put the current AI boom in context. The stock price of Nvidia – which makes many of the computer chips that power the AI industry – has multiplied 13-fold since the start of 2023. Shares of other AI-related companies such as Microsoft and Google’s parent company Alphabet have multiplied by 2.1 and 3.2, respectively. In comparison, the S&P 500, which includes the stocks of the most important…