When numbers get large enough they cease to make sense, and the scale of investment in AI is already dwarfing the dotcom bubble, says Chris Clothier

Scarcely a day goes by without a new announcement of a huge sum of money to be spent on AI. In early October, Open AI, the company behind ChatGPT, announced a partnership with AMD worth “tens of billions of dollars”. Just before that they announced a deal with Nvidia for $100bn and back in September a deal with Oracle to spend $300bn. These are just OpenAI’s deals. The so-called Hyperscalers – Google, Amazon, Microsoft, Meta and the like – are expected to collectively spend around $500bn per year over the next few years on the build out of AI infrastructure.

We find this all very worrying.

Our first concern is a historical one. Every technological boom in history was accompanied by overinvestment which resulted in a massive misallocation of capital. The results have been similar on each occasion. Society benefited twice over, first from the deployment of a new technology (canals, railways, bicycles, automobiles, telecoms) and second from the oversupply which meant that the costs of that new technology to the end consumer was lower than it would otherwise have been. Those benefits came at the expense of investors who – mostly – did much worse.

It appears that these mistakes are being repeated. The scale of........

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