Wall Street's AI Boom Just Reached a Dangerous Milestone. History Says the Winners Could Change.
The AI boom has benefited many companies, but history shows the winners might not be the ones investing heavily in it.
Intelligence analysis by Qwen 2.5 (3B)
The AI boom has led to significant investment, but history suggests the true winners might be those using the technology rather than those building it.
Imagine you build a big playground with lots of equipment. At first, it costs a lot of money. But then, more kids come and use the playground. The kids who use the playground get to play and have fun. The people who built the playground don't get as much benefit as the kids who use it.
Analysis
The Internet Boom and Its Lessons
In the late 1990s, telecom companies invested heavily in fiber optic networks, expecting a huge return on investment (ROI). However, the market was wrong, and the telecom companies suffered significant losses. The quality of the equipment and infrastructure improved, and costs came down, benefiting internet-based businesses. This shows that the true winners are often the users of the technology, not the ones building it.
The 19th Century Railroad Boom
Similar to the internet boom, in the 1800s, companies invested heavily in railroad infrastructure. The quality of the equipment and routes improved, and costs came down, benefiting the factories and manufacturers using the infrastructure. Again, the true winners were the businesses using the technology, not the ones building it.
The AI Boom and Its Winners
The article suggests that the AI boom might follow a similar pattern. If AI becomes cheaper and more accessible, the true winners could be the businesses using it, not the ones building it. The State Street Industrials Select Sector SPDR ETF (XLI) and the Vanguard Technology ETF (VGT) are recommended as potential investments.
Key points
- The AI boom has led to significant investment but history shows the true winners might be those using the technology.
- The State Street Industrials Select Sector SPDR ETF (XLI) and the Vanguard Technology ETF (VGT) are recommended as potential investments.
- The article suggests that the AI boom might follow a similar pattern to the internet and railroad booms.
As AI becomes cheaper and more accessible, businesses that use it will benefit more than those who build it.
If AI doesn't become cheaper and more accessible, the benefits might not be as significant for businesses using it.
