Is The AI Boom A Bubble, Or Just The Start Of A New Era?
7th November 2025
There’s plenty of noise right now about artificial intelligence, tech valuations, and an “impending correction.” The Magnificent Seven have driven much of the market’s returns this year, and it’s true that valuations are stretched compared to historical norms. But the question is whether this is simply overexcitement - or the early stages of something far more transformative.
At Brigantia, we invest for the long term. Over a ten or twenty-year investment horizon, investors will experience one or two genuine market events. The real challenge isn’t predicting them - it’s resisting the urge to react to every headline along the way.
Financial media thrives on clicks and drama. “Everything’s still going up” doesn’t generate attention, so we get a steady stream of predictions about bubbles, crashes and overbought markets. Yet history shows that waiting for the “perfect entry point” usually costs investors more in missed growth than they ever save by avoiding a dip.
At Brigantia, we invest for the long term. Over a ten or twenty-year investment horizon, investors will experience one or two genuine market events. The real challenge isn’t predicting them - it’s resisting the urge to react to every headline along the way.
Financial media thrives on clicks and drama. “Everything’s still going up” doesn’t generate attention, so we get a steady stream of predictions about bubbles, crashes and overbought markets. Yet history shows that waiting for the “perfect entry point” usually costs investors more in missed growth than they ever save by avoiding a dip.
Does AI Justify Higher Valuations?
Artificial intelligence is not just another tech theme - it’s arguably the most significant productivity revolution since the internet. Data-centre spending is surging, chip demand remains far beyond supply, and major firms like Microsoft, Amazon and Google are already seeing genuine revenue growth from AI-related services.
The bull case is simple: if AI fundamentally changes how economies operate, the companies building or enabling it deserve higher valuations. Earnings growth could eventually justify today’s prices.
But the bear case is equally clear. Expectations have run well ahead of reality. Many firms using the word “AI” are doing so as a marketing exercise, not a business model. Hardware bottlenecks, energy constraints and slow real-world adoption all raise the risk of disappointment.
Is This A Bubble?
There are certainly signs of exuberance. Some analysts compare today’s sentiment to the late 1990s, and Michael Burry (famous for shorting the housing market before 2008) has re-emerged to warn of another crash. He’s also famously “predicted seventeen of the last two recessions,” so perhaps we take that with a pinch of salt!
Yes, valuations are rich. Yes, momentum is extreme. But unlike many previous bubbles, this one is underpinned by genuine profitability in key players, not just hope. If we do see a correction, it could be healthy rather than catastrophic.
Artificial intelligence is not just another tech theme - it’s arguably the most significant productivity revolution since the internet. Data-centre spending is surging, chip demand remains far beyond supply, and major firms like Microsoft, Amazon and Google are already seeing genuine revenue growth from AI-related services.
The bull case is simple: if AI fundamentally changes how economies operate, the companies building or enabling it deserve higher valuations. Earnings growth could eventually justify today’s prices.
But the bear case is equally clear. Expectations have run well ahead of reality. Many firms using the word “AI” are doing so as a marketing exercise, not a business model. Hardware bottlenecks, energy constraints and slow real-world adoption all raise the risk of disappointment.
Is This A Bubble?
There are certainly signs of exuberance. Some analysts compare today’s sentiment to the late 1990s, and Michael Burry (famous for shorting the housing market before 2008) has re-emerged to warn of another crash. He’s also famously “predicted seventeen of the last two recessions,” so perhaps we take that with a pinch of salt!
Yes, valuations are rich. Yes, momentum is extreme. But unlike many previous bubbles, this one is underpinned by genuine profitability in key players, not just hope. If we do see a correction, it could be healthy rather than catastrophic.
What History Tells Us
Market pullbacks are inevitable. In the past fifty years we’ve had oil shocks, the dot-com crash, the global financial crisis, the pandemic, and multiple rate-driven corrections. Each time, those who stayed invested recovered - and went on to new highs.
For example, during the 2008 crisis global equities fell more than 40%, but were up over 300% ten years later. The cost of being out of the market, even briefly, far outweighs the benefits of trying to time it.
According to a study by Hartford Funds (using data 1995-2024 for the S&P 500): missing the 10 best days over that period would have cut an investor’s returns by about 50 %. The same study says missing the 30 best days would reduce returns by ~83 %! So, it's missing out on gains that should really cause nightmares rather than being in the market for a temporary pullback.
At Brigantia, we believe AI represents a genuine and sustainable tailwind for global markets. Valuations may reset, but the long-term direction remains positive.
How We Position Portfolios
The Brigantia View
Whether the next few months bring a correction or continued growth, our stance remains unchanged: we build portfolios for time horizons measured in years, not headlines. AI may well be expensive - but the alternative, sitting on the sidelines, has rarely been a winning strategy.
Time in the market, not timing the market.
Market pullbacks are inevitable. In the past fifty years we’ve had oil shocks, the dot-com crash, the global financial crisis, the pandemic, and multiple rate-driven corrections. Each time, those who stayed invested recovered - and went on to new highs.
For example, during the 2008 crisis global equities fell more than 40%, but were up over 300% ten years later. The cost of being out of the market, even briefly, far outweighs the benefits of trying to time it.
According to a study by Hartford Funds (using data 1995-2024 for the S&P 500): missing the 10 best days over that period would have cut an investor’s returns by about 50 %. The same study says missing the 30 best days would reduce returns by ~83 %! So, it's missing out on gains that should really cause nightmares rather than being in the market for a temporary pullback.
At Brigantia, we believe AI represents a genuine and sustainable tailwind for global markets. Valuations may reset, but the long-term direction remains positive.
How We Position Portfolios
- Stay diversified. Exposure to AI and tech themes is valuable, but we avoid concentration risk.
- Maintain discipline. Volatility creates opportunity, not panic.
- Manage liquidity. Having dry powder ready for pullbacks allows us to act, not react.
- Focus on time in the market. Predicting short-term moves is impossible; compounding over decades is what builds wealth.
The Brigantia View
Whether the next few months bring a correction or continued growth, our stance remains unchanged: we build portfolios for time horizons measured in years, not headlines. AI may well be expensive - but the alternative, sitting on the sidelines, has rarely been a winning strategy.
Time in the market, not timing the market.
