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AI Investment Boom Promises Uncertain Returns
While chip manufacturing companies are achieving record profits from the AI boom, many other companies are spending billions on technology development without proven potential to generate returns proportionate to their investments. A Goldman Sachs analysis predicts that the profits are heavily concentrated among chip makers, while most companies in the AI supply chain are still striving to turn usage into stable profits. This raises concerns of a repeat of the dot-com bubble, where excessive expectations led to market crashes and trillion-dollar losses before some companies managed to grow. The key question remains: how sustainable is this boom, and will current investments translate into real profits and cash flows? This uncertainty is compounded by increasing risks stemming from intertwined financing and the erosion of the actual value of equipment and technology. If tangible profits are not realized quickly, the market could experience a sharp correction similar to the previous technology bubble crisis.
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