FEAR & GREED | Business News Are we in an AI bubble?
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Jan 13, 2026 Roger Montgomery, founder and CIO of Montgomery Investment Management, dives into the intriguing world of AI and its market implications. He discusses how AI, as a general-purpose technology, fuels hype and attracts investors. Roger warns of the dangers of viewing AI as a perpetual growth opportunity, emphasizing the cyclical nature of markets. He suggests practical constraints could lead to an unwind in valuations. Additionally, he advises on rebalancing portfolios and taking profits from AI stocks to mitigate risk.
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AI Behaves Like Past General-Purpose Booms
- AI is a general-purpose technology that attracts hype, cheap capital and broad excitement.
- That cycle typically leads to a boom phase followed by cyclical realities exposing limits to adoption.
Cheap Capital Fuels A Scaling Frenzy
- Hype lowers the cost of capital, prompting firms to race to scale before economics are proven.
- That rush can mask structural adoption issues until cyclical forces reveal them.
Structural Narratives Clash With Cycles
- Markets treat structural themes as smooth, uninterrupted adoption paths, but customers and businesses are cyclical.
- Cyclical realities like funding changes, regulation or resource constraints interrupt the assumed growth arc.