What will burst the AI bubble?

Thursday 27 November 2025

Many will argue that there is no AI bubble. The poster child of the bubble, NVDA, is not running away from profits on valuation.

However, bubbles always have a kernel of truth, and that truth distorts underlying economic behaviour.

In 1999, it was Cisco profits on routers. Note what happened to profits when the bubble burst.

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.