Learning from history, technological revolutions all follow the same pattern. Will the AI "investment frenzy" be like the railways and the power grid of the past?

The artificial intelligence infrastructure is experiencing the largest and fastest technological wave in history. However, historical patterns indicate that every great technological revolution will cyclically move from frenzied investment to bubble burst, and then to the arrival of a golden age.

Carlota Perez, author of "Technological Revolutions and Financial Capital," believes that AI is still in the "installation phase," and historically, every technological revolution has needed to experience a bubble burst before entering the golden age. Unlike previous revolutions, the AI revolution is primarily driven by software for the first time, with network effects amplifying both opportunities and risks, while AI companies are expected to directly benefit from the broad economic value they release.

Currently, this investment frenzy is sweeping the globe on an unprecedented scale. In just the next two years, the four major tech giants—Google, Amazon, Microsoft, and Meta—will invest up to $750 billion in the data center sector to support their AI models. Morgan Stanley predicts that by 2029, global spending in this area will reach $3 trillion.

However, the massive capital expenditure has triggered growing anxiety among investors: how much return can such a huge investment actually generate?

The market's tense sentiment is not unfounded. Wall Street Journal previously mentioned that a recent report released by the Massachusetts Institute of Technology exacerbated the turmoil in the stock market, finding that as many as 95% of the surveyed companies had not received any returns from their generative AI investments. When asked if there is an AI bubble, OpenAI CEO Sam Altman's response was not optimistic; he stated:

I do think some investors may lose a lot of money.

Learning from History: From Railroads to Information Technology, Frenzy and Bubbles are the Prelude to the "Golden Age"

Carlota Perez provides us with a historical perspective to understand the current AI craze. She believes that artificial intelligence is an extension of the information technology revolution that began in the 1970s, and all technological revolutions follow a predictable cycle.

In her book "Technological Revolutions and Financial Capital," Perez identifies five great technological revolutions: the Industrial Revolution of the late 18th century, the steam and railroad revolution of the 1830s, the steel and heavy industry revolution of the 1870s, the era of mass production in the early 20th century, and the information technology revolution that began in the 1970s.

Perez points out that these revolutions all follow a predictable cycle.

In the initial "installation phase," new technologies disrupt old industries and regions, triggering a large amount of "creative destruction" and social upheaval. This phase is often accompanied by over-investment, financial mania, and stock market bubbles.

However, these bubbles are not without benefits. They often provide the funding for the large-scale promotion of subsequent technologies, building crucial infrastructure that enables broader economic benefits to be realized. In terms of AI, Perez believes we are still in this fervent "deployment phase."

Historical experience suggests that before any "golden age" arrives, a "bone-juddering" collapse seems inevitable. Perez stated in an interview:

I have never seen a golden age arrive without experiencing a collapse.

She added that the current dysfunction in capital markets could lead to greater turmoil triggered by the bursting of the AI bubble. Capital markets are now more focused on speculative games like cryptocurrencies rather than productive investments, while global debt has exceeded three times GDP. She warned:

This could also become a trigger for significant instability.

What Makes This Revolution Different: Software-Driven, Network Effects, and Risk Amplification

Although historical patterns provide important references, this round of technological revolution has its uniqueness.

Unlike before, the AI revolution is driven jointly by software and hardware for the first time, changing some financial dynamics.

Software companies can achieve faster scale expansion through enormous network effects, even going global overnight. For example, OpenAI's ChatGPT reached 700 million users per week less than three years after its launch.

However, digital globalization amplifies opportunities while also intensifying risks.

One example is that the cheaper DeepSeek AI model once shook investors' confidence in U.S. tech stocks. This rapid, borderless competitive landscape means that leadership positions may change more quickly, and investment risks correspondingly increase.

Additionally, the most striking difference is that AI companies are expected to directly benefit from the financial gains they release. This technology is accelerating advancements in multiple fields such as biotechnology, robotics, and materials science.

AI companies could very well leverage their technological advantages to develop into significant healthcare, drug discovery, or autonomous vehicle companies.

Historical Guidance: How to Enter the Golden Age

Perez believes a more important lesson from past revolutions is that to enter a "golden age," civil society needs to actively shape the revolution to serve its own purposes.

Just as early politicians established antitrust agencies to tame overly powerful companies and built welfare states to mitigate the shocks to the labor market, the establishment of social rules is crucial.

Perez argues that today's dysfunctional financial markets, concentration of corporate power, rise of populism, and the threat of climate change have brought the world to a new turning point.

However, as historian AJP Taylor wrote in commenting on the European revolutions of 1848, nations sometimes reach a turning point—yet fail to turn.

Perez believes that how to respond to these challenges will be the theme of her next book, which will also determine whether the AI revolution can truly usher in the anticipated golden age