The lessons from the "AI frenzy": The rise and fall fate of the "capital expenditure bull market"
Deutsche Bank pointed out that historically, booms driven by large-scale capital expenditures are often accompanied by busts, such as the canal frenzy of the 18th century and the railway investments of the 19th century. Although technological revolutions in sectors like aviation and telecommunications have changed the world, the long-term returns of stocks in these industries have underperformed the broader market, with investors failing to achieve returns commensurate with technological changes. This warns that the current massive investments in AI may benefit consumers more than producers
Breakthrough technological innovations often lead to frenzied pursuits by investors, giving rise to a "capital expenditure bull market." However, history warns us: booms driven by large-scale capital expenditures are often accompanied by downturns.
Deutsche Bank:
Like the "Canal Mania" of the 18th century and the "Railway Investment" of the 19th century, it points out that financial market booms driven by large-scale capital expenditures almost always end in bubble bursts. Similarly, while revolutionary technologies such as aviation and telecommunications have changed the world, the long-term returns of stocks in these sectors have significantly underperformed the broader market, and investors have not reaped returns commensurate with the technological transformations.
This warns us that the current massive investments in AI may ultimately benefit consumers more than producers (investors).
