Name: Will an ‘AI bubble’ affect your retirement? | Terms of Service
Uploaded: 2026-03-10T16:31:57.000Z
Duration: 23 min 33 s
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Artificial intelligence has been driving massive gains in the stock market over the past couple of years.

But there are also concerns that this might not last and that over indexing on AI could lead to big consequences.

Some experts think we could be heading towards something similar to the implosion of the dot com bubble, where technology stocks rose rapidly with the emergence of the Internet in the late 90s and then crashed in 2000.

So is the AI market a bubble waiting to burst?

And if so, how worried do we all as individuals need to be about our own Investments and 401ks?

To help me answer those questions, I have Ross Mayfield here with me today.

Ross is an investment strategist for Baird Private Wealth Management, where he helps clients make informed investment decisions.

So before we get into AI specifically, let's talk about what a market bubble is.

What are some attributes that you define a market bubble?

A few of the telltale signs of a bubble are one, just prices separating from fundamentals, right?

Prices going up at a pretty monumental clip and leaving fundamentals of whatever the underlying is completely in the dust.

So it could be tech stocks, it could be the housing market, it could be something entirely different, but

prices going vertical and leaving the fundamentals behind.

And when you say fundamentals, you're talking about what the business is actually poised to make, right?

The earnings of the company, the cash flows of the companies.

In the case of housing, what the cost to build the housing was, the fundamentals that define a business in this case, which we typically use to price companies, to price the stock market to make investments, they should be the core driver.

An asset bubble tends to pop up when a narrative or kind of a speculative fervor outweighs any sense of the fundamentals of the underlying.

Everybody piling in, everybody on one side of the boat.

And there's a sense that this time is different for whatever reason.

And so that narrative and that psychology are really important, but they're also really hard to pin down.

So that's one of the things we're watching for really closely.

Ok, so price not matching with fundamentals and then this narrative, the speculation, those are the two big pieces you look at when defining a market bubble or an asset bubble.

And there are other things on the margins, right?

You would look for excessive use of leverage or a lot of retail trading in certain asset classes.

In the dot com bubble And I'm sure we'll talk a lot about that.

There are all these stories about people quitting their jobs to day trade.

It's not very quantitative, which is tough for analysts like myself.

But you're looking for excess leverage, loose financial conditions, things that allow what might normally be just an expensive market or some excitement to morph into something different altogether.

For people who might not be familiar, will you give us some examples or an example of a previous bubble?

The dot com bubble of the late 90s is the go to example, particularly for today because it's a brand new technology.

It has a lot of promise to change the way that we exist in the world, the way that we work, the way that we move around through the world.

There were a lot of new companies, a lot of, a lot of investment into the infrastructure and hardware that would take to make this come off the ground.

Ultimately a big run up in tech stocks like we're seeing today, followed by the dot com bubble popping in the early 2000s.

We might touch on that a little bit more.

I would say this also resembles pretty closely the mid-1800s railroad bubble, which is my favorite bubble.

Yeah, it's great, right, because railroads are such an old school technology, but

in the 1800s they were the AI of their time.

You had to build all the railroads, lay all the tracks.

So big upfront investment for an uncertain future.

And then of course that comes along with a lot of hype, a lot of charlatanism.

But ultimately I think the thing that's really important is both of those bubbles and I think the AI market today were investments in productive assets that even once the bubble popped had long uses.

The Internet is still obviously the bedrock of the economy today.

Railroads the the same for the rest of the 1800s and a lot of the 1900s.

It's when you get bubbles in non productive assets financed with debt that can be really problematic.

So the first asset bubble of all time references the tulip bubble and the Dutch tulip mania.

And so big asset, you know, FOMO asset prices going straight up, but

So it was, it was a lot of speculation and fervor for an underlying that had no fundamentals because it was, it was just a flower.

Yeah, I think that's such an important point that you're making there, that even when there are bubbles that pop and cause Short term, you know, financial strain on people, and

But they can still lead to these investments in future technologies that are really important.

I mean, we're still using railroads today.

We've heard lots of talk over the past year about this bubble.

Why do you think that so many people are talking about this right now?

I think that in a lot of ways we're always the general fighting the last war outside of the pandemic.

The two big financial crises that most investors and consumers in the last 40 years were the dot com bubble and the great financial crisis.

This has so many commonalities to the dot com bubble that I think it's just an easy thing for people to glob onto and look for the similarities and really dig at it.

And if you look over the last 10, 15 years, I mean, this has been a common thing.

But when Facebook IPO'd in 2012, there was a lot of talk about a new tech bubble with these social media companies.

So we've really been grabbing onto the themes that we're used to and that we've seen play out in real time.

Yeah, everybody is so worried about it happening again.

We feel like we need to keep talking about it.

Do you think that we're in an AI bubble right now?

I'll just go back to our definition of a bubble.

I mean, number one, we've had a robust bull market.

But really not even close to what you see in a true asset bubble.

One of our favorite charts to use on this is comparing the NASDAQ today from the launch of ChatGPT in late 2022 and the NASDAQ in the late 90s from the Netscape IPO in 1995.

And the NASDAQ is up more than 100% over the last couple of years.

And you see that price move and you think bubble.

But then if you look at what a real bubble looks like, the late 90s, the NASDAQ was up over 700% in five years.

Today just looks kind of like a bull market.

And the other big thing is it's driven by the fundamentals of the underlying companies.

Right now there are, you know, exceptions every rule.

So there are some companies and some slices of the market that do look bubbly to us, but

by and large, the big players at the center of this are really cash rich, really for now, low debt, very profitable.

Outside of the AI stuff, they all have core businesses that are extremely profitable.

And then the other thing is there's just not a fervor or a euphoria.

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