AI bubble 17 times dot-com and four times subprime Knut Wicksell Decidedly from the pessimistic camp.
The AI bubble is 17 times the size of the dot-com frenzy — and four times subprime, this analyst.
Artificially low interest rates have stimulated investment into AI that has hit scaling limits, says research firm.
Decidedly from the pessimistic camp.
It’s a take from independent research firm the MacroStrategy Partnership, which advises 220 institutional clients, in a note written by analysts including Julien Garran, who previously led UBS’s commodities strategy team.
You have to go way back to 19th century Swedish economist Knut Wicksell. Wicksell’s insight was that capital was efficiently allocated when the cost of debt to the average corporate borrower was two percentage points above nominal GDP.
Only now is that positive after a decade of Fed quantitative easing pushed corporate bond spreads low.
LLMs, he argues, already are at the scaling limits. “We don’t know exactly when LLMs might hit diminishing returns hard, because we don’t have a measure of the statistical complexity of language.
To find out whether we have hit a wall we have to watch the LLM developers. If they release a model that cost 10x more, likely using 20x more compute than the previous one, and it’s not much better than what’s out there, then we’ve hit a wall,” he says.
Steve Goldstein MarketWatch Oct. 3, 2025
Bank of America chief strategist remains reluctant to call a top in markets
Equity wealth is at all-time highs, reinforcing the notion, that right now in America, Wall Street is much more robust than Main Street.
MarketWatch Oct. 3, 2025 at 8:49 a.m. ET
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