I was there for the dot-com burst. Here's how the AI bubble will pop.

Getty Images; Tyler Le/BI As often happens in the early buildout of a new technology, a fierce argument is raging about whether the AI spending boom is a rational investment or a speculative bubble .

The answer, very likely, is… both.

AI will radically change the economy and society — just as the internet, computers, cars, trains, canals, electricity, and other technologies did.

And… Much (most?) of the money being invested right now will probably be lost — just as much of the money invested early in the prior booms was.

The early AI boom will likely end the way most prior eras have ended — with a gigantic bust that clobbers the first wave of companies and investors, followed by a long boom that helps build huge new companies and transforms the way we live.

Personally, I hope there's never an AI bust.

It would hurt millions of people, including me.

AI investment accounts for a huge share of US economic growth (a third, by some estimates ), so a bust will likely trigger a bear market and major recession.

I don't run an AI company or trade frequently, but I do own stocks and benefit from a healthy economy.

So, if there's an AI bust, I'll get poleaxed along with everyone else.

But having had a front-row seat for two big booms-and-busts — the Internet (1995-2002) and the Great Financial Crisis (2002-2009) — I'm fascinated by the parallels (and differences) with this one.

So, while I hope the AI boom will never turn to bust, I will also keep analyzing out loud.

Growth and leverage — we've got 'em! Most speculative bubbles share two key elements: An exciting innovation or product that leads to enormous demand ("Growth") Debt, credit, circular financing, or other leverage that amplifies this demand ("Leverage") In the internet bubble, the growth was real.

Millions of new people connected every month, and usage went through the roof.