we moving towards smaller, faster, do ...
Is the Tech/AI Rally Sustainable or Are We in a Bubble? Tech and AI-related stocks have surged over the last few years at an almost unreal pace. Companies into chips, cloud AI infrastructure, automation tools, robotics, and generative AI platforms have seen their stock prices skyrocket. Investors,Read more
Is the Tech/AI Rally Sustainable or Are We in a Bubble?
Tech and AI-related stocks have surged over the last few years at an almost unreal pace. Companies into chips, cloud AI infrastructure, automation tools, robotics, and generative AI platforms have seen their stock prices skyrocket. Investors, institutions, and startups, not to mention governments, are pouring money into AI innovation and infrastructure.
But the big question everywhere from small investors to global macro analysts is:
“Is this growth backed by real fundamentals… or is it another dot-com moment waiting to burst?”
- Let’s break it down in a clear, intuitive way.
- Why the AI Rally Looks Sustainable
There are powerful forces supporting long-term growth this isn’t all hype.
1. There is Real, Measurable Demand
But the technology companies aren’t just selling dreams, they’re selling infrastructure.
- AI data centers, GPUs, servers, AI-as-a-service products, and enterprise automation have become core necessities for businesses.
- Companies all over the world are embracing generative-AI tools.
- Governments are developing national AI strategies.
- Every industry- Hospitals, banks, logistics, education, and retail-is integrating AI at scale.
This is not speculative usage; it’s enterprise spending, which is durable.
2. The Tech Giants Are Showing Real Revenue Growth
Unlike the dot-com bubble, today’s leaders (Nvidia, Microsoft, Amazon, Google, Meta, Tesla in robotics/AI, etc.) have:
- enormous cash reserves
- profitable business models
- large customer bases
- strong quarter-on-quarter revenue growth
- high margins
In fact, these companies are earning money from AI.
3. AI is becoming a general-purpose technology
Like electricity, the Internet, or smartphones changed everything, AI is now becoming a foundational layer of:
- healthcare
- education
- cybersecurity
- e-commerce
- content creation
- transportation
- finance
When a technology pervades every sector, its financial impact is naturally going to diffuse over decades, not years.
4. Infrastructure investment is huge
Chip makers, data-center operators, and cloud providers are investing billions to meet demand:
- AI chips
- high-bandwidth memory
- cloud GPUs
- fiber-optic scaling
- global data-center expansion
This is not short-term speculation; it is multi-year capital investment, which usually drives sustainable growth.
But… There Are Also Signs of Bubble-Like Behavior
Even with substance, there are also some worrying signals.
1. Valuations Are Becoming Extremely High
Some AI companies are trading at:
- P/E ratios of 60, 80, or even 100+
- market caps that assume perfect future growth
- forecasts that are overly optimistic
- High valuations are not automatically bubbles
But they increase risk when growth slows.
2. Everyone is “Chasing the AI Train”
When hype reaches retail traders, boards, startups, and governments at the same time, prices can rise more quickly than actual earnings.
Examples of bubble-like sentiment:
- Companies add “AI” to their pitch, and stock jumps 20–30%.
- Social media pages touting “next Nvidia”
- Retail investors buying on FOMO rather than on fundamentals.
- AI startups getting high valuations without revenue.
This emotional buying can inflate the prices beyond realistic levels.
3. AI Costs Are Rising Faster Than AI Profits
Building AI models is expensive:
- enormous energy consumption
- GPU shortages
- high operating costs
- expensive data acquisition
Some companies do not manage to convert AI spending into meaningful profits, thus leading to future corrections.
4. Concentration Risk Is Real
A handful of companies are driving the majority of gains: Nvidia, Microsoft, Amazon, Google, and Meta.
This means:
If even one giant disappoints in earnings, the whole AI sector could correct sharply.
We saw something similar in the dot-com era where leaders pulled the market both up and down.
We’re not in a pure bubble, but parts of the market are overheating.
The reality is:
Long-term sustainability is supported because the technology itself is real, transformative, and valuable.
But:
The short-term prices could be ahead of the fundamentals.
That creates pockets of overvaluation. Not the entire sector, but some of these AI, chip, cloud, and robotics stocks are trading on hype.
In other words,
- AI as a technology will absolutely last
- But not every AI stock will.
- Some companies will become global giants.
- Some won’t make it through the next 3–5 years.
What Could Trigger a Correction?
A sudden drop in AI stocks could be witnessed with:
- Supply of GPUs outstrips demand
- enterprises reduce AI budgets
- Regulatory pressure mounts
- Energy costs spike
- disappointing earnings reports
- slower consumer adoption
- global recession or rate hikes
Corrections are normal – they “cool the system” and remove speculative excess.
Long-Term Outlook (5–10 Years)
- Most economists and analysts believe that
- AI will reshape global GDP
- Tech companies will keep on growing.
- AI will become essential infrastructure
- Data-center and chip demand will continue to increase.
- Productivity gains will be significant
- So yes the long-term trend is upward.
But expect volatility along the way.
Human-Friendly Conclusion
Think of the AI rally being akin to a speeding train.
The engine-real AI adoption, corporate spending, global innovation-is strong. But some of the coaches are shaky and may get disconnected. The track is solid, but not quite straight-the economic fundamentals are sound. So: We are not in a pure bubble… But we are in a phase where, in some areas, excitement is running faster than revenue.
See less
1. The early years: Bigger meant better When GPT-3, PaLM, Gemini 1, Llama 2 and similar models came, they were huge.The assumption was: “The more parameters a model has, the more intelligent it becomes.” And honestly, it worked at first: Bigger models understood language better They solved tasks morRead more
1. The early years: Bigger meant better
When GPT-3, PaLM, Gemini 1, Llama 2 and similar models came, they were huge.
The assumption was:
“The more parameters a model has, the more intelligent it becomes.”
And honestly, it worked at first:
Bigger models understood language better
They solved tasks more clearly
They could generalize across many domains
So companies kept scaling from billions → hundreds of billions → trillions of parameters.
But soon, cracks started to show.
2. The problem: Giant models are amazing… but expensive and slow
Large-scale models come with big headaches:
High computational cost
Cost of inference
Slow response times
Bigger models → more compute → slower speed
This is painful for:
real-time apps
mobile apps
robotics
AR/VR
autonomous workflows
Privacy concerns
Environmental concerns
3. The shift: Smaller, faster, domain-focused LLMs
Around 2023–2025, we saw a big change.
Developers realised:
“A smaller model, trained on the right data for a specific domain, can outperform a gigantic general-purpose model.”
This led to the rise of:
Small models (SMLLMs) 7B, 13B, 20B parameter range
Domain-specialized small models
Medical AI models
Legal research LLMs
Financial trading models
Dev-tools coding models
Customer service agents
Product-catalog Q&A models
Why?
Because these models don’t try to know everything they specialize.
Think of it like doctors:
A general physician knows a bit of everything,but a cardiologist knows the heart far better.
4. Why small LLMs are winning (in many cases)
1) They run on laptops, mobiles & edge devices
A 7B or 13B model can run locally without cloud.
This means:
super fast
low latency
privacy-safe
cheap operations
2) They are fine-tuned for specific tasks
A 20B medical model can outperform a 1T general model in:
diagnosis-related reasoning
treatment recommendations
medical report summarization
Because it is trained only on what matters.
3) They are cheaper to train and maintain
4) They are easier to deploy at scale
5) They allow “privacy by design”
Industries like:
Healthcare
Banking
Government
…prefer smaller models that run inside secure internal servers.
5. But are big models going away?
No — not at all.
Massive frontier models (GPT-6, Gemini Ultra, Claude Next, Llama 4) still matter because:
They push scientific boundaries
They do complex reasoning
They integrate multiple modalities
They act as universal foundation models
Think of them as:
But they are not the only solution anymore.
6. The new model ecosystem: Big + Small working together
The future is hybrid:
Big Model (Brain)
Small Models (Workers)
Large companies are already shifting to “Model Farms”:
1 big foundation LLM
20–200 small specialized LLMs
50–500 even smaller micro-models
Each does one job really well.
7. The 2025 2027 trend: Agentic AI with lightweight models
We’re entering a world where:
Agents = many small models performing tasks autonomously
Instead of one giant model:
one model reads your emails
one summarizes tasks
one checks market data
one writes code
one runs on your laptop
one handles security
All coordinated by a central reasoning model.
This distributed intelligence is more efficient than having one giant brain do everything.
Conclusion (Humanized summary)
Yes the industry is strongly moving toward smaller, faster, domain-specialized LLMs because they are:
cheaper
faster
accurate in specific domains
privacy-friendly
easier to deploy on devices
better for real businesses
But big trillion-parameter models will still exist to provide:
world knowledge
long reasoning
universal coordination
So the future isn’t about choosing big OR small.
It’s about combining big + tailored small models to create an intelligent ecosystem just like how the human body uses both a brain and specialized organs.
See less