AI Boom or Bubble? Finance’s 2025 Playbook for Trillion‑Dollar Bets
Artificial intelligence has turned capital markets and corporate budgets into a single, self‑reinforcing flywheel. Equity investors have bid up the most AI‑exposed franchises to record valuations, while those same companies are deploying unprecedented sums into data centers, chips, and power. Nvidia’s sprint to a $5 trillion market capitalization crystallized the trade. Meanwhile, Microsoft, Alphabet and Meta are lifting multi‑year capex plans by tens of billions. The financial question for 2025 is brutally simple: Will real, monetizable demand arrive quickly enough to validate this capex—and who’s left holding the bag if it doesn’t? This playbook walks through the anatomy of the AI cycle from a markets and balance‑sheet perspective: the temperature check on valuations and momentum; the scale and composition of the capex arms race; the funding stack and where systemic risk could emerge; the state of enterprise adoption and ROI; bubble diagnostics and plausible scenarios; and, finally, portfolio positioning and risk management for investors navigating trillion‑dollar bets.