The great AI faith: The debate that time won’t settle anytime soon

Markets have a way of making cynics look clever right up until the moment they look broke. We live in a cycle that rewards the optimists — those who see through the noise, bet on the signal, and hold their nerve while the rest of the room argues about the meaning of the static. The AI debate — will it or won’t it, bubble or revolution — is the loudest static in years. But beneath that surface hum, the great levers of this market haven’t shifted: lower rates, full employment, a consumer still standing, and a world where money is being diluted into every imaginable asset class from bitcoin to bullion to biotech.

We are, by any measure, deep into one of the most remarkable bull markets in modern history — fifteen years and counting, with barely a sustained drawdown in sight. All-time highs now roll off the printing press as routinely as quarterly earnings. Retail keeps buying, call volumes are setting records, and the speculative pulse beats stronger than ever. It’s a rally where 57% of the S&P can be red, yet the index still closes green — a paradox that tells you everything about the concentration of capital and conviction in this age of hyperthemes.

Tech isn’t just leading the parade — it is the parade. More than half of U.S. market cap is now tethered to technology and its offshoots, with defensive names fading into historical footnotes. This is no longer a diversified market — it’s a leveraged bet on innovation itself. Growth has swallowed value, large caps have crushed small, and the more unprofitable or heavily shorted a company is, the louder the market cheers when it rises from the ashes. It’s the 3 a.m. stage of the party, where the lights are still dim and the music’s still loud — and everyone convinces themselves it’s not yet time to go home. But hangovers are part of every cycle, even the ones powered by silicon dreams.

Still, the AI engine keeps rolling. We’re talking about trillions — $2.8 trillion in hyperscaler capex through 2029, $5.5 trillion globally. Those aren’t projections; they’re commitments etched into the balance sheets of the world’s biggest firms. AI may not be fully here yet, but its gravitational pull already distorts everything around it. You don’t fight a supertanker mid-turn, and you don’t short a capital wave of that magnitude just because you think it’s gone too far. This is a five-year trajectory that will not be decided quarter by quarter, however loud the noise gets.

Rates, the second horseman, ride alongside. Whether it’s 50 or 75 basis points, by choice or by politics, gravity is pointing toward lower U.S. yields. That’s another gust of wind at the sails of growth assets, and one more reason why this market feels impossible to kill. Then come margins and employment — horsemen three and four — each intertwined with AI’s promise of productivity and threat of redundancy. Whether AI truly boosts efficiency or simply gives executives cover to squeeze costs harder, the result may rhyme: profits stay intact while job markets soften at the edges.

And then there’s the debasement trade, the quiet, inflation-adjusted undercurrent beneath all this. The Nasdaq may be up 165% since Covid, the S&P 102%, but in gold terms those gains almost vanish — just 7% and -18% respectively. In Bitcoin terms, they collapse entirely. The dollar-based rich have grown richer, but the real alpha since 2020 has been found in assets unshackled from fiat — gold, crypto, and even select foreign markets where currency weakness inflates equity strength.

This is the paradox of modern prosperity: the wealth effect roars in dollars, but the purchasing power reality whispers something colder. It’s why Jeff Bezos calls AI an “industrial bubble” — one that, unlike tulips, leaves behind infrastructure, cables, and capacity. Some bubbles destroy; others transform. The 19th-century railway bubble built an empire. The 1990s telecom bubble wired the internet. If AI is the next industrial bubble, then the debate isn’t whether it bursts, but what it leaves behind.

Meanwhile, Europe stares at the scoreboard and sees none of its names among the global top 25 by market cap — not one. Scale, in this new era, is everything, and the U.S. and Asia own it. Japan, newly reflationary, is spending its way back to relevance. China is building its fortress — 29 of the 63 nuclear reactors under construction worldwide sit on Chinese soil, and they’re not thinking in quarters but decades. Energy security, chip sovereignty, rare-earth supply — these are the new currencies of power, and China’s playing the long game while the West trades the next CPI print.

Even the VIX is learning new tricks. Last week saw the S&P rise for five straight sessions and the VIX rise every day alongside it — something never seen before. Spot up, vol up: a market where hedges cost more even as the tape rallies, a sign of speculative pressure and retail leverage colliding with structural vol selling. In this upside-down world, realized volatility stays calm, but single-stock options burn white-hot — the modern version of leverage in a yield-starved age.

Traditional portfolios — 60/40, 70/30 — feel like museum pieces. The world is fracturing into ever-smaller niches: AI baskets, private credit, Dubai real estate, catastrophe bonds, tokenized anything. The analog portfolio in a digital world no longer suffices. Investors today are not choosing between stocks and bonds, but between realities — old versus new, fiat versus digital, safety versus growth.

So, will AI or won’t it? The truth is, it already has — at least in narrative form. The argument will drag on for many quarters, but capital doesn’t wait for philosophical clarity. It moves toward belief, and belief right now is heavily long AI, long innovation, long tomorrow. The skeptics may sound smarter, but the optimists are still getting richer — and until the tanker turns, the market’s compass points one way: forward, even if it’s into uncharted waters.