If we look back at the defining technologies of the last century—the airline industry, personal computers, and the Dot-com era of the internet—a clear pattern emerges.

In each case, the technology itself was a real, long-term trend that fundamentally changed how humanity lives and works. However, the financial markets are prone to what we call "speculative exuberance." Investors, sensing the magnitude of the shift, tend to overshoot in their optimism, driving valuations to heights that the current earnings cannot possibly support.

When the bubble bursts, the companies with weak business models vanish, but the technology remains. The internet didn't disappear after 2000; it simply entered its most productive phase once the hype subsided. We believe AI is currently following this exact trajectory.

The Industry vs. The Valuation

Is AI a bubble? No. The industry itself is a monumental shift in computing. The current valuation hype, however, may very well be a bubble. Valuation bubble is not a reason not to invest. Bubbles often create opportunities of significant gains, as long as one takes profit before the bubble bursts.

Today, we see an incredible diversity of models and massive capital expenditure across the globe:

• US: Giants like OpenAI (with their Frontier and GPT-5 models), Google’s Gemini, and Anthropic’s Claude are locked in a race for general intelligence. Meanwhile, Elon Musk’s xAI with Grok continues to leverage real-time data at an unprecedented scale.
• China: China has emerged as a powerhouse of AI efficiency. Models such as Alibaba’s Qwen, ByteDance’s DouBao, and the reasoning-focused DeepSeek are proving that high-level performance can be achieved with significantly lower training costs than Western counterparts.

A Portfolio Approach to Speculation

Our philosophy at Hoovest is rooted in prudent diversification. While we recognize the potential for AI to create immense wealth, we also recognize the risk of market timing in a period of high exuberance.

We view AI as a speculative opportunity within a broader portfolio. For many clients, this means allocating a small, controlled portion of wealth—"money one can afford to lose"—to capture the potential for large, rapid gains. By keeping the core of the portfolio anchored in resilient assets like private credit or real estate, you can participate in the AI rally without risking your long-term financial security.

A Bold Prediction: The OpenAI Signal

While we rarely provide specific market predictions, we will memorialize this one for the record.

We don’t know when the valuation of the AI sector will peak, but we boldly predict that as long as the industry leader, OpenAI, has not yet gone IPO, the industry valuation has likely not seen its ultimate topping.

The public listing of the world's most influential AI startup will represent a massive liquidity event and a shift in how the sector is priced. This is not to say that the OpenAI IPO will be the exact peak, but rather that it is a key milestone we are monitoring as a signal of market maturity.

Opening the Discussion

The field of Artificial Intelligence is far larger and more complex than can be covered in a single article. From the physical hardware and energy requirements to the ethical implications of autonomous agents, we are only at the beginning of the conversation.

We merely seek to open the discussion and offer a measured perspective on the market exuberance we see today. The trend is real; the prices are debatable. As always, our role is to ensure that while you reach for the stars of innovation, your feet remain firmly on the ground of risk management.

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