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Foreign Affairs essay argues AI's promise is what inflates its market bubble
Foreign Affairs says roughly 30% of Americans use AI less than four years after ChatGPT, five times the share for earlier technologies at comparable stages. The essay treats that speed as fuel for a market bubble, pointing to ten AI stocks that supplied around half of this year's S&P 500 returns.
The Board Room · Leadership desk
Per a Foreign Affairs essay: roughly 30% of Americans use AI less than four years after ChatGPT; about 6% used smartphones, the Internet or electricity at comparable stages; AI company revenue is three times what earlier digital technologies made early on.
| Figure | Value | Note | Claim |
|---|---|---|---|
| Americans using AI, roughly, under four years after ChatGPT | 30% | 13 | |
| Share for earlier technologies at comparable stages, about | 6% | smartphones, Internet, electricity | 7 |
| AI company revenue vs. earlier digital tech's early years | 3 times | vs. Internet, cloud, early mobile apps | 14 |
What happened
- AI company revenue is three times what the Internet, cloud computing and early mobile apps earned in their early years, according to the essay.
- Steam engines and electricity did not reach their full potential until railways, highways and power grids were completed decades later.
- Policymakers, investors and business leaders are counting on AI as a cure for runaway public debt and the costs of aging populations, the essay says.
- A 2018 study by researchers at Texas Tech, Texas A&M and the Vlerick Business School found that the most revolutionary innovations of two centuries each inflated a market bubble.
Why it matters
- contradiction The 30 percent figure is the optimists' best datum and the essay's stated cause for concern, so adoption alone cannot settle which side is right.
- exposure A crack would reach economies that supply AI builders. China is the essay's example: net exports, mainly of AI-related goods, are a third of its growth.
- decision If the weakest players are wiped out and survivors consolidate, a buyer signing a multi-year AI contract this quarter is choosing a vendor without knowing which group it will fall into.
Speed of adoption and speed of payoff are separate questions, and the essay uses history to answer the second. Business computers appeared in the 1950s and gave no visible lift to the economy until the Internet connected them in the 1990s [2]. The adoption figure implies earlier technologies stood near 6 percent at the same stage [7]. The essay also supplies the best objection to its own analogy. Commercial AI arrived when the overwhelming majority of humans already had a computer or smartphone [6]. If missing infrastructure is what delayed earlier payoffs, that device base is a reason to expect a shorter wait this time.
The investment argument concerns prices, and the essay separates prices from the technology. Its general rule is stated flatly: "Major technology revolutions have always triggered dramatic boom-bust cycles." [10] The author says the innovations of the current boom are real and the hype is born of genuine promise [12]. The next sentence is the thesis: "That promise, however, is exactly what is inflating the bubble." [9] A bubble and a real payoff can coexist. The 2018 finding the essay cites describes stock prices rising and then falling [8]. It speaks to what investors paid.
The payoff side is harder to size than the adoption side. The essay gives revenue as a multiple of what earlier digital technologies earned in their early years [14]. It gives US spending as "hundreds of billions of dollars" of Big Tech investment [5]. One is a ratio and the other a loose range, so no payback period can be computed from the essay's figures. Revenue is also not profit, and the passages on adoption and revenue do not include profit or productivity numbers.
Timing is the open item. The essay says the mania will crack "as it inevitably will" and that the shock will ripple through financial markets into a global economy increasingly dependent on AI for growth [15]. We do not know whether the crack falls inside a given budget year, and the answer changes what a company should sign.
In our view the essay documents fast use and elevated prices, and it concedes the technology is real. The payoff case it describes as shaky rests on historical delay and market concentration.
What to watch
- A dated forecast, or profit and productivity figures for AI firms, that would let revenue be set against the 'hundreds of billions of dollars' of investment.
- Whether the ten AI stocks keep supplying around half of the S&P 500's returns.
- China's share of growth coming from AI-related net exports, now a third by the essay's count.
Clarity's read
What the record supports and how the coverage leans. The claims behind it follow.
Reality
- Evidence40
- Adoption60
- Hype gap
- Insufficient
- Incentives
- Insufficient
- Confidence40
Claim ledger
Ranked by verification strength, evidence, and original report placement.
- [1]
Steam engines and electricity did not realize their full potential before the completion of railways, highways, and power grids decades later.
- [2]
Computers for business use emerged in the 1950s but gave no visible lift to the economy before the Internet connected them in the 1990s.
- [3]
The top ten stocks in the S&P 500 are all big AI players and together account for nearly 40 percent of the index and around half of its returns this year.
- [4]
China is spending far less on AI than the United States, but net exports, mainly of AI-related goods, now account for a third of China's growth.
- [5]
In the United States, growth has been fueled primarily by hundreds of billions of dollars of Big Tech investment in AI projects and by consumer spending energized by stock market gains.
- [6]
Commercial AI appeared almost overnight on screens worldwide, at a moment when the overwhelming majority of humans already had access to a computer or smartphone.
- [7]
If roughly 30 percent of Americans using AI is five times the share at comparable stages for smartphones, the Internet, or electricity, the earlier share was about 6 percent.
- [8]
A 2018 study by researchers from Texas Tech University, Texas A&M University, and the Vlerick Business School found that all of the most revolutionary technological innovations of the last two centuries inflated a major market bubble, a rapid increase in stock prices followed by a precipitous decline.
- [9]
The essay says of the current boom: "That promise, however, is exactly what is inflating the bubble."
- [10]
The essay states: "Major technology revolutions have always triggered dramatic boom-bust cycles."
- [11]
Policymakers, investors, and business leaders are counting on AI to be a miracle cure for everything from runaway public debt to the costs associated with aging populations.
- [12]
The essay says that, as with all previous tech bubbles, the innovations of the current AI boom are real and the hype is born of genuine promise.
- [13]
Less than four years after the release of ChatGPT, roughly 30 percent of Americans are using AI, five times the share of Americans who were using smartphones, the Internet, or electricity at comparable stages of development.
- [14]
Revenue for AI companies is three times what previous digital technologies, including the Internet, cloud computing, and early mobile apps, generated in their early years.
- [15]
The essay says that once the mania begins to crack, "as it inevitably will", the shock will ripple back through financial markets into a global economy increasingly dependent on AI for growth.
- [16]
The essay says that after the mania cracks, the weakest players will be wiped out, the survivors will consolidate their lead, and a more stable AI ecosystem will emerge.
Sources
1 independent publisher whose own reporting we read for this story.
- foreignaffairs.comThe Global AI Bust
1 article · October 13, 2026
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