Legendary investor Bill Gross warns about potential overvaluation in AI-related stocks and infrastructure investments. He argues that while artificial intelligence is driving significant capital expenditure in data centers and tech infrastructure, this trend might lead to overcapacity by 2025. Gross specifically points to major tech companies’ massive investments in data centers and AI infrastructure, with projected spending reaching $150 billion in 2023. The ‘Bond King’ expresses concern that this rapid expansion could create a surplus of computing capacity, similar to previous tech boom-bust cycles. He draws parallels to historical instances of overinvestment, such as the fiber optic cable boom of the late 1990s. The article highlights how companies like Microsoft, Meta, and Google are dramatically increasing their capital expenditure for AI infrastructure, with some firms doubling their spending compared to previous years. Gross suggests that this aggressive investment cycle could lead to market corrections, particularly affecting semiconductor companies and other AI-related stocks. He emphasizes that while AI technology itself is revolutionary, the market might be overestimating short-term infrastructure needs. The analysis concludes with a warning about potential market adjustments as supply catches up with demand, though it acknowledges the long-term transformative potential of AI technology.
Source: https://www.businessinsider.com/bond-king-bill-gross-ai-stocks-capex-data-centers-tech-2025-9