Unlike past speculative bubbles, the current AI frenzy has near-universal, top-down support. The government wants domestic investment, tech giants are in a competitive spending arms race, and financial markets profit from the growth narrative. This rare alignment of interests from all major actors creates a powerful, self-reinforcing mandate for the bubble to continue expanding.

AI infrastructure leaders justify massive investments by citing a limitless appetite for intelligence, dismissing concerns about efficiency. This belief ignores that infinite demand doesn't guarantee profit; it can easily lead to margin collapse and commoditization, much like the internet's effect on media.

During a fundamental technology shift like the current AI wave, traditional market size analysis is pointless because new markets and behaviors are being created. Investors should de-emphasize TAM and instead bet on founders who have a clear, convicted vision for how the world will change.

The world's most profitable companies view AI as the most critical technology of the next decade. This strategic belief fuels their willingness to sustain massive investments and stick with them, even when the ultimate return on that spending is highly uncertain. This conviction provides a durable floor for the AI capital expenditure cycle.

The startup landscape now operates under two different sets of rules. Non-AI companies face intense scrutiny on traditional business fundamentals like profitability. In contrast, AI companies exist in a parallel reality of 'irrational exuberance,' where compelling narratives justify sky-high valuations.

The massive investment in AI infrastructure could be a narrative designed to boost short-term valuations for tech giants, rather than a true long-term necessity. Cheaper, more efficient AI models (like inference) could render this debt-fueled build-out obsolete and financially crippling.

The current AI investment frenzy is a powerful feedback loop. Silicon Valley labs promote a grand narrative to justify huge capital needs. Simultaneously, Wall Street firms earn massive fees by financing this buildout, creating a shared, bi-coastal incentive to keep the 'super cycle' narrative going, independent of immediate profitability.

Products like Sora and current LLMs are not yet sustainable businesses. They function as temporary narratives, or "shims," to attract immense capital for building compute infrastructure. This high-risk game bets on a religious belief in a future breakthrough, not on the viability of current products.

Perception and storytelling are overriding reality as the primary drivers of value. For investors, this means prioritizing companies with compelling, world-changing narratives (like SpaceX or OpenAI) over those that are simply 'fine businesses,' as the discontinuous upside comes from the power of the story.