An AI stock market bubble, like the dot-com bubble of the late 90s, is primarily equity-financed, not debt-financed. Historically, the bursting of equity bubbles leads to milder recessions because they don't trigger systemic failures in the banking system, unlike collapses fueled by debt.

Today's massive AI company valuations are based on market sentiment ("vibes") and debt-fueled speculation, not fundamentals, just like the 1999 internet bubble. The market will likely crash when confidence breaks, long before AI's full potential is realized, wiping out many companies but creating immense wealth for those holding the survivors.

Unlike prior tech revolutions funded mainly by equity, the AI infrastructure build-out is increasingly reliant on debt. This blurs the line between speculative growth capital (equity) and financing for predictable cash flows (debt), magnifying potential losses and increasing systemic failure risk if the AI boom falters.

Unlike the leverage-fueled dot-com bubble, the current AI build-out is funded by the massive cash reserves of big tech companies. This fundamental difference in financing suggests a more stable, albeit still frenzied, growth cycle with lower P/E ratios.

The current AI boom is more fundamentally sound than past tech bubbles. Tech sector earnings are greater than capital expenditures, and investments are not primarily debt-financed. The leading companies are well-capitalized with committed founders, suggesting the technology's endurance even if some valuations prove frothy.

Unlike the dot-com or shale booms fueled by less stable companies, the current AI investment cycle is driven by corporations with exceptionally strong balance sheets. This financial resilience mitigates the risk of a credit crisis, even with massive capital expenditure and uncertain returns, allowing the cycle to run longer.

The most immediate systemic risk from AI may not be mass unemployment but an unsustainable financial market bubble. Sky-high valuations of AI-related companies pose a more significant short-term threat to economic stability than the still-developing impact of AI on the job market.

Unlike the dot-com bubble, which was fueled by widespread, leveraged participation from retail investors and employees, the current AI boom is primarily funded by large corporations. A downturn would thus be a contained corporate issue, not a systemic economic crisis that triggers a deep, society-wide recession.

Unlike the dot-com bubble's weak issuers, the current AI debt boom is driven by investment-grade giants. However, the risk is that these stable companies are using debt to finance speculative, 'equity-like' technology ventures, a concerning trend for credit investors.