Société Générale Strategist Compares AI Boom With Pre-1997 Bubble

Société Générale strategist Albert Edwards compared the artificial-intelligence investment boom with the economic bubble that preceded the 1997 Asian financial crisis, warning that heavy spending may be masking weak productivity gains.

Edwards sees similarities in rapid capital investment and optimistic growth expectations despite limited evidence that AI spending is producing broad efficiency improvements. Massive AI investment has not yet translated into significant growth in U.S. total factor productivity, raising questions about near-term returns from the spending.

The comparison adds to scrutiny of the financial risks surrounding AI infrastructure investment. Equities could come under pressure if AI spending fails to deliver expected productivity gains, while bond investors face rising borrowing costs across major economies.

The concerns follow broader attention on investor sentiment, spending levels and debt exposure across the AI sector. Earlier coverage examined debt and infrastructure risks facing the AI boom.