Archive for November 2025
Today I am writing about a paper by MIT professor and 2024 Economic Nobel Laureate Daron Acemoglu titled “The Simple Macroeconomics of AI”.
Unlike the bullish projections of AI’s transformative impact on economics, Acemoglu’s view is much more measured. Given the overwhelming media coverage favoring maximalist views on AI, his perspective offers a necessary counterpoint.
Acemoglu argues that over the next ten years, AI will likely automate only 5% of tasks and increase the GDP by about 1%. He explains that while AI excels in specific tasks with clear truths, most real-world jobs involve complex, tacit, contextual knowledge and social intelligence that AI can not easily replicate and replace.
His paper also makes these important points:
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A client of mine asked me this question and I thought many of my readers might have the same question.
What Happened to the Dot-com Bubble?
When the dot-com bubble popped in March of 2000, the Nasdaq lost nearly 80% of its value over a two-year bear market stretch, and it took 15 years, that is, until 2015, for the Nasdaq to regain its previous high. As you can imagine, that was financially devastating for investors fully invested in the Nasdaq.
Are We in a Similar Bubble, Only Now Driven by AI?
It’s highly likely. As I write now, NVDIA’s market cap is over $5T. In other words, a company with + 36,000 employees is now valued higher than the entire GDP of Japan, an advanced country with a population of 140 million. If that’s not a sign of a bubble, what is?
Will It Pop Like the Dot-com Bubble and Wipe Out 80% of Its Value?
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The Investment Scientist 