Stock market veterans often say that it’s impossible to tell when you’re living inside a bubble. Truly irrational behaviour only becomes clear in hindsight, when sanity has returned. So why, suddenly, has talk of an AI bubble become so prevalent?

Expectations are certainly running well ahead of current reality. That is the nature of any new technology, as investors try to predict the scale of a market that is still taking shape. But even if valuations are stretched, it doesn’t mean AI investment is facing the kind of general implosion that happens when bubbles collapse in on themselves, rather than with the sort of severe corrections that often follow tech stock booms.

The bubble theorists are grappling with two interrelated issues. One is an overbuilding of data centres that could leave a massive overhang of stranded assets. The other is the risk that some stock market valuations have completely lost touch with reality.