Episode summary
AI Boom or Bubble? Michael Lewis, Tom Lee on the Risks and Rewards | The Important Part LIVE
The Important Part
· · Hosts: Liz Thomas · Guests: Tom Lee, Michael Lewis
Summary
The discussion centered on whether the current AI-driven market boom is becoming a bubble, and whether the risks are mainly financial or broader social and political ones. One guest argued that AI is already creating clear winners and losers, with software demand shrinking and productivity gains showing up in fewer tech jobs, while the other warned that markets often overshoot because of fear of missing out and bad incentives.
The guests split on how much of today’s froth is dangerous. One said bubbles are only obvious in hindsight and that investors should be careful not to confuse transformative technology with guaranteed stock-market profits. The other argued retail investors have been unusually right because they think in longer time horizons and are not forced to manage daily performance, while institutions often trade too quickly. That theme carried into gold, where both guests treated the rally as more than a simple macro trade: one framed it as a generational preference shift, while the other said he owns gold because he is “long fear.”
The conversation also covered AI capex, the Fed, and crypto. One guest compared AI to the telecom overbuild of the late 1990s, but said it is still early and that the eventual winners may be hard to identify until after the shakeout. On crypto, the view was that Bitcoin’s drawdown looks painful but not yet like a full winter, though quantum computing, leverage, and regulatory shocks remain major risks.
Key takeaways
- The host and both guests agreed AI is transformative, but one guest said investors are wrongly assuming that transformative technology automatically means broad equity profits.
- One guest said retail investors have outperformed because they use permanent capital and longer holding periods, while institutions are often forced into short-term trading.
- The gold rally was framed as both a generational trade and a fear trade; one guest said he owns gold because he is "long fear."
- One guest compared AI capex to the late-1990s telecom buildout and warned that the eventual winners may only become obvious after a crash.
- On crypto, one guest said Bitcoin’s recent decline looks more like a "crypto squall" than a full winter, but quantum risk and deleveraging are real concerns.
Notable quotes
“This is a bubble of some sort. It's all going to fall apart in some way”
“I think in 2026 we are starting to see the other side of the payoff from AI”
“Fear of missing out. I mean, going infinite, the book I did about Sam Bankman Freed”
“I think unquestionably if you ask me I'd like to make a prediction even though I said I wouldn't”
How the episode opens
I think unquestionably I if you ask me I'd like to make a prediction even though I said I wouldn't. This is a bubble of some sort. It's all going to fall apart in some way. — Well, I agree with Michael that eventually AI will be a bubble. But when people say something's a bubble, it's probably not a bubble. It's going to be a bubble when we say of course it's not a bubble. Hi everybody. I'm Liz Thomas, head of investment strategy at SoFi. This is the first ever live recording of the important part. We are so excited to be here at the lovely green space at WNYC in New York City.
So I want to start this by saying markets as everybody knows here markets have been on a tear for quite a few years. The last few weeks being perhaps the exception to that. But quite a few years markets have been on a tear largely due to AI which has driven a ton of innovation.
It's driven new products. It has injected a ton of money into the system. But there are investors all over the place sort of looking over their shoulders, uncomfortable, uneasy.
Something about this doesn't feel right. It's going too far too fast. All the worries that we have about it.
So when we think about that and look at what might be happening, you ask somebody like Tom Lee and he'll tell you it's because we're at this juncture of great innovation and change and that can be scary, but it doesn't mean that things have to fall apart anytime soon. So Tom Lee is co-founder and head of research at Funstrat, a research firm known for its equity and economic research. Uh Tom, thank you for joining me tonight.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai bubble vs boom
- retail vs hedge fund performance
- bitcoin dip and crypto winter
- gold outlook
- ai job displacement and regulation
Companies and tickers mentioned
- SOFI
- SoFi
- Fundstrat
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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