AI is more like a shoe factory than a software firm

AI is moving from a novelty to a utility, and that shift is creating real demand for the chips, memory, electricity, and data centers needed to produce each token. As costs fall, usage is likely to rise rather than shrink, which supports the case for continued investment in AI infrastructure even as investors worry about overcapacity.

This market still carries classic boom-and-bust risk because capacity can be built too quickly and technology keeps improving. But the bigger picture points to expanding adoption across more users, more frequent use, and new AI agents that can work continuously. For investors, the opportunity lies in backing the physical backbone of AI while staying mindful that returns may be uneven as supply catches up with demand.