First Principles with Andy Constan launches with a deep dive into market bubbles, AI, semiconductor stocks, and the financial conditions that can turn powerful technological change into a dangerous investment regime. Andy explains how bubbles form, why they are almost impossible to time, how today’s AI boom compares to past episodes like 1987, the dot-com bubble, housing, and the bond bubble, and what investors should watch as expectations, financing, and FOMO build.
Topics covered:
Why bubbles are easy to identify in hindsight but nearly impossible to define in real time
The difference between an expensive market and a true bubble regime
How new technologies, easy money, regulation, and exogenous shocks can create bubble conditions
Why AI may rhyme with the internet boom without being an exact repeat
The role of ChatGPT, Microsoft’s OpenAI investment, and semiconductor earnings expectations
What the 1987 crash, Japan, housing, bonds, and dot-com bubble can teach investors today
Why human nature, FOMO, and “keeping up with the Joneses” make bubbles so powerful
How the late-1990s Fed response to Long-Term Capital Management helped fuel the final phase of the tech bubble
Why tech’s current size in the economy and market may limit how far the AI boom can grow
How AI capex, hyperscaler spending, buybacks, debt issuance, and IPO supply could determine what happens next
Timestamps:
00:00 Intro and the challenge of identifying bubbles
04:32 Expensive markets vs true bubble regimes
09:57 The five bubble episodes Andy compares to today
14:35 Root conditions, escalation events, and the peaking phase
19:20 Why the 1987 crash may also have been a bubble
24:25 The late-1990s setup and the Netscape Navigator moment
28:00 Crisis analogs, easy financial conditions, and today’s AI parallels
32:20 Long-Term Capital Management and rocket fuel for the tech bubble
36:11 Why tech’s market share matters more today than in the 1990s
43:18 Policy mistakes, subsidies, and how governments feed bubbles
47:42 Semiconductor earnings expectations and valuation risk
53:45 The AI capex chain and where the money has to come from
58:42 IPOs, corporate debt, and the financing risk behind the AI boom
01:02:27 What investors should do differently in a bubble regime
