Good morning. It's understandable that people often frame the AI boom in terms of earlier tech investment cycles, notably the telecom boom and bust of the 1990s and early 2000s.

The telecom cycle creates a compelling narrative arc, with a rise, fall and ultimate redemption led by the smartphone. But looking at past tech cycles to understand the current AI era will only get you so far. This boom needs to be understood on its own terms, in all of its particularity. Despite its similarity to telecom or railroads or any other capital-intensive wave of innovation and construction, it's still unique, a category of one.

But to the extent that analogizing from the past is useful, we might be able to see something about AI by looking at it through a different lens. The telecom boom was followed shortly thereafter by the early years of social media. Plenty of companies from that era ran into trouble, culminating with the displacement of Myspace by a new leader, Facebook.

The soaring growth of telecom led to an industrywide bust that rippled through the financial markets and the economy. Social media cut a different pattern, in which individual companies deflated even as the entire market grew.

People often see AI through the lens of telecom, because both involve so much capital, with AI setting records on that front. But there's a big difference between telecom and AI infrastructure demand, according to Heath Terry, global head of technology and communications research at Citi. About 94% of the fiber laid during that period was "dark", or unused at the time, according to Terry, who leads AI research as part of his role. "There are no dark GPUs," Terry told me earlier this year.

Social media and AI have viral appeal, and they have both sparked a profound backlash. Yet they both continue to grow, that love-hate relationship with the public notwithstanding.

While the AI revolution is bound to produce winners and losers, that doesn't necessarily mean it must conform to the "boom-bust" cycles of the past, or for that matter, any historical pattern at all.

On Our Radar

John Ternus steps up as Apple's chief executive on Tuesday facing a paradox: The company is worth nearly $5 trillion and its devices still sell at a brisk pace, but it's lost its historic role defining consumer tech in the AI age, the WSJ reports. His success will hinge, in part, on demonstrating genuine AI leadership-speeding up Siri improvements, persuading app developers to open their services to the assistant, and navigating the AI-component supply crunch.

Nvidia's next bet is on "physical AI," a roughly $10 billion business for the company that CEO Jensen Huang expects to grow 10-fold in a decade, the WSJ reports. That push pairs specialized chips with developer software tools, echoing the strategy behind Nvidia's dominance in AI chips, and it's increasingly reliant on China, the world's largest industrial-robot market. The U.S. has barred Nvidia from selling its most powerful AI chips to China, but trade remains open for its robot and car chips.

Bank of England Governor Andrew Bailey warned G-20 finance officials in a letter that frontier AI models' growing autonomy and cyber-threat capabilities "could undermine market confidence system-wide," CNBC reports. The letter, issued ahead of this week's G-20 summit in North Carolina, also cited sovereign debt fragilities and AI-related asset valuations among broader financial stability risks.

Chinese technology giant Huawei Technologies reported a drop in first-half net profit despite higher revenue, as spending on research and development surged, the WSJ reports. The company, which has spent big on AI research and development, said R&D was up 25% from the previous year. Rising costs of raw materials also weighed on its profitability.

Nissan and Honda have agreed to jointly develop core software and systems for next-generation vehicles, aiming to adopt the shared architecture starting in fiscal year 2029, the WSJ reports. The Japanese automakers hope standardizing these technologies will cut development costs and boost competitiveness through shared engineering resources.

The WSJ Technology Council Summit

The WSJ Tech Council brings together CIOs, CTOs and CISOs advancing innovation and shaping the future. Join this trusted community where tech executives connect with peers to explore emerging trends and gain the perspective they need to stay ahead of disruption.

Request an Invitation

About Us

Follow Isabelle Bousquette on LinkedIn, Instagram, X, and TikTok for more behind the scenes on her tech and AI coverage, and lately, her contributions to the WSJ Leadership Institute's new Executive Resilience series, where she's profiling America's top execs about their fitness and wellness habits.

Follow Belle Lin on LinkedIn and X for her latest reporting on enterprise technology and AI.

Steven Rosenbush is chief of the enterprise technology bureau at the WSJ Leadership Institute. He also has a column. You can follow him on LinkedIn.

Tom Loftus is the editor of The Morning Download. He suggests following Isabelle, Belle and Steve on their various social channels. But if you insist, here's his LinkedIn.