Right now, the AI stocks are very bullish. Just in case you don't, know what that means, let me break it down.

AI means artificial intelligence. And technological products and services that are based on AI are on the rise. The most popular one is ChatGPT, now majorly owned by Microsoft. But there are several others.

The companies that are actively developing AI technologies that are on the stock market are booming. It means the stock prices have been on the rise since the announcement of ChatGPT. And many analysts and investors are still pushing for those companies to go higher in stock price. The narrative for that is based on the notion that AI is the future.

But is it? I am here to fuel the doubts. And this is because I have doubts too. No doubt that AI is here to stay. But will it live up to the futuristic expectations the world has built for it? Listen to the other side of the argument.

These are 7 reasons why I believe the AI boom will burst soon. This is not financial advice, this is a financial perspective.

1. The National Security Narrative is Gradually Ending

You've probably heard the saying that when people go digging for gold, sell shovels. And how do you know the gold-digging era is about to end? There is a way...

You know that when the guy selling shovels becomes super rich and those digging for gold are coming back empty-handed more often. You know the sentiment is already dying. And whether you like it or not, the stock price is based on sentiment.

In recent times, we have seen Nvidia come out with record profits and profit expectations. And in the age of AI, Nvidia is the shovel seller. They make the hardware components for these AI companies. But they too get their supplies somewhere.

They get their (chip) supplies from a Taiwanese company called TSMC. This company is one of the major issues between the USA and China. If Taiwan is absorbed into China, the company will no longer be able to service American companies with chips.

These are very small semiconductor chips that are very sophisticated to make. And arguably, only TSMC is widely known to have the technology to make those chips.

Technological advancement is one of the ways the world stays balanced. Once it is concentrated somewhere above others, the world's balance will be called into question. This leads to conflict - major conflicts.

So indirectly, AI is a matter of national security. At least, it is to the USA. This is how the narrative was first formed. But a lot has happened since the AI wave began. And now, the narrative is shifting.

First, TSMC is building a plant in America. And yes, that will take some time. But most importantly, the national security is toned down right now as China and the US have more problems to face.

China has major economic issues to deal with. America has lots of internal conflicts to deal with. So, even if both countries want to fight each other, they can't right now. They both have bigger problems to deal with.

AI is still national security, but it has gone way down on the priority list.

2. The Fed Cannot Print Money for AI

Actually, the Fed can, if common sense does not prevail. But I am hoping that we still have common sense in this world.

You might be wondering why the Fed is in this conversation. This is because there is only one game in town. And it is the Fed's game. We all deceive ourselves that we live in a capitalist society. But if the Fed wants to get rid of you, there is no way out for you.

If the AI industry gets in trouble, the Fed cannot print money for it. Let me make my argument. First, people would say that AI is national security so the Fed ought to be able to print money to help the AI industry. But it doesn't work that way.

AI is primarily about displacing people from work. If the labour participation rate and employment data are still important to the Fed, they will not print money to kill the labour. If they do, it will create the greatest wealth inequality known to mankind and this civilization will not survive it.

Some say that will eventually happen. I think it can be avoided, especially now that we know the risks. The Fed will print money for the military. They will print money for healthcare. They will print money for banking. But that's probably where it ends.

As long as politicians don't allow themselves to be played into a false narrative, the Fed will not print money for AI. And I can assure you that AI will run out of money soon and many would need bailouts.

3. The Incoming AI Consumption Bias

Many people are not thinking this AI revolution thing through. So, a movie company makes a movie where the writer is AI and the actors are AI. And you are now telling the people displaced by the AI to go pay money to watch the movie? You must be kidding.