Giving the AI boom a bubble score from American Public Media.

This is Marketplace Tech.

I'm Megan McCarty Carrino.

Is AI a bubble? It's the trillion-dollar question in the economy. So we decided to look to

history for some answers. David A. Kiersch is a historian and management professor at the

University of Maryland. He co-authored the book, Bubbles and Crashes, the Boom and Bust of Technological Innovation.

He looked at patterns over 150 years of technological breakthroughs, from broadcast radio to rayon,

and came up with a model of the conditions that most often lead to bubbles.

The four factors that we looked at were the presence of uncertainty.

So is it a technology that people know how to use, or is it a technology that people don't

know how to use or how it will generate value?

Does it happen in the presence of novice investors?

These are investors who might be inexperienced or might not have seen technologies similar to the new technology in the past.

Does the technology arrive in a way that investors can invest in it?

So, you know, is it something where we can go to our Schwab account

and buy something that reflects the technology? And then finally, what are the nature of the

narratives surrounding the technology? So is it a technology that is, it sort of has a magic to it that says,

oh, we can do this, we can do that. There are lots of narratives, or is it a pretty straightforward

technology? So, you know, when we look at those four factors, then we say, well, that can be

the recipe for a boom if all four of those factors are there. And if there's a boom,

then there can be a bust. We don't actually have a theory of the bust because it's very hard to

know when you have a boom, will the technology kind of catch up and in fact deliver on its promise?

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