I agree with you from our perspective it is ridiculous. I also agree that getting the consumer market to willingly pay for AI to the point where it sustains such an amount of revenue is not going to happen. (The knock on effects of folks using AI, and turning others off to AI because they used AI instead of writing emails themselves, for example).

But.

They may peak at 500B before this bubble bursts, simply because other major industry players are betting on AI as a means to get folks to believe in their own stock.

It’s belief all the way down, until you get to the point where “the market” starts asking where the return on investment is, and why they haven’t seen it yet. By that time, the investors have gotten their return and cashed out, and it’s the pension funds and the retail traders that are holding the bag.

And of course, at some point AI’s promise will be delivered in a form or fashion as yet unknown to us, but that is still years away, and until folks recognize that LLMs as they exist to day are not the path to that, they’ll continue to believe in this valuation.