To The Moon

Railways, Roads, the Internet—and Now AI: The 4th Great Infrastructure Gamble in Human History

This earnings season, tech giants quietly unveiled a staggering plan:
This year they will pour US$342 billion into building AI infrastructure.

The figure has Wall Street asking:
Is this the greatest investment of all time, or the most spectacular bubble?

How mind-blowing is the number?
💰 After inflation, it eclipses the entire Apollo moon program
💰 It equals 1.2–1.4 % of U.S. GDP
💰 In real terms, it is 50 % higher than global telecom investment at the peak of the dot-com bubble

Only a few periods in history have seen infrastructure spending on this scale:

• 19th-century Railway Mania: 3–4.5 % of U.K. GDP

• Early-20th-century roads & cars: 2 % of U.S. GDP

• 1990s fiber-optic build-out: 1.5 % of U.S. GDP

• 2020s AI infrastructure: 1.2 % of U.S. GDP

Every earlier episode ended in a bust. Will this time be different?

Gamble #1 – Railway Mania

1840-1850: U.K. private railway investment reached 3–4.5 % of GDP.

The logic was identical to today:
“Railways will change everything!” (today: “AI will change everything!”)
“First-mover wins—miss the boat and you’re finished!” (today: “AI arms race”)
“Losing money now doesn’t matter; profits will come!” (today: “land-grab first”)

In 1845 alone, 12,875 km of rail lines were submitted for approval—only slightly less than Britain’s entire 16,000 km network today.

Result?
📉 1847: Railway bubble bursts
Hundreds of rail & finance firms collapse
Investors wiped out; Britain slides into recession

✅ But the rail network survives
Becomes the backbone of the Industrial Revolution
Transforms freight & passenger transport
50 years later, hailed as the greatest investment ever

Lesson 1: Over-investment creates bubbles, but infrastructure endures.

Gamble #2 – Auto Fever

1910-1920: The automobile ignited the second tech-fueled frenzy.

Same script:
“Cars will change everything!”
“Every family will own one!” (today: “AI will be standard”)
“Expensive & unreliable now, but mass adoption is inevitable!” (today: “land-grab first”)

1910: 1 car per 1,000 Americans
1929: 200 cars per 1,000 – a 200× surge in 20 years

1900-1929: >1,800 U.S. carmakers
By the 1930s, fewer than 20 survived the Great Depression.

Result?
📉 Late-1920s bubble bursts
Thousands of carmakers bankrupt or merged
Investors wiped out; survivors (Ford, GM) bruised

✅ But the auto industry & highway system endure
Become the engine of 20th-century growth
Reshape life, cities, commerce
30 years later (with 1950s Interstates), hailed as the greatest investment ever

Highways avoided rail-style busts because governments, not speculators, paid.

Lesson 2: Application-layer bubbles burst, but sector champions survive.

Gamble #3 – Fiber Bubble

1996-2001: Telcos burn US$1 trillion (today’s dollars) laying fiber.

Forecast: “Internet traffic doubles every 90 days!”
Reality: Doubled annually—4× slower

Peak capex: US$120 bn in 2000 ≈ US$213 bn today
Massive over-capacity → glut of fiber

Result?
📉 Bubble bursts 2000-2005
80–95 % of the 80 million miles of fiber sits “dark”
Global Crossing, WorldCom bankrupt; fiber prices crash 90 %
Cisco stock –89 % from peak

✅ Yet demand arrives 2006-2015
YouTube (2005), Netflix streaming (2007), cloud boom
“Dark fiber” turns to gold; WDM tech boosts capacity 100×
Buyers of cheap fiber (Level 3) become winners

Lesson 3: Real demand may be late, but it never fails to show up.

Gamble #4 – AI Investment

We are now at the starting line of the fourth great infrastructure gamble.

Where does AI spending stand?
🚂 19th-c railways: 3–4.5 % of U.K. GDP
🚗 20th-c autos & roads: 2 % of U.S. GDP
💻 1990s fiber: 1.5 % of U.S. GDP
🤖 2020s AI: 1.2 % of U.S. GDP

AI investment is moving from “rational” to “euphoric”—and the totals keep climbing.

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So, will this time be different? History teaches three things:

1. Over-investment → inevitable bubble
   Not a valuation issue; a human-nature issue.
   When everyone believes “AI changes everything” and fears being left behind, over-building is guaranteed.
   Subsidies, cheap money and FOMO only fan the flames.

2. Bubbles burst, but infrastructure stays
   Short term: investors lose

• Railways: hundreds of rail firms dead

• Autos: thousands of carmakers gone

• Fiber: trillions vaporized

• AI: ?

Long term: the rails, roads, fibers—and AI data centers—remain.
1840s tracks still carry trains; 2000 fiber still carries bits; 2025 data centers will still serve 2050.

3. The next-decade winners may NOT be the “pick-and-shovel” stars
   2000: Cisco is the most valuable firm on Earth
   2020: The world is reshaped by then-tiny Google (born 1998) and money-losing Amazon

$Cisco(CSCO)$ today: US$0.28 trn
$Alphabet(GOOGL)$ today: US$3.4 trn (12× Cisco)

Will the 2035 or 2045 champions be:

• An obscure AI-app start-up?

• A loss-making, unloved company?

• A firm that hasn’t even been founded yet?

The AI era’s true winners may surface only after the build-out bubble bursts.

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Every infrastructure mania looks like a bubble to contemporaries—and a godsend 50 years later.

1840s railways, 1920s roads, 2000 fiber: all still in use.
What will survive from the 2020s AI data-center boom?

History says:
Bubbles pop, investors lose, humanity keeps marching.
Railways, cars, the Internet—each proved the point.
AI will likely do the same.

Perhaps the US$342 billion is not a bubble,
merely this generation’s down-payment on the next 50 years—
we just can’t yet see what it will buy.

So, what do you think will be the lasting legacy of today’s AI spending spree?

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