Why patience could help you survive the AI bubble

It is not wrong. What began as a technological breakthrough has morphed into a financial belief system, one that has rewired valuations, capital allocation and investor psychology.

The numbers are staggering. The big four US hyper-scalers are now spending nearly $US90 billion($139 billion) each quarter on artificial intelligence infrastructure. Nvidia has surged almost 600 per cent since 2023, AMD jumped 23 per cent in a single day after OpenAI’s latest chip announcement.

The sheer velocity of these moves would be enough to make online companies of the dot-com bubble blush. Yet, like all manias, conviction seems to have replaced evidence.

A recent MIT study found that 95 per cent of corporate AI pilots delivered no measurable return, despite tens of billions spent on “strategic adoption”. Bain estimates that to justify the current spending, global AI revenues would need to reach $US2 trillion annually by 2030. And in energy, AI’s ravenous appetite for power has thrust nuclear back to centre stage, propelling investment in reactors and uranium producers that shows little sign of fading.

AI can be transformative, but it is not instantly profitable. The first railways, manufacturers of internal combustion engine vehicles, electric vehicle makers and internet firms all lost money – or are losing money in the case of EVs – before their economics matured.

Markets, however, have a habit of discounting the future too early and too absolutely. Today, some investors talk about “AI defensiveness” as if the sector were a utility. That should give us reason to pause.

It could be that liquidity is trumping logic. The US Federal Reserve is cutting rates in response to job numbers, despite inflation sitting above its target. Yet investors treat policy easing as validation, not caution. Equities are priced for perfection even as earnings momentum fades.

This is the age of artificial conviction: a world where belief in perpetual growth is financed by leverage and reinforced by algorithmic momentum. The S&P 500’s price-to-sales ratio is at record highs and margin debt exceeds $US1 trillion. In markets that move at the speed of a tweet, patience feels like an antique virtue.

We are drowning in data but starving for perspective. Behavioural finance has long warned that more information doesn’t produce better decisions, it amplifies our biases.

We now invest in the age of immediacy. Our relationship with time has been rewired. Investors today live in a dopamine economy, where every market tick or AI-generated forecast offers a tiny hit of excitement.

Studies by behavioural finance pioneers Barber and Odean show that investors who trade most frequently underperform those who trade least by several percentage points per year.

The culprit is familiar: overconfidence. As humans, we tend to overestimate our ability to predict markets, and we are poor at estimating randomness and assessing risks. Loss aversion, our tendency to feel losses twice as strongly as gains, makes us chase rallies and flee corrections. Both destroy compounding. Patience, by contrast, allows time, not emotion, to do the work.

True patience isn’t passivity, it’s conviction with composure. It is optimism stretched over time. As Charlie Munger put it: “The big money is not in the buying or the selling, but in the waiting.”

Zero interest rates once turned impatience into a business model. Leverage was free, valuations were optional, and “growth at any price” became gospel. When money had no cost, risk lost its meaning. Now that capital has a price again, time has re-entered the equation.

The reflexes built during the easy-money of the near-zero rate environment, anchoring on past returns, chasing momentum, extrapolating forever, are being unlearned the hard way.

Research by independent research firm DALBAR found that over 30 years, the average equity investor underperformed the market by more than three percentage points annually due to emotional timing errors. That “behaviour gap” could be considered as a tax on impatience.

In this environment, selectivity matters. Companies with strong free cash flow, low leverage and pricing power are quietly outperforming. Even small caps, the market’s perennial underdogs, are stirring as valuations reset.

Patience, then, isn’t inaction. It’s intentional. It is actively resisting the urge to move because everyone else is. It could be holding cash when valuations are stretched, deploying it when panic returns and remembering that “buy low, sell high” is simple only in theory.

Yet as any seasoned investor knows, the hardest part of long-term investing isn’t forecasting markets, it is managing human behaviour.

The behavioural dividend belongs to those who can stay rational when others cannot. The ability to under-react becomes a strategic advantage when volatility rises and narratives shift.

The lesson for those willing to extend their time horizons beyond the cycle is that patience remains the most underpriced asset class in the world. In finance, it’s called time diversification, the longer you hold quality risk, the narrower the probability of loss. In human terms, it’s simply trust in compounding.

Don’t confuse patience and passivity. Patience can be an act of defiance against our own wiring and a quiet vote of confidence in the future. The world and information, may be speeding up, but real lasting wealth still grows at human speed. The patient investor doesn’t fight that truth. They embrace it.

Wisdom in investing and in life lies in learning with humility and acting with patience. As the Ethics of The Fathers reminds us, the wise learn from everyone and as American economist Benjamin Graham warned, they learn most from mastering themselves.

This article was originally published in The Australian Financial Review on 19 October 2025.