• Federal Reserve Bank of San Francisco President Mary Daly dismisses comparisons between the AI investment surge and historical speculative bubbles.
  • Daly characterizes current AI development as a "good bubble" that leaves productive infrastructure even if some investor expectations aren't met.
  • The Fed sees no immediate financial stability threat from AI investment, with most capital flowing to large, stable companies rather than risky startups.

Federal Reserve Bank of San Francisco President Mary Daly pushed back against comparisons between the current artificial intelligence investment boom and historical speculative manias, telling Axios in an interview that she views the technological transformation as fundamentally productive rather than bubble-like.

"Research and economics call it more like a good bubble," Daly said, according to people familiar with the discussion. "Even if investors don't get all the returns that early enthusiasts think, it doesn't leave us with nothing. It leaves us with something productive."

The comments come amid record capital inflows into AI technologies and rapid adoption by businesses, with usage among US firms nearly tripling from around 3.7% in 2023 to nearly 10% in 2025. Daly emphasized that unlike previous speculative episodes, most AI investments are being made by large, well-capitalized companies rather than risky startups, reducing systemic financial risk.

Efforts to contextualize the AI boom within financial stability frameworks have gained urgency as market valuations for AI-related companies continue climbing. Daly's assessment suggests the Federal Reserve does not currently foresee a need for targeted intervention to curb AI-related market exuberance, according to people briefed on the matter.

A spokesperson for the San Francisco Fed declined to comment on the specific remarks when reached Thursday afternoon.

The comparison to tulip mania—referring to the 17th century Dutch speculative bubble in tulip bulbs—has gained traction among some market observers questioning whether AI valuations have become detached from realistic economic returns. But Daly's comments align with analysis suggesting the current investment wave more closely resembles the dot-com and telecom booms, which left valuable infrastructure despite significant investor losses.

Daly noted that widespread AI adoption could enhance productivity and democratize specialized expertise across the workforce, potentially benefiting broader economic performance even if some individual investments underperform. The technology is already beginning to replace hiring in some sectors, though massive job displacement hasn't materialized yet.

Federal Reserve officials continue to monitor AI's economic impact as they maintain their focus on monetary tightening to control inflation. No new regulations specifically aimed at AI investment bubbles have been announced, with broader tech policy and international competition considerations taking precedence in regulatory discussions.

Correction: An earlier version of this article misstated the timeline for AI adoption growth. The increase from 3.7% to nearly 10% of US firms using AI occurred between 2023 and 2025, not 2022 to 2024.