But what if we’re in a “rational bubble” that, unlike other big speculative manias in history, takes our economy to a fundamentally better place?

I’m borrowing the phrase “rational bubble” from conversations with a Nobel laureate in economics, my friend A. Michael Spence. Bubbles seem by definition irrational. They grow as investors — often hostage to exuberant, herd-like behavior — push valuations well beyond anything warranted by the fundamentals on the ground.

However, the A.I. excitement, as seen in the blowout Nvidia earnings on Wednesday, rightly reflects the potential transformation of the entire economy. It is economically rational to risk losing everything on several bets if just a few can deliver a thousandfold return, which some A.I. investments almost certainly will.