Tulips, Tech, and Temptation: What the 1600s Tulip Craze Can Teach Us About Today’s AI Boom, LFG Daily - December 5, 2025

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Tulips, Tech, and Temptation: What the 1600s Tulip Craze Can Teach Us About Today’s AI Boom

Every generation believes its investment boom is different. In the 1600s, it was tulips. In the 1990s, dot-com startups with no revenue. Today, it’s artificial intelligence—a technology with the power to reshape every industry on the planet. And while comparing flowers to machine learning might feel absurd, the psychology that drives bubbles rarely changes.

But here’s the nuance: while the tulip craze was a pure mania, today’s AI explosion is built on real, world-changing fundamentals. Understanding what’s similar—and what’s different—is essential for building a portfolio that captures the upside without getting crushed when reality catches up.

A Quick History Lesson: The Tulip Craze

In the early 1600s, tulips became a status symbol in the Netherlands. Rare varieties—especially those with unique patterns caused by a virus—became luxury goods. Demand exploded. Prices skyrocketed. At the peak, a single tulip bulb could sell for more than a house.

The mechanics of the mania were classic:

• Scarcity drove obsession.

• Stories of overnight fortunes fueled FOMO.

• People bought bulbs not to plant, but to flip.

• Eventually, confidence cracked. Prices collapsed. Lives were ruined.

  
  

It wasn’t really about tulips. It was about human behavior.

The Similarities: Why AI Has Bubble DNA

1. Extrapolation of the Future

Just like tulip buyers assumed prices would rise forever, investors today extrapolate AI’s potential infinitely forward. Every company is suddenly “AI-powered.” Every startup deck includes the phrase “model inference.”

2. Concentration Risk

A disproportionate share of market gains is coming from a handful of names—similar to how only a handful of tulip varieties commanded extraordinary prices.

3. Speculation > Fundamentals

We’re seeing pockets of speculation:

• Micro-cap “AI infrastructure” firms doubling in weeks

• GPU demand narrative stretching far beyond current real-world use cases

• Investors confusing “AI is transformative” with “every AI stock is a good investment”

  
  

Speculation doesn’t mean the technology isn’t real. It just means prices can detach from reality.

But Here’s the Difference: AI Isn’t a Flower

AI is a revolutionary technology—not a decorative plant.

1. Tulips Had No Productivity Impact

AI has massive potential to boost productivity, compress costs, and increase output across nearly every industry—from drug discovery to finance to manufacturing. Tulips simply made gardens prettier.

2. AI Has Real Cash Flows Behind It

NVIDIA, Microsoft, Amazon, Oracle, Broadcom—these companies are generating billions in revenue today from AI workloads. Tulip bulbs only had speculative value.

3. AI Solves Real Problems

Tulips never solved a labor shortage, automated tasks, or created economic leverage. AI does all three.This means even if valuations compress in the short term, long-term value creation is very real.

So… Bubble or No Bubble? The Answer Is “Both”

AI resembles the tulip craze in psychology, not in fundamentals.

Yes, we may be in a valuation bubble in some parts of the AI ecosystem—the picks-and-shovels trades, the early-stage software firms with unproven business models, the companies chasing hype.

But no, the entire AI sector is not destined to collapse.AI is more analogous to the early days of the internet: a transformative breakthrough that creates both:

• A speculative surge

• Long-term structural winners

• 
  

What This Means for Your Financial Plan

1. Don’t Chase Every AI Trade

Just because a company mentions AI doesn’t make it a good investment.

2. Focus on Fundamentals—Earnings, Cash Flow, Adoption

The companies that become the next “internet winners” will be the ones driving real utility and solving real problems.

3. Diversify Exposure

The biggest risk in bubbles is concentration. A well-built portfolio spreads risk across industries, sizes, and time horizons.

4. Keep a Long-Term View

Hype cycles fade. Innovation does not.If AI delivers on even a fraction of its potential, it will continue reshaping the economy for decades.

Final Take: Learn From Tulips—But Don’t Fear AI

The tulip mania shows us how human behavior can distort markets.The AI revolution shows us how technology can reshape them.

Your job as an investor isn’t to avoid innovation or chase it blindly.It’s to build a disciplined, evidence-based strategy that captures growth while protecting your downside.

And that’s exactly what sophisticated financial planning is designed to do.

Don’t leave your financial future up to chance. Let’s build a plan that gives you confidence today and peace of mind for tomorrow. Click here to schedule a meeting — I’m here to help you take the next step toward financial freedom.

Colin Symons, CIO Lloyd Financial Group

Initial jobless claims were 191K vs. exp. 220K, while Continuing Claims were 1939K vs. exp. 1960K.

Factory Orders were 0.2% m/m vs. exp. 0.5%.

BoJ repeated they were likely to raise rates this month and added there may be more.

Government bonds continued to slide on the news.

Japanese Household Spending was -3.5% m/m vs. exp. 0.7%. Maybe there isn’t much of a need for more hikes if that’s how the consumer is doing, though inflation remains high.

Trade head Greer said he’d like to see a 25% drop in goods trade with China.

Copper touched a record high this morning amidst supply concerns and optimism on a Fed rate cut.

PCE inflation, today.

What does it all mean? Japanese bonds seem like the only real trouble spot right now, and that’s probably not enough to derail upside.

Don’t leave your financial future up to chance. Let’s build a plan that gives you confidence today and peace of mind for tomorrow. Click here to schedule a meeting — I’m here to help you take the next step toward financial freedom.

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