VINY 2026 – Cole Smead: Proof AI Is A Bubble And How To Profit Off Of The Mania

At the Value Invest New York 2026 conference, Cole Smead, CEO and Portfolio Manager at Smead Capital Management, challenged the optimism surrounding technology investments by big companies like Amazon, Meta, OpenAI etc. He views the market looking at it through a lens of more than a century of capital cycle history. Smead argued that the current infrastructure buildout dominating investor attention follows a pattern,  one that has consistently rewarded patience and punished enthusiasm. His message was simple: the best investment idea right now may be knowing what not to own.

Smead noted that he has refined is views over years of studying transformative industries. Every great capital cycle, he explained, shares the same ingredients, a revolutionary technology, massive fundraising and capital expenditure, intense competition, and ultimately, disappointing long-term returns for the investors who piled in at peak excitement. He walked through three historical examples to illustrate the pattern before turning to the latest cycle and where the real opportunities lie today.

Lessons From Railroads, Telecoms, and Shale

The first case study was the American railroad boom of the late 19th century. Smead showed that at its peak, railroad infrastructure capital expenditures consumed roughly 6% of U.S. GDP, an extraordinary commitment of resources to a single industry. The technology was genuinely transformative, connecting the continent and enabling commerce at unprecedented scale and speed. But the investment frenzy attracted fierce competition. Smead displayed maps showing the large number of predecessor railroad companies that eventually consolidated into the handful of surviving names. Most early investors were wiped out, and even the long-term survivors had subar returns.