Baker identifies Taiwan Semi's capacity decisions as the single most important indicator of AI bubble risk.
“The pace at which they expand capacity. If I were to watch one thing to understand where there's a bubble, it's Taiwan Semi's capacity decisions.”
Baker compares current AI buildout to internet bubble risks if debt-funded rather than cash flow-funded.
“So if supply and demand get a little bit out of whack, things can unwind very, very, very quickly. That's what happened in the Internet.”