A forgotten bowling boom reframes today’s AI narrative

Arbuthnot Banking Group

The automatic pinsetter arrived at precisely the moment America was ready to embrace a new form of entertainment. By cutting the cost of manual resetting and enabling alleys to operate almost round the clock, the machine opened the door to mass-market bowling as a mainstream leisure pursuit. Between 1955 and 1963, the number of bowling lanes in the United States climbed from roughly 6 600 to 12 000, almost doubling in less than a decade. Equipment manufacturers, most notably Brunswick Corporation, saw their fortunes climb in tandem, Brunswick’s share price rose by a factor of sixteen between 1957 and 1961, reflecting the market’s confidence in continued expansion.

Yet beneath those gleaming surfaces and polished lanes, cracks were already forming. Operators calculated potential revenues on the assumption that every new alley would sustain traffic levels seen in the boom years. They underestimated the appeal of emerging leisure alternatives, television, home entertainment systems and other pastimes that began to vie for disposable income. By the mid 1960s, new alley openings had outstripped genuine consumer demand. Loans extended by equipment suppliers turned sour and Brunswick’s share price tumbled from around $75 to near $13 in little more than a year. What had once seemed an unstoppable growth story became a cautionary tale of overcapacity and misallocation of capital.

Fast-forward to today’s AI ecosystem and the parallels become striking. Artificial intelligence is nothing short of transformative: companies across sectors are reporting productivity gains, from automating routine tasks to unearthing insights in vast data troves. In the first quarter of 2025, Nvidia posted revenue of $44 billion, a year-on-year increase close to 70%, while industry-leading startups such as OpenAI have seen revenues climb from $5.5 billion in December 2024 to an estimated $10 billion in the first months of 2025. These numbers underscore that the technology is delivering real economic value, rather than merely riding a hype-driven wave.

Nonetheless, the risk of overheated enthusiasm remains. Capital is flooding into every corner of the AI value chain, semiconductor fabs, sprawling data centres and a proliferation of specialised startups. Without clear differentiation or sustainable business models, some of these bets may struggle to yield enduring returns. Just as too many bowling lanes eventually sat idle, excess capacity in chips or compute infrastructure could lead to disappointing utilisation rates and margin pressure.

Investors also face a valuation challenge. In the bowling bubble, equipment stock prices detached sharply from fundamentals as market participants extrapolated short-term growth indefinitely. In AI, certain high-flying names display similarly stretched multiples, trading on narrative rather than established profit streams. By contrast, larger technology firms with diversified revenue sources tend to exhibit more disciplined valuations, underpinned by robust balance sheets and tangible earnings growth. Allocating capital with a focus on realistic projections and durable competitive advantages remains paramount.

For those navigating this landscape, the mid-century bowling saga holds three central warnings. First, genuine innovation does not immunise an industry from overheated expectations. Second, unchecked capacity expansion, be it lanes or servers, can erode returns if demand falls short of projections. Third, valuation discipline is the cornerstone of long-term success, steering investors towards businesses with clear paths to sustainable margins.

Against this backdrop, a balanced approach feels most fitting. Quality semiconductor and technology companies continue to offer exposure to AI’s secular growth, while careful selection within more speculative segments can capture upside without succumbing to froth. Regular deep-dive research, engagement with sector specialists and rigorous stress-testing of forecasts all help to separate genuine leaders from those merely chasing a trend.

History may not repeat in exact detail, but its rhythms endure. The bowling boom reminds us that even transformative technologies carry lessons about human behaviour, capital allocation and the interplay between hype and reality. As artificial intelligence evolves from promise to widespread application, investors who heed these insights will be best placed to unlock the rewards while avoiding the pitfalls of the next great bubble.

Arbuthnot Banking Group PLC (LON:ARBB), operating as Arbuthnot Latham, offers private and commercial banking products and services in the United Kingdom. Established in 1833, Arbuthnot Banking is headquartered in London, United Kingdom.

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