Investor anxiety about an AI bubble is at “fever pitch” with fears growing that a surge in artificial intelligence investment could lead to a crash similar to 2000’s dot-com bust.<\/p>\n
Artificial intelligence has seen huge investment: 50% of venture dollars were spent on AI start-ups during the first half of 2025, according to data from CB Insights. And in those six months “AI funding exceeded spending for all of last year”, said Business Insider<\/a>.<\/p>\n <\/p>\n Yet investors have a number of concerns. “Some are wondering whether large language models are actually powerful enough to develop the long-desired superintelligence; some fear tech companies’ massive expenditures won’t pay off; and some are worried that less experienced investors are getting caught up in the hype.”<\/p>\n The Week<\/p>\n Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.<\/p>\n <\/p>\n \nSUBSCRIBE & SAVE\n<\/p>\n <\/a><\/p>\n Sign up for The Week’s Free Newsletters<\/p>\n From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.<\/p>\n From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.<\/p>\n Why is there so much concern now?<\/p>\n There are a few big reasons. First, is a Massachusetts Institute of Technology report<\/a> which found that 95% of companies investing in generative AI have yet to see any financial returns. Given that there has been between $30 billion (\u00a322.1 billion) and $40 billion (\u00a329.6 billion) in enterprise investment in generative AI, the lack of returns is concerning.<\/p>\n Another is a warning from OpenAI CEO Sam Altman that investors are getting “over-excited” about AI. He told The Verge:<\/a> “Are we in a phase where investors as a whole are over-excited about AI? My opinion is yes. Is AI the most important thing to happen in a very long time? My opinion is also yes.” He added that some valuations of AI start-ups are “insane” and “not rational”.<\/p>\n Some investors are also spooked by reporting from The New York Times<\/a> that Meta is looking at “downsizing” its AI division, with some AI executives “expected to leave”. It could mark a significant change from Meta CEO Mark Zuckerberg<\/a>, who has heavily invested in shaking up his company’s artificial intelligence operations in recent months.<\/p>\n Will the bubble burst?<\/p>\n It’s too early to call a peak in the US stock market, “but the signs of one are starting to appear”, said UnHerd<\/a>. Share prices in the data mining and spyware firm Palantir<\/a> fell by 10% last week, while AI chip maker Nvidia<\/a> fell more than 3%, and other AI-linked stocks such as Arm, Oracle and AMD also fell.<\/p>\n