Opinions split over AI bubble after billions invested

[Daniel Nenni]

(Reuters) — Companies announcing multi-billion-dollar investments in artificial intelligence have sparked debate over whether the sector is entering a bubble reminiscent of the dot-com boom. Investors are increasingly cautious, watching for signs that AI demand or returns might not justify the record-level spending.

A Bank of America survey found that 54% of fund managers believe AI stocks are in a bubble, compared with 38% who do not. The Bank of England recently warned that a sharp correction in AI-related markets could have “material” spillover effects on global financial stability. Singapore’s GIC investment chief Bryan Yeo noted that early-stage AI startups are being “valued right up there at huge multiples,” echoing bubble-era behavior.

Amazon founder Jeff Bezos said that while investor enthusiasm often blurs the line between good and bad ideas, such industrial bubbles can still produce lasting innovation. In contrast, “Big Short” investor Michael Burry has taken bearish positions against AI leaders like Nvidia, warning of overvaluation.

Others remain optimistic. Goldman Sachs economist Joseph Briggs argues AI investments are sustainable, while ABB CEO Morten Wierod sees long-term infrastructure constraints rather than overexuberance. OpenAI’s Sam Altman summarized the tension best: investors may be “overexcited,” he said, but fortunes — both gained and lost — will shape AI’s future.

Opinions split over AI bubble after billions invested

Companies announcing multi-billion dollar investments in artificial intelligence have raised concerns about the formation of a bubble reminiscent of the dotcom boom and bust.

www.reuters.com

 

[Arthur Hanson]

Everyone is just learning to work with AI/ML at this point, and we are still in the very, very early stages of development. Once more people learn to really work with it and unlock its full potential, the world will change in ways most haven't even imagined. Everything has been developing at an accelerating pace for many years, and AI/ML will be no exception.

 

[count]

Burry's housing bubble call was about 2 years early, and I think his AI bubble call is at least 1 year too early as well.

I think AI is certainly a bubble. It's also a profound and revolutionary technological change.

I would not be betting against AI regardless of whether I think it's a bubble, because bubbles can always grow larger before popping.

 

[lefty]

Burry's housing bubble call was about 2 years early, and I think his AI bubble call is at least 1 year too early as well.

I think AI is certainly a bubble. It's also a profound and revolutionary technological change.

I would not be betting against AI regardless of whether I think it's a bubble, because bubbles can always grow larger before popping.

There's no way of knowing when it'll happen, could be tomorrow, could in a years time

 

[samwilde]

The amount of investment in AI data centers is ridiculous. There is no economic rationale for it whatsoever.
All this money is being spent on perishable goods. Hardware that will become obsolete after a couple of years. This isn't a bridge or a railroad.

In my opinion once the costs come down and hardware plus software become more efficient it will be highly profitable but that clearly is not the case right now.