Warning signs on the horizon
Anxiety is growing in the financial world over the future of artificial intelligence. The rapid surge in the market value of AI-related companies is increasingly being compared to the infamous dot-com bubble of the late 1990s and the mortgage crisis of 2008. Even the leaders of major tech giants at the forefront of this revolution have begun to voice their concerns publicly. Some have warned that if this speculative bubble bursts, its impact will be felt by everyone, leaving no sector of the global economy untouched. This warning underscores the systemic risk posed by the excessive hype surrounding this new technology.
Investors are pouring billions into startups and established corporations, sometimes driven more by belief in AI’s limitless potential than by actual financial performance. This creates fertile ground for asset overvaluation, where market prices drift far from their underlying value. Analysts point out that many financial market indicators show signs of overheating, prompting even the most optimistic players to exercise caution.
Investors are divided: some are betting on growth, while others are bracing for a crash.
The financial community is now split into two camps. On one side, prominent investors like Warren Buffett continue to place major bets on tech giants such as Alphabet, reflecting their belief in the long-term sustainability and profitability of their AI innovations. Their strategy is anchored in the conviction that artificial intelligence is not a passing fad, but a fundamental technological shift that will define the future economy.
On the other side, influential skeptics have emerged. Financiers known for accurately predicting previous crises—such as Michael Burry and Peter Thiel—are actively shorting the stocks of major sector players, including chipmaker Nvidia and software developer Palantir. Their moves raise questions about the fairness of current valuations and suggest the market may be on the brink of a major correction. This clash of perspectives is fueling a climate of deep uncertainty and volatility.
The scale of the potential crisis: trillions of dollars at risk
Economic models paint a grim picture of a possible collapse. According to some estimates, total losses could reach $42 trillion. Of particular concern is the significant increase in the participation of private households in the stock market over recent years. This means that if a crash occurs, not only will major funds be affected, but the savings of millions of ordinary citizens as well, inevitably leading to a sharp decline in consumer demand. Consumption is projected to fall by up to 1.6% of US GDP, which could trigger a recession.
Direct parallels are drawn with the subprime mortgage lending scheme. The largest technology companies plan to invest up to $3 trillion in AI development by 2028, and a significant portion of these funds will be raised through debt financing. Accumulating massive debts to fund risky, albeit promising, projects creates a systemic vulnerability that could trigger a chain reaction if these ventures fail.
Is there any reason for optimism?
Despite all the risks, there are strong arguments in favor of the sector’s stability. Unlike the dot-com era, when many companies had no real product, today’s demand for artificial intelligence technology is enormous and continues to grow exponentially. Practical applications of AI are already transforming industry, healthcare, transportation, and many other fields. The demand for computing power and advanced algorithms exceeds supply, ensuring companies a steady stream of revenue.
Financial reports from market leaders such as Nvidia show record profits, surpassing analysts’ expectations. Companies are presenting positive growth forecasts, backed by real contracts and an expanding customer base. So, while the market is undoubtedly in a state of frenzy and the risk of a bubble is real, its imminent collapse is not a foregone conclusion. The fundamental value of the technology may be strong enough to withstand the current turbulence.
