Since 2025, the controversy surrounding the AI bubble in Silicon Valley has continued to escalate, becoming a focal point of global financial markets. Numerous tech giants and authoritative institutions have issued warnings, stating that investors’ enthusiasm for artificial intelligence has become excessive, AI enterprise valuations may be severely overstated, and the sector might even be on the verge of a collapse that could wipe out trillions of dollars in market value.
Market data underscores this anxiety: AI-related enterprises have contributed 80% of the growth in U.S. stock markets this year, with the forward price-earnings ratio of the tech-heavy Nasdaq 100 Index rising to nearly 28 times—far exceeding the 10-year average of 23 times. Global AI spending is projected to reach a staggering $1.5 trillion by the end of 2025. However, behind these glamorous figures, 95% of generative AI pilot projects have failed, and for most enterprises, AI remains a “cost center” rather than a “profit engine.” More alarmingly, U.S. GDP growth is almost entirely dependent on AI-related technologies, while the growth rate of other sectors is a mere 0.1%, with economic structural imbalances exacerbating systemic risks.
Jerry Kaplan, an industry pioneer who has witnessed four tech bubbles, notes that the scale of capital flowing into the AI sector currently far exceeds that during the dot-com bubble. Bubble indicators such as blind corporate expansion and retail investors flocking into startups have emerged. David Solomon, CEO of Goldman Sachs, bluntly states that a significant portion of the capital deployed in AI may fail to deliver returns, with some assets facing a 20% correction risk. A Bank of America survey reveals that 54% of fund managers believe tech stocks are overvalued—the highest on record.
Dual Predictions: Bubble Burst and Long-Term Value
Despite mounting bubble risks, the tech industry holds divided attitudes toward AI. Jeff Bezos, founder of Amazon, acknowledges that the AI industry is in an “industrial bubble” but expresses eagerness to see it burst, arguing that this will eliminate weaker players and ultimately allow society to benefit from genuine technological innovation. Sam Altman, CEO of OpenAI, while acknowledging excessive market enthusiasm, firmly believes AI will drive unprecedented economic growth.
One of the core controversies is the “circular financing” phenomenon in the AI sector. OpenAI has struck over $1 trillion in cross agreements with giants like NVIDIA and AMD, blurring the lines between customers and investors and sparking concerns about inflated demand. However, industry leaders such as Jensen Huang contend that today’s tech giants are far more powerful than those during the dot-com bubble, and the current AI boom is built on a solid technological foundation.
For long-term capital such as family offices, AI remains a key investment focus. Eighty-six percent of family offices have invested in AI through public stocks, AI-enabled enterprises, and other channels, focusing on high-certainty infrastructure areas like data centers and GPU computing power. Faced with challenges such as scarce investment opportunities in the primary market and information asymmetry, family offices have adopted strategies including focusing on emerging GPs (general partners) and global diversified allocation, cautiously navigating bubble risks while seizing long-term industrial opportunities.
Overall, an AI bubble burst could trigger a chain reaction across multiple industries, including semiconductors and finance. Even ordinary people, who may think they are “safe” as they do not directly hold stocks of these companies, could be indirectly affected through their bank deposits, pensions, and other financial instruments. Nevertheless, optimists argue that just like the dot-com bubble, even if the AI bubble bursts, it will spawn truly valuable technologies and enterprises. Currently, the AI industry stands at a crossroads between financial risks and industrial transformation, and its development trajectory will profoundly shape the global economic landscape. Amidst these fluctuations, staying informed about the latest AI news remains crucial for investors and stakeholders navigating this dynamic sector.
