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Fears grow over AI bubble - and here are the pressure points that could burst it
The market seems to be content, for now at least, to keep betting big on AI.
While the value of some companies integral to the AI boom like Nvidia, Oracle and Coreweave have seen their value fall since the highs of the mid-2025, the US stockmarket remains dominated by investment in AI. Of the S&P500 index of leading companies 75% of returns are thanks to 41 AI stocks.
The "magnificent seven" of big tech companies, Nvidia, Microsoft, Amazon, Google, Meta, Apple and Tesla, account for 37% of the S&P’s performance. Such dominance, based almost exclusively on building one kind of AI - Large Language Models is sustaining fears of an AI bubble.
Nonsense, according to the AI titans. "We are long, long away from that," Jensen Huang, CEO of AI chip-maker Nvidia and the world’s first $5trn company, told Sky News last month.
Not everyone shares that confidence. Too much confidence in one way of making AI, which so far hasn't delivered profits anywhere close to the level of spending, must be testing the nerve of investors wondering where their returns will be.
The consequences of the bubble bursting, could be dire. "If a few venture capitalists get wiped out, nobody's gonna be really that sad," said Gary Marcus, AI scientist and emeritus professor at New York University.
But with a large part of US economic growth this year down to investment in AI, the "blast radius.
Amir Nisi
Creative and experienced content writer with 6+ years of experience lazy to create unique content strategy for News5 to turn website visitors into customers.
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