AI euphoria faces concern as bubble warnings intensify
The artificial-intelligence boom has sent the market roaring but now several analysts, investors, and policymakers are warning that the bubble may be approaching its breaking point.
Concerns that initially centered on skyrocketing corporate debt to finance the massive data centers and rising interest rates have since escalated, with industry leaders now saying that advances in AI could potentially cause catastrophic harm to humanity within the next decade.
In an unusual display of solidarity, the heads of many AI labs came together last month to say that the progress of improving AI model capabilities should be scaled back.
In the face of potential risks, Anthropic (ANTHRO) CEO Dario Amodei called to 'slow the pace' of AI model improvements and urged for greater coordination among AI companies, with OpenAI CEO Sam Altman and SpaceX founder Elon Musk agreeing with Amodei. This came after an Anthropic insider Evan Hubinger said in a post on X that he "earnestly" believes AI could kill all humans, putting his personal estimate of the probability at more than 10% within the next decade.
Microsoft (MSFT) co-founder Bill Gates also stated that the technology is “powerful enough” to help cause at least 1B human deaths. This week, Anthropic (ANTHRO), OpenAI (OPENAI), and other companies’ top executives are reportedly gaming out scenarios for a public and political revolt following a catastrophic AI event.
Here are some prominent investors, strategists, and analysts who warned that the AI bubble could burst
The billionaire has sounded the alarm on the AI bubble, warning that it is nearing the point where it may burst due to rising interest rates and increased borrowing to fund the AI infrastructure buildout. "What creates the bursting of a bubble is the fact that you need cash," he said. "And you start to convert the wealth that you have to do that. Something like a wealth tax would have that effect, or having to pay back loans. So there's that dynamic that we have to keep an eye on." The London investment-bank strategist sees a scenario in which the AI-driven rally unravels as soon as 2027, dragging the broader market sharply lower. “My core conviction is that the AI bubble will either burst in 2027 or in 2028, so sometime in the next two years,” Klement said in an interview and urged clients to prepare for such a scenario rather than wait for the selloff to begin. The famous “Big Short” investor caution that the AI boom could resemble past speculative market episodes. He took short positions against high-flying tech and industrial stocks, including Nvidia (NVDA), Oracle (ORCL), Palantir (PLTR), Nebius (NBIS), Micron (MU), CoreWeave (CRWV), and has repeatedly challenged the AI investment narrative. He has argued that enormous capital spending might not necessarily translate into durable returns. The Galaxy Digital (GLXY) CEO said it is in the "biggest bubble of our lifetime" but advised investors to ride the wave rather than exit immediately. Last year, the OpenAI CEO has reportedly said that he believes AI could be in a bubble and compared the market conditions to those of the dotcom boom in the 1990s. "Are we in a phase where investors as a whole are overexcited about AI? My answer is yes," Altman told tech media The Verge. Another legendary investor behind "The Big Short," warned that the stock market would "go straight down" if any major tech hyperscaler cuts its AI capital expenditures. He reportedly warned that a failure of major AI companies like OpenAI could trigger an immediate U.S. recession due to extreme market dependence on AI. The GMO co-head of asset allocation during one CNBC interview said that “AI is a bubble, and figuring out exactly when it’s going to burst is really hard.” He added that AI boom relies heavily on debt and "circular deals" where money-losing firms fund one another's infrastructure. The Goldman Sachs strategist in 2025 reportedly warned investors AI remains a powerful long-term theme but warned that near-term risks are mounting. He highlighted that investors demanding much more scrutiny about massive hyperscaler capital expenditure as well as tangible evidence about its returns.
Ray Dalio Joachim Klement: Michael Burry Michael Novogratz Sam Altman: Steve Eisman Gary Marcus In his Substack account, the cognitive scientist and author in 2025 wrote that “If September 2025 was peak bubble, 2026 will likely the year which it all falls apart.” David Cahn Sequoia’s David Cahn put the annual gap between AI infrastructure spending and ecosystem revenue at nearly $600 billion. He said the AI bubble is reaching “a tipping point.” Ben Inker Ryan Hammond
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