Why Fears of a Trillion-Dollar AI Bubble Are Growing
Investors have parted with unprecedented sums of money to help AI fulfill its lofty promise. But no one really knows how it will all pay off.
Illustration: Nick Little
For almost as long as the artificial intelligence boom has been in full swing, there have been warnings of a speculative bubble that could rival the dot-com craze of the late 1990s that ended in a spectacular crash and a wave of bankruptcies.
Tech firms are spending hundreds of billions of dollars on advanced chips and data centers, not just to keep pace with a surge in the use of chatbots such as ChatGPT, Gemini and Claude, but to make sure they’re ready to handle a more fundamental and disruptive shift of economic activity from humans to machines. The final bill may run into the trillions. The financing is coming from venture capital, debt and, lately, some more unconventional circular financing arrangements that have raised eyebrows on Wall Street.