There are increasing fears about the growing AI bubble, which if burst could destroy the entire economy.
For months now, investors and even tech leaders have been openly discussing the possibility — but when and whether such a collapse might occur remains a topic of hot debate.
Nonetheless, investors are already preparing for that type of major technical selloff financial Times reportsReporting shows that there remains considerable fear and uncertainty over the untold billions of dollars being poured into wildly unprofitable AI ventures – a dynamic that has caused valuations of AI companies to reach record highs, despite questionable prospects of ever turning a profit,
Some are withdrawing their investments in major tech stocks, while others are simply betting on a decline in share prices.
“It is no longer doubtful what AI excesses are in the equity market, but it is difficult to know which companies will suffer losses and when that reckoning will happen,” said Vincent Mortier, chief investment officer at fund management firm Amundi. foot,
One investment fund, Blue Whale Growth, sold its Microsoft and Meta stock in the second quarter of last year, with chief investment officer Stephen Yiu telling the newspaper that “we are concerned about the returns on investment in some cases, while some of the valuations are crazy – especially in the private markets.”
Rajiv Jain, chairman of GQG Partners, said that “AI’s huge cash burn is still high and profitability looks very low.” His fund sold off all of its Magnificent Seven – investor shorthand for Alphabet, Amazon, Apple, Tesla, Meta Platform, Microsoft and Nvidia.
“Although we had low exposure to some Mag 7 names throughout 2025, we exited our remaining positions in early November as the risk of an AI bubble blow-up continues to increase,” he said.
At the same time, many people are not afraid of impending collapse.
“We don’t believe we’re in a bubble,” said Helen Jewell, BlackRock International chief investment officer. foot“But investors should be prepared for a bumpy ride in 2026.”
Despite considerable concerns among investors, banks remain optimistic about future growth. Wall Street has predicted double-digit profits this year. S&P 500 is There was a huge increase of 92 percent Since October 2022, it has been posting double-digit returns for three consecutive years.
“2026 should be another strong year for AI stocks, with capital spending likely to exceed expectations,” said JPMorgan’s Dubravko Lakos-Bujas. wrote In a memorandum.
Others are far more muted about the approach. Three years after the launch of OpenAI’s ChatGPT, there are some began to wonder How long can the huge hype about AI continue?
In a 2025 retrospective posted Monday, Bridgewater hedge fund founder Ray Dalio warned that the tech market is “now in the early stages of a bubble.”
But some argue that a crash caused by too much excitement may still be some way off.
“A bear market is likely to burst a bubble,” said Gene Goldman, chief investment officer at Cetera Financial Group. told bloomberg“We don’t see a bear market in the near future,”
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