When the AI bubble bursts, who'll be left standing?

"As Sir Isaac Newton discovered, the core scientific law of gravity is that what goes up must come down. The principle applies in many areas, which is why markets are jittery about the near-unchecked, three-year growth of stock prices fueled by the strength of the generative- AI revolution. The market is on a tear, with a large gap growing even wider between public market valuations and the significantly higher private-market valuations of AI-exposed companies. The top five tech companies in the U.S. are, collectively, valued at more than the combined size of the Euro Stoxx 50,"

"Investors in companies like Nvidia are seeing blockbuster returns, as the firm's value has risen more than 1,200% in the past five years, thanks to being one of the few companies able to provide the computer chips required for the AI revolution. Even so, some are worried that Nvidia is providing financing to customers looking to buy its chips-a supposedly circular chain that short sellers have quibbled with. (Nvidia, for its part, has issued responses to market analysts to refute those claims.)"

"It all adds up to a tetchy time, with nervousness and debate about an AI bubble. Not helping matters are the public comments about the current moment by some of the industry's biggest names. OpenAI CEO Sam Altman has said that we're currently in an AI bubble where "investors as a whole are overexcited about AI." Microsoft founder Bill Gates has called it a "frenzy.""

Generative-AI adoption has driven a three-year surge in stock prices and heightened market nervousness about sustainability. Public market valuations for AI-exposed companies lag significantly behind private-market valuations, while the top five U.S. tech firms collectively exceed the combined size of major international indices and account for about 16% of global public equities, according to Goldman Sachs. Investment in data centers contributed almost all U.S. GDP growth in early 2025, per Harvard economist Jason Furman. Nvidia's value rose over 1,200% in five years by supplying AI chips, though concerns exist about the firm financing customers to buy its chips; Nvidia has disputed those claims. Industry leaders have publicly warned of an AI bubble and frenzy.

Read at Fast Company