The world is currently obsessed with Artificial Intelligence (AI). From massive corporate investments to bold predictions about the future, AI has become the biggest buzzword in the global economy, especially in the United States. But as the excitement grows, a crucial question has started to emerge — are we living in an AI bubble? The short answer is both yes and no.
Many tech experts and economists believe that the present AI boom shows all the signs of a financial bubble. A chart shared widely on social media shows how a small group of companies — Nvidia, OpenAI, Meta, Google, Microsoft, Oracle, Amazon, and others — have invested heavily in each other through various deals. This has inflated their values dramatically, at least on paper.
Reports suggest that AI-related industries now account for almost 40% of the total US GDP. On Wall Street, AI companies have driven 80% of this year’s total market growth. Yet, as Harvard economist Jason Furman points out, if AI-related capital expenditure is excluded, the actual US GDP growth for the year is almost zero. This means the economic expansion is mostly artificial — driven by expectations rather than real productivity.
This raises a concern: if the AI revolution has yet to produce tangible returns, then the current excitement might just be an inflated financial bubble, similar to the dot-com boom of the 1990s. Investors like Michael Burry, known for predicting the 2008 housing crash, have already placed bets against AI — suggesting he expects the bubble to burst.
The reason for this artificial growth lies in what economists call “easy money.” Over the last few years, the US government and Federal Reserve have injected large amounts of money into the economy. Much of this has flowed into technology companies, fuelling speculation and risk-taking. As financial historian Edward Chancellor notes in The Price of Time, easy money often pushes investors toward projects that promise distant, uncertain returns. AI fits this description perfectly — a promising but unproven dream of the future.
The pattern is familiar. In the past, industries like shipping, railroads, and housing all went through similar bubbles before eventually stabilizing. Right now, AI seems to be the new “El Dorado” — the mythical land of gold — attracting endless money and hype. Tech leaders like Sam Altman of OpenAI and Jensen Huang of Nvidia are at the forefront, making bold claims about AI’s limitless future. Their enthusiasm fuels even more investment, creating a self-reinforcing cycle of hype and hope.
But here’s the reality: AI is powerful but still far from replacing humans or reshaping the world to the extent people imagine. ChatGPT is not a god-like intelligence; it’s a remarkable tool built on patterns and probabilities. Unless there is a sudden, game-changing technological breakthrough, this wave of excitement will eventually fade. The bubble may burst this year or in the next few years — no one can predict when. But history suggests that it will happen sooner or later.
However, it would be wrong to call AI a complete illusion. Like past technological revolutions, there’s a strong foundation underneath the hype. The dot-com bubble of the 1990s also collapsed, but the internet itself didn’t vanish — it reshaped the world. Similarly, while many AI-driven startups or overvalued companies might fail, the core technology is here to stay.
AI today is similar to the early days of personal computing. The first IBM PC in the 1980s ran on slow processors and basic software. Yet, within decades, that technology evolved into the smartphones we carry today, which are hundreds of thousands of times more powerful. AI is at a similar early stage. The current tools like ChatGPT and Google Gemini represent just the beginning.
In another sense, the AI revolution mirrors the early years of the World Wide Web. Back in the 1990s, the web looked simple and limited, but it became the foundation of almost every digital service we use now — from social media to online banking. The dot-com bubble burst, but Google, Amazon, and the internet itself grew stronger afterward.
AI seems destined to follow the same path. While the short-term financial hype may fade, the long-term technological impact will remain. Large Language Models (LLMs) — the engines behind chatbots and generative AI — are already changing how information flows and how people interact with technology. Over the next two to three decades, AI will likely become a basic layer of our daily lives, much like the internet is today.
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Still, there are big challenges ahead. For AI to truly transform the world, breakthroughs in reasoning, creativity, and safety are needed — and some of these may take years or even decades. Others may never happen. But regardless of the financial ups and downs, the progress made so far ensures AI will stay an essential part of modern innovation.
In the end, we can say this: the financial AI bubble may burst, but the technological foundation it’s built on will survive. The markets may fall, startups may disappear, but the science and tools behind AI will continue to grow stronger and more practical. Just like railways and the internet before it, AI’s early hype may fade — but its long-term impact will shape the future.
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