I read a lot of posts convinced that the AI bubble is going to pop and will result in data centres and all the money invested will become wasted.

I think these types of people are only using Chatgpt to ask it about the weather. I don't believe they are involved in anything that actually uses AI in business or functionality.

If you are a coder, you fully well know this technology is not going anywhere. It is far too useful. Getting it to analyze codebases, throwing 20 documents at it to analyze and build something out of it. Then you have all the industries it helps, example legal, customer service, art design etc.

We cannot get enough compute at the moment, AI models are always being quantized and compressed to make them more efficient because it is far to costly to run at full power.

Not to mention robots on the horizon and all the chip and ai requirements they will have.

You might get some AI companies going bust due to competition, but the demand will be transferred to another company.

It is the next industrial revolution. You see the uproar when Chatgpt goes down.

EDIT:
As others have siad we have two definitions of the AI bubble

1. People that think AI is going away and artists will be back in employment in pre 2020 numbers. I've seen many posts like this in some art focused reddits.

2. The AI companies financial status. What could actually disrupt this biggly is imagine a super model, like how Deepseek sometimes throws a spanner in the works, if a model can exist to be crazy efficient and we can get SOTA performance on regular gpus?

I’m sorry for my short sidedness and I understand that a lot of things right now are AI related. But what would be the tangible impact (other than job loss I think) that would cause large scale issues of the AI bubble burst?

TIA.

https://www.commondreams.org/news/ocasio-cortez-ai-bailout

People keep comparing today’s AI market to the Dotcom bubble, but the structure is fundamentally different. Back then, the market was dominated by hundreds of small, non-viable companies with no revenue and no real product. Today, the core of the AI build-out is driven by the most profitable, cash-rich companies on the planet: Microsoft, Google, Amazon, Apple, Meta, NVIDIA, Broadcom, and the hyperscalers. These firms have actual products, real demand, and business models that already scale.

What is similar to the Dotcom era is the valuation stretch and the expectation curve. We are in a CapEx Supercycle where hyperscalers are pouring unprecedented amounts of money into GPUs, data centers, power infrastructure, and model development. This phase cannot grow linearly forever. At some point, build-out slows, ROI expectations tighten, and the market will reprice.

When that happens, here’s what to expect:

Winners: diversified hyperscalers, cloud platforms, chip manufacturers with real moats, and software ecosystems that can monetize AI at scale.

Survivors but volatile: model labs, foundation model vendors, and second-tier hardware companies that depend on hyperscaler demand cycles.

Casualties: AI “feature startups,” companies without defensible tech, firms relying on perpetual GPU scarcity, and anything whose valuation implies perfect execution for a decade.

This isn’t a bubble waiting to burst into nothingness but a massive, front-loaded investment cycle that will normalize once infrastructure saturation and cost pressures kick in. The technology is real, the demand is real, and the winners will be even large, but the path there won’t be a straight line.

Edit: Thank you all very much for your posts and discussion. This seems to be a very controversial topic, but this is also something where everyone can learn.

I keep seeing people say that AI is a bubble or that it’s overhyped, but every time I use AI tools I seriously don’t get how people believe that. To me it feels like AI is already capable of doing a huge part of many jobs, including some in healthcare like basic analysis, documentation, nutrition planning, explanations, x-rays, etc. And if it keeps improving even a bit, it seems obvious that a lot of tasks could be automated.

So I’m wondering why some people are so convinced it’s a bubble that will “burst.” Is it fear of job loss? Just media exaggeration? Real technical limits I’m not aware of? Or just general skepticism?

I want to understand the other side. Do you think AI is actually going to collapse, or do you think it’s going to keep growing and eventually replace certain roles or reduce the number of workers needed?

Curious to hear different perspectives, especially from people who think AI is overhyped.

During the 2008 financial crisis the housing bubble burst because of mortgages to unqualified borrowers, complex financial products like mortgage-backed securities (MBS), and lax lending standards. So, a faulty system depending on we, the people, paying off mortgages and loans that were not being paid back. Seems a logical cause for a bubble to burst.

Before, the dotcom bubble bursted because of extreme overvaluation of companies, which were not performing up to the expectations, so the revenue wasn't there.

Now there is obviously an AI bubble as has been pointed out many many times, but currently the companies involved are still meeting their expected revenue goals (looking at NVIDIA, Meta, Google even though that is not strictly an AI-related company, their current valuation is also due to their AI developments). Of course, investing in each other and buying each other's products, causing stocks to rise, is super inflatory, but is not punished so far. It seems.

Now, a geopolitical conflict involving a certain chipmaker to not be able to produce would likely pop the bubble overnight. Given the current geopolitical situation and the people involved, this is not unlikely in the coming years. But as long as this doesn't happen it appears to be business as usual, and the AI-race will continue.

Now, comparing this to earlier bubbles, the pattern is similar. An industry is pumped to the moon, a bunch of people make an insane amount of money, the bubble bursts and most people get screwed over with a few winners. The question is always: how high will it go when the companies are profitable and how deep will the lows be?

As a retail investor who is not trading daily, this situation is extremely difficult and hard to predict when also just having a regular 9 to 5 job. I know I won't be able to predict it, so it is a risk analysis whether the current valuations will be the future lows OR if big companies with PE ratios of 50 are already a selling sign for the retail investor. This would even apply to ETFs like VWRL, since their share of NVDA is also high. The whole market will likely go down when this bubble bursts, just some companies more than others. given earlier arguments, I feel like going short here is stupid. Thereby, world governments are hedging inflation (buying loads of gold), which also has geopolitical implications. Now I believe in the mantra that time in the market beats timing the market but probably needing the money in 3 years or so, the current situation is a spicy sauce. It seems like hedging inflation (e.g. buying gold and funds like Berkshire) is not a bad move.

I see alot of people here woo’ing over their gains in 2025. Able to fire cause they hit their minimum goal.

What happens if you suddenly lose 30-40 or more % of your portfolio in the event of a market wide downturn?

I understand you’re diversified but that only goes so far when everything’s connected.

Do you re enter the job market?

Edit: I should have found a clarifying article that explains the underpinnings of the ai bubble and explain why it’s different from previous real estate or dot com bubbles.

Edit 2: I cannot believe the amount of backlash, negativity and personal attacks from this post.

I’m asking a genuine question about diversification in regards to a widely accepted near coming financial crisis and all I get is personal attack word vomit. wtf?

Am I wrong or is the current AI bubble discourse insane? If, by bubble, it is implied that AI-relates asset prices will drop, then shouldn't it be impossible for this to be predictable by randos on the street? Are there mechanisms that would stop institutional investors from making free money by shorting AI stocks if the AI bubble is real AND "known" by even randos on the Internet?

Not here for the daily "Freak tf out, it's joever" vs "No Bubble exists" debate.

My question is simply, as a noob retail investor; If the big AI investors see a major downturn due to whatever reason, or a bailout happens for openAI (arguably it already is happening with the BBB).

What would be the winning move on the stock market, if any? Keep riding S&P? Buy land, water and gold? Crypto? Bonds? Just any other sector? I see a lot of talk but I don't understand what it would actually mean in actual effect. Enlighten me plz

People who have lived through dot com and GFC, do you think investors are more skeptical with the steadily growing AI bubble? Are there more guardrails in place in the financial systems? Could this skeptisism, checks and balance lead to a market crash not at the same scale as these 2 events?

I think 80% of AI agent startups are going to be dead within 18 months and here's why.

Every week there's 5 new "revolutionary AI agent platforms" that all do basically the same thing. Most are just wrappers around OpenAI or Anthropic APIs with a nicer UI. Zero moat, zero differentiation, and the second the underlying models get cheaper or offer native features, these companies are toast.

Three types of companies that are screwed:

Single-purpose agent tools. "AI agent for email!" "AI agent for scheduling!" Cool, until Gmail or Outlook just builds that feature natively in 6 months. You're competing against companies with infinite resources and existing distribution.

No-code agent builders that are actually low-code. They promise "anyone can build agents!" but then you hit limitations and need to understand webhooks, APIs, data structures anyway. So who's the customer? Not technical enough for developers, too technical for business users.

Agent startups that are just services companies larping as SaaS. They call it a "platform" but really you need to pay them $10k for custom implementation. That's consulting not software.

My take on who survives:

Companies building real infrastructure. Platforms that handle the messy parts like orchestration, monitoring, debugging, version control. Things like LangChain, Vellum, or LangSmith that solve actual engineering problems, not just UX problems.

Companies with distribution already. If you have users, you can ship agent features. If you're starting from zero trying to get users for your agent tool, you're fighting uphill.

Most of these startups exist because it's easy to build a demo that looks impressive, building something that works reliably in production with edge cases and real users? That's way harder and most teams can't do it.

We're in the "everyone's raising money based on vibes" phase. When that stops working, 90% of agent companies disappear and the remaining 10% consolidate the market.

Am I wrong? What survives the shakeout?

As days pass i only see companies adopting new AI techs with no sign of removing them. People eventually starting to use them too. Im not seeing RAM prices will go down soon like this until some company starts focusing on consumers and not AI.

Regardless of what you think about the tech behind AI (given what sub this is I can safely assume that most people here are deeply sceptical) you can do some simple math to show why the spending on AI has to blow up. Regardless of weather or not the AI industry becomes profitable (it's not anywhere close to profitable currently) it is almost impossible to justify the current spending on the AI bubble. Note: there are really two aspects of the AI bubble: 1 a bunch of start-ups with no path to profitability and 2 insanely irresponsible capex spending on data centers by big tech. I am only really focusing on the latter in this post because it is what has turned the AI bubble from an industry problem to a systemic risk.

First, just ask the question of how much revenue would it take to justify the capex spending on AI datacenters? I'll just use ball park round numbers for 2025 to make my point but, I think these numbers are directionally correct. In 2025 there has been an expected 400 Billion dollars of capex spending on AI data centers. An AI data center is a rapidly deprecating asset; the chips become obsolete in 1-3 years, cooling and other ancillary systems last about 5 years, and the building itself becomes obsolete in about 10 years due to changing layouts caused by frequent hardware innovations. I'll average this out and say a datacenter deprecates almost all its value in 5 years. Which means, the AI datacenters of 2025 deprecate by 80 billion dollars every year.

How much profits do AI companies need to make in order to justify this cost? I'll be extremely generous and say that AI companies will actually become profitable soon with a gross margin of 25%. Why 25%? I don't know it just seems like a good number for an asset heavy industry to have. Note: the AI industry actually has a gross margin of about -1900% as of 2025 so, like I said I am being very generous with my math here. Assuming 25% gross margin the AI industry needs to earn 320 billion dollars in revenue just to break even on the data center buildout of 2025. Just 2025 by the way. This is not accounting for the datacenters of 2024 or 2026.

Let's assume in 2026 there is twice the capex spend on data centers as 2025. That means the revenues they need, again assuming this actually becomes profitable, the AI industry will need close to a trillion dollars in revenue just to break even on the capex spending in 2 years. What if there is even more capex spending 2027 or 28?

In conclusion, even assuming that AI becomes profitable in the near term it will rapidly become impossible to justify the spending that is being done on data centers. The AI industry as a whole will need to be making trillions of dollars a year in revenue by 2030 to justify the current build out. If the industry is still unprofitable by 2030 it will probably become literally impossible to ever recoup the spending on data centers. This is approaching the point where even the US government can't afford to waste that much money trying to save this sinking ship.

I recently spoke to a tech-founder-suddenly-turned-AI-founder, and now he's pivoting back to his old services He has been big time into building AI agents and has built some good ones too. Now, he believes prospects are turning away when he talks about building AI agents. I think because of underwhelming ROI than what's promised.

Is the AI party getting over? I mean, everyone's talking about bubble burst now, even Sam Altman and Jezz Beffoz, but still investments aren't stopping. What's really going on?