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’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

I see so many posts online about a supposed "AI bubble" and how it'll eventually burst and things will "go back to normal." Is that really true though? AI isn't like the 2008 housing crisis where people were just careless about their mortgage, rather it is something that'll help humanity into a new age of advancement and I don't see how it can really be "burst" by some poor stock choices

Powell recently said: this is different. Unlike in 90s which was clearly a bubble because companies then had no earnings or a business model. Modern ones do.

But many still talk about the bubble nevertheless. Those who do, how do you think the burst would manifest? What's your hypothesis?

Those who don't, why do you think that bubble allegation is a nothing burger? What's your reasoning?

Comment below, let's discuss.

I keep hearing that phrase. "The AI bubble is going to burst" but...

What does it means? What impact will that have for regular people? Will it truly happen? What does needs to happen for it to burst?

I only want apps to stop embedding any for of AI as a new function, hate it

How much of society already depends on AI? If it goes away in some fashion, what's going to happen?

Everywhere I look there are articles that keep talking about us being in an AI bubble right now and that it's going to pop. But if that's the case and people really believe this, what is keeping it from already bursting? Why doesn't the fear of being in an AI bubble cause mass panic and cause a preemptive burst?

Last time I checked, OpenAI still needs billions in funding and they just recently switch to for-profit business model so I don't know if they even started making money yet. Same with Microsoft, they seem to be struggling with AI adoption.

What is still holding things together?

Open Ai is considering to IPO, at a market cap at $1,000,000,000,000. A trillion! They have to IPO to give a return to all the private equity firms who invested billions foolishly!

Their revenue is supposed to $20billion this year and expected to lose $27 billion in 2025. Its a cleary a bubble. Sam is a fraud at this point. Last year 2024, their total reveune was $3.7billion with a lost of $5 billion.

Also Nividia is worth $5 trillion, worth more than every country except 2. Although they are profitable and growing, proabbly 5x their current market cap. I dont agree with Michael Burry often, but I would short Openai, Nvidia, and others if I had the funds to lose money on shorts.

What do you all think?

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.

(Note the flair: Humour on the weekend. Please don’t read, if you are easily triggered. too late!

Sam Altman says he’s ‘0%’ excited to be CEO of a public company as OpenAI drops hints about an IPO: ‘In some ways I think it’d be really annoying’

December 19, 2025, 12:38 PM ET

OpenAI may be building up to one of the largest initial public offerings ever, but CEO Sam Altman says he is not necessarily looking forward to helming a public company.

“Am I excited to be a public company CEO? 0%,” Altman said in an episode of the “Big Technology Podcast” published on Thursday. “Am I excited for OpenAI to be a public company? In some ways, I am, and in some ways I think it’d be really annoying.”

OpenAI is laying the groundwork for an IPO, with a Thursday report from The Wall Street Journal putting early talks of a valuation at $830 billion. In a more lofty estimate, the company could be valued at up to $1 trillion, Reuters reported in October, citing three sources. According to the Reuters report, chief financial officer Sarah Friar is eyeing a 2027 listing, with a potential IPO filing in late 2026.

Altman told “Big Technology” he didn’t know if his AI company would go public next year and was mum on details about fundraising, or the company’s valuation. OpenAI did not respond to Fortune’s request for comment.

Despite his hesitance to lead a public company—which are often under more scrutiny, greater regulatory oversight, and are associated with less influence from founders—OpenAI’s IPO wouldn’t be all bad, Altman noted.

“I do think it’s cool that public markets get to participate in value creation,” he said. “And in some sense, we will be very late to go public if you look at any previous company. It’s wonderful to be a private company. We need lots of capital. We’re going to cross all of the shareholder limits and stuff at some point.”

An IPO would pave the way for OpenAI to raise the billions of dollars needed to compete in the AI race. Founded as a nonprofit in 2015, OpenAI just completed a complex restructuring in October that converted it into a more traditional for-profit company, giving the nonprofit controlling the company a $130 billion stake in it. The restructuring also gave Microsoft a reduced 27% stake in the company, as well as increased research access, while simultaneously freeing up OpenAI to make deals with other cloud-computing partners.

More ‘code reds’ to come

OpenAI’s urgency to compete with rivals was apparent earlier this month when Altman declared a “code red” in an internal memo, following the surge of interest after Google rolled out its new Gemini 3 model in just one day, which the company said was the fastest deployment of a model into Google Search. Altman’s “code red” was an eight-week mandate to redouble OpenAI’s own efforts while temporarily postponing other initiatives, such as advertising and expanding e-commerce offerings.

The blitz appears to be paying off: Last week, OpenAI launched its new GPT-5.2 model, and earlier this week, it released a new image-generation model to compete with Google’s Nano Banana. Fidji Simo, OpenAI’s CEO of applications, said the update wasn’t in response to Google’s Gemini 3, but that the extra resources from the code red did help expedite its debut.

As OpenAI tries to address slowing user growth and retain and grow market share from its competitors, Altman conceded a code red will not be a one-off phenomenon. The all-out effort is a model that’s been employed by Google, and also Meta through Facebook’s more extreme “lockdown” periods. He downplayed the stakes of a code red, matching what sources told Fortune equated to a focused, but not panicked, office environment.

“I think that it’s good to be paranoid and act quickly when a potential competitive threat emerges,” Altman said. “This happened to us in the past. That happened earlier this year with DeepSeek. And there was a code red back then, too.”

Altman likened the urgency of a code red to the beginning of a pandemic, where action taken at the beginning, more so than actions taken later, have an outsized impact on an outcome. He expected code reds will be a norm as the company hopes to gain distance from the likes of Google and DeepSeek.

“My guess is we’ll be doing these once, maybe twice a year, for a long time, and that’s part of really just making sure that we win in our space,” Altman said. “A lot of other companies will do great too, and I’m happy for them.”

https://fortune.com/2025/12/19/sam-altman-0-percent-excited-ceo-of-public-company-openai-ipo/

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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?

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 have mixed feelings about AI. I think it can replace many repetitive jobs – that’s what AI agents do well. It can even handle basic thinking and reasoning. But the real problem is accountability when it fails in complex, non-repetitive fields like software development, law, or medicine? Meanwhile, top CEOs and CTOs are overestimating AI to inflate their companies' value. This leads to my bigger concern If most routine work gets automated, what entirely new types of jobs will emerge ? When will this bubble finally burst?

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've heard it's something bigger than dotcom or 2008. But who will lose that money? I have nothing invested in it or any debt, how could it affect common people like me?

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.

75% of the US stock market growth of the past few years has come from AI, but that was built on a promise. That AGI was just around the corner. Now companies like OpenAI are pivoting to selling ads and porn, a sure sign they do not think AGI is about to arrive.

If the AI bubble bursts, what happens afterwards?

I'd guess there will be a backlash against Big Tech. Perhaps 2025 is the high watermark of their political influence. AI is already broadly unpopular with many people, and that will only grow when they see if it has crashed the economy and their pensions.

AI, the technology, will still be with us, even if many of today's AI companies won't be. Even without AGI, it still has the potential to be transformative and economically disruptive. Rules-based businesses — legal, accounting, transaction, and claims processing could all be made obsolete. Humanoid robotics and self-driving, both aspects of AI, will eventually replace millions of human workers.

The AI bubble crashing would mean a recession. Recessions mean companies cut workforce numbers. Ironically, this time, they will be able to replace many of those people who were let go with AI. So the crash that AI causes will also speed its adoption.

I don't like generative AI, with it flooding the internet with bot content, but why do people look forward to the AI bubble bursting as a solution to it? I've literally seen verbatim online, "I can't wait til the bubble pops", I'm sure you've seen something similar.

As far as I gather, if the burst/crash happens, all that will happen is that we enter a recession, as in we lose our jobs and grocery prices go up, but all of the problematic AI would still exist.

Sure, I'd imagine 95% of the AI companies that exist today will go bankrupt, but that woudln't affect OpenAI (edit: OpenAI is a bad example, but the main point still stands), Claude, Google, etc. The companies that will be going bankrupt would be companies who sell stuff like "AI-powered automatic dog feeder" or "your new AI anime catgirl girlfriend".

The big guys in the AI space can just weather the storm, and in the process maybe even get rid of a few competitors to get even bigger in the future. Or get bailed out by the US government like in 2008.

It's like if you wish for an economic crash for restaurants because you believe that McDonald's and Domino's Pizza is destroying people's health, but then it actually happens and all it affects are your local businesses, while all of the global chain restaurants stay strong. That is literally what happened during COVID-19 5 years ago.

Am I missing something?