Global AI Bubble Concerns Mount as Tech Giants Brace for Potential Market Correction

Economists and financial institutions, including the IMF and the Bank of England, have raised concerns about a potential AI bubble fueled by overinflated stock valuations and massive investments in AI infrastructure without corresponding revenue growth, reminiscent of the dot-com bubble. Speculation dominates the AI investment landscape, with nearly half of global private investment flowing into AI, raising fears that current models like GPT-5 are nearing performance limits, which may precipitate a bubble burst. Despite warnings, some argue that AI could boost productivity enough to avoid a financial crisis, though risks remain from increasing private debt exposure and the interconnectedness of financial markets. Skeptics highlight that while AI has made advances in areas like natural language processing, the rush to monetize and the escalating energy demands for training models cast doubt on sustainable profitability. Critics like Cory Doctorow warn of "enshittification," where AI platforms degrade over time as commercialization prioritizes profits over user experience, potentially alienating users and developers. Industry observers debate the consequences for companies heavily invested in AI infrastructure, with concerns about a possible decline in value and innovation as the hype fades.