AI Investment Bubble: Trillions at Risk Amid Hype, Weak Returns

Big Tech is pouring trillions of dollars into artificial intelligence, but analysts warn this frenzy is fueling a massive bubble reminiscent of the late-1990s dot-com crash. Despite record stock market gains, most firms have yet to see real returns, raising the specter of a financial meltdown.

Alarming Numbers

• Combined capex by Amazon, Alphabet, Meta, and Microsoft has soared from under $100 billion five years ago to nearly $300 billion this year.

• Projections: over $500 billion annually in U.S. AI spending this decade, with total outlays reaching $5 trillion by 2030.

• To break even, firms would need $2–3 trillion in annual AI revenues — about 10% of U.S. GDP, a highly unlikely target.

Expert Warnings

• MIT study: 95% of businesses using AI have seen no financial return yet.

• Charles Carter (Marathon Asset Management): “AI is an innovator’s dilemma — essential to stay competitive, but likely unprofitable.”

• Alphabet’s Sundar Pichai: “The risk of underinvesting is dramatically greater than the risk of overinvesting.”

• Meta’s Mark Zuckerberg: “Wasting hundreds of billions would be unfortunate, but falling behind is worse.”

Markets in Euphoria, Risking Collapse

• Nvidia’s stock has surged 350-fold in a decade.

• Oracle’s shares jumped 36% in one day on cloud revenue projections.

• Yet strategists warn this mirrors the TMT bubble, where booming investment quickly collapsed into heavy losses.