The current investment in artificial intelligence (AI) raises questions about the sustainability of its business models. While subscription-based models are popular, they may not generate profits comparable to ad-driven platforms that have defined the internet. Major tech companies are under pressure to deliver on the promise of AI technologies capable of fully replacing human roles and completing real-world tasks.
Investors seem to be largely influenced by the prospective capabilities of powerful AI systems, with expected returns hinging on significant infrastructure investments. Companies like OpenAI will need to justify their spending to stakeholders in the future as investor confidence hinges on tangible results.
There is also considerable uncertainty regarding the future direction of AI. While large language models (LLMs) are likely to remain essential, experts are divided on what advancements are necessary to attain artificial general intelligence (AGI). Some are exploring AI that can comprehend the physical environment, while others are focused on teaching AI to learn in ways similar to humans. This raises the question: Could the substantial investments be supporting misguided technological paths?
This current landscape is characterized by a candid acknowledgment of its volatility. Some tech leaders express that both the transformative potential of AI and the risk of a financial bubble coexist. Historical comparisons to the internet boom illustrate the potential for both failure and success in the sector, showing how similar ideas can yield very different outcomes over time.
Goldman Sachs likens the current AI momentum to the state of tech stocks during the late 1990s, citing signs that could indicate an impending bubble. Factors such as heightened investment, decreasing corporate profits, and increasing corporate debt bear monitoring. While not at critical levels yet, the concerns are mounting.
As industry figures caution that future losses are inevitable, it remains to be seen how the landscape will evolve and who will emerge as the winners in the field.
Source: https://www.technologyreview.com/2025/12/15/1129183/what-even-is-the-ai-bubble/