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Draft:AI bubble

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AI bubble is a prediction that the AI boom, the 2020s rapid growth of generative artificial intelligence, would stagnate and then decline.

Comparisons with the dot-com bubble have been made but also challenged.[1] The dot-com tech companies were public on the stock market amid the period before the bubble. On the other hand, the AI companies had been private by 2019, making both types hard to compare directly.[2]

In January 2025, a few members of Oxylabs's advisory board predicted possible factors of the AI bubble: overpromises and under-deliveries; declining hype; and law regulations, like the European Union's Artificial Intelligence Act.[3] In February 2025, as a Pomona College economics professor Gary Smith wrote, the stocks of AI companies and other companies providing AI have been overvalued primarily to appeal investors willing to buy them.[4]

In March 2025, Joe Green of the Tech HQ website criticized the statistics of users using generative AI, such as Microsoft Copilot and Google Gemini, as "inflated by users who have little option but to use AI 'feature', given that 'smart' searches have become the enforced default, and offerings of AI-generated content summaries appear in once-static applications." Per Green further, sixteen percent of Gmail users have used ChatGPT, and very small number of those using ChatGPT have wanted to pay for its subscription-based plans. Furthermore, one of the AI-based companies OpenAI as of 2025 have operated at a net loss. Green further criticized OpenAI's Deep Research as slow and lackluster, compared to human responses.[5]

In the same period, Alibaba Group Chairman Joseph Tsai remarked that the US investments in artificial intelligence has been excessive, foreshadowing "the beginning of some kind of bubble". Meanwhile, Alibaba announced the CN¥ 380 billion (US$52 billion) investment plan on cloud computing and AI infrastructure in 2025–2028.[6]

Certain figures like Richard Susskind have believed that the bubble would unlikely happen. In his 2025 book, Susskind criticized such predictions for "not grasping current market appetite."[7]

The "AI bubble" was previously referred to the AI winter of the 1980s.[8]

References

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  1. ^ Snow, Jackie (March 10, 2025). "Is AI a bubble? It's complicated". Quartz. Retrieved March 10, 2025.
  2. ^ Gerbert, Philipp; Spira, Michael (2019). "Learning to Love the AI Bubble". MIT Sloan Management Review. ISSN 1532-9194. ProQuest 2239532484.
  3. ^ Adebayo, Kolawole Samuel (January 20, 2025). "Experts Predict The Bubble May Burst For AI In 2025". Forbes. Retrieved March 11, 2025.
  4. ^ Smith, Gary (February 20, 2025). "Economics Professor Gary Smith Warns About AI Bubble". Pomona College. Retrieved March 11, 2025.
  5. ^ Green, Joe (March 10, 2025). "When will the AI bubble burst?". Tech HQ. Retrieved March 10, 2025.
  6. ^ Wu, Kane; Li, Selena (March 25, 2025). "Alibaba says to restart hiring, sees signs of start of AI bubble in the US". Reuters. Retrieved March 26, 2025.
  7. ^ Susskind, Richard (2025). "On Technology". How to Think About AI. Oxford University Press. p. 35. ISBN 9780198941927. LCCN 2025900031.
  8. ^ Stephenson, David (2018). Big Data Demystified. Harlow, England: Pearson Education. p. 25. ISBN 978-1-292-21810-6.

Further reading

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