There is no artificial intelligence bubble

Published: Friday, November 21, 2025 at 11:00 am

AI Investment Boom: No Bubble in Sight, Experts Say

The artificial intelligence (AI) sector is experiencing a massive surge in investment, with major players like OpenAI, Amazon, Meta, Microsoft, and Alphabet leading the charge. These companies, along with others such as Oracle and xAI, are engaged in a fierce competition to secure computing power, with OpenAI alone planning to invest approximately a trillion dollars in data centers and related infrastructure over the next few years.

This investment wave is driven by the transformative potential of AI, which is expected to revolutionize industries and boost productivity, much like the railroad, electrification, and the internet did in their respective eras. The demand for AI compute is so high that companies like Microsoft are struggling to meet their own needs, leading to the emergence of "neo-cloud" operators who rent out data-center capacity.

Despite the scale of investment, experts argue that the current situation does not resemble the dot-com bubble of the late 1990s and early 2000s. Unlike that era, today's leading companies are highly profitable, and their capital spending is largely funded through internal cash flow, not external debt. For example, Nvidia, a key player in the AI space, trades at a reasonable valuation compared to its growth rate.

The global nature of this AI race is also evident. While the U.S. is currently leading the investment charge, with projected capital investment by hyperscalers exceeding $600 billion in 2026, China is also significantly increasing its AI investments. Europe and emerging economies like India and Nigeria are also working to build their own data center capacity.

BNN's Perspective: The rapid expansion of AI investment is undeniably significant. While the potential for transformative change is exciting, it's crucial to monitor valuations and ensure responsible financial practices. The current market conditions, with profitable companies and internal funding, suggest a more sustainable growth trajectory than the dot-com era. However, the sheer scale of investment warrants continued scrutiny to ensure long-term stability and prevent any potential market imbalances.

Keywords: AI, artificial intelligence, investment, hyperscalers, OpenAI, data centers, computing power, Nvidia, market, growth, China, Europe, neo-cloud, profitability, valuation.

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