The question isn’t if - it’s when: What the AI bubble could mean for investors and Silicon Valley
We may be able to learn lessons from the past when it comes to the rapid expansion of AI.
Similar to that time before your younger sibling was born, it’s quickly become hard to imagine a world without the medium of AI. You know it must have existed due to the nature of the universe, but what on Earth was day to day life like back then?
The AI-dominated world is constantly breaking new ground and finding new avenues which it can control. We’ve seen this before, with the rapid expansion of the dot-com era when it first arrived in our lives, and there are perhaps some lessons we can learn...
In the dot-com era, a large percentage of firms bet that demand would catch up with supply. They laid vast networks of fibre-optic cable and wired cities to the hilt, only to find much of it underused when the bubble burst. Today, tech companies are investing billions in AI data centres and cloud infrastructure, constructing massive, complex systems in anticipation of future demand. For example, Zuckerberg remarked that by 2025, Meta aims to have over 1.3 million GPUs and build a data centre “so large it could cover a significant part of Manhattan.”
But there’s a concern: what if the demand never arrives at the scale needed to justify those investments?
Sora 2 is here. pic.twitter.com/hy95wDM5nB
— OpenAI (@OpenAI) September 30, 2025
As well as that, back in 1999–2000, low revenues meant that companies’ valuations were based on future promise, not present results: that very same pattern is present now with AI startups that command sky-high valuations despite having — let’s put it politely — speculative income.
Analysts now suggest that the industry must generate trillions in additional AI revenue over the next few years just to justify the massive capital being deployed today.
Let’s look at some numbers when things go south: Corning, the world’s leading optical-fibre maker, watched its stock collapse from nearly $100 in 2000 to just $1 by 2002. While we’re not seeing that yet — OpenAI has predicted $20 billion in revenue by the end of the year — the fibre optic bubble also appeared very promising at the start.
When Might the AI Bubble Burst?
That’s like asking when a volcano is going to erupt. While it’s impossible to time a potential collapse, some observers think a correction could begin as early as late 2025. Others argue that momentum will keep the numbers straight until 2026 or even 2027 before the pancake flips.
The new Sora 2 video app is wild.
— Nate Lorenzen (@anatelorenzen) September 30, 2025
Just asked it to generate “the most 80's thing ever” and the output was uncanny. pic.twitter.com/K0I4ANRsKl
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