AI companies are reaching trillion-dollar valuations, but experts warn of an “irrational” market and growing risk of a bubble burst. Investors are pulling back quietly while global economies brace for the potential fallout from overhyped AI hype and volatile tech investments
As the value of AI companies reaches trillions and orders are worth as much as the budgets of wealthy nations, key players are warning of “irrationality,” while investors quietly sell off positions. Biznis sredom checks whether the fear is real—or just exaggerated.
It was a week in which trillion-dollar valuations were defended with cautious statements, while the “smart money” pulled back quietly. Sundar Pichai, CEO of Alphabet, Google’s parent company, warned of “elements of irrationality” in the current AI investment cycle, emphasizing that no company—not even Google—would be immune if a market correction occurs.
His comments arrive at a time when bets on AI have reached astronomical levels, and business moves—from selling stakes in Nvidia to rapidly resolving ownership issues in regional oil companies—appear pressured. Old business deals are under stress, new ones are made under the shadow of sanctions, and markets and citizens are trying to assess the real risks.
How Many Zeros Make “Overheated”?
While Nvidia revealed it has $500 billion in orders for its AI chips, warnings about an overheated market are coming from the highest levels. Sundar Pichai told the BBC that there are “elements of irrationality” in the AI boom. Daniel Pinto, Vice Chairman of JPMorgan, predicts a possible “correction” in AI company valuations, while Luis de Guindos, Vice President of the European Central Bank, warns that shocks in this sector could spill over into the broader market.
Investor actions also signal caution. Peter Thiel’s hedge fund sold its entire $100 million stake in Nvidia. Warren Buffett’s Berkshire Hathaway reduced its Apple position by 15%. While not abandoning tech entirely, it invested a massive $4.3 billion in Alphabet, effectively betting on a slower but steadier AI contender.
Meanwhile, Michael Burry—famous for predicting the 2008 financial crisis and profiting from the collapse of supposedly “safe” stocks, as dramatized in The Big Short—has now shorted Nvidia, betting on a decline in the company’s market value.
The Risks Beneath the Surface
Doubts are fueled further by the very structure of AI financing. A complex network of circular investments is emerging—a financial perpetuum mobile where Microsoft, Amazon, and Google invest billions in AI startups like OpenAI, which almost immediately reinvest the funds to purchase cloud services and chips from the same investors. This creates the illusion of organic demand, inflates giant revenues, but raises the key question: what happens when this vicious circle breaks?
Outside the tech sector, the Trump administration, facing criticism over food prices, removed some tariffs on coffee, bananas, and beef imports. Simultaneously, there is talk of imposing tariffs up to 500% on countries trading with Russia.
Economic Warning Signs
Europe’s industrial engine is struggling again. Germany, the EU’s traditional locomotive, is having trouble keeping pace—European Commission projections estimate 2026 growth at 1.2%, below the EU average of 1.4%. This economic sluggishness is pushing German officials into diplomatic outreach. Vice Chancellor Lars Klingbeil in Beijing called for “fair trade” and reliable access to rare minerals—essential “vitamins” without which there are no chips, batteries, or green transition projects.
Meanwhile, while the West seeks raw materials, Beijing is focusing inward on a project of tectonic scale. Instead of relying solely on exports, China has announced an ambitious plan to double its middle class to 800 million by 2035. This is a strategy to create the world’s largest consumer market, an internal economic “fortress” resilient to external shocks and trade wars.
A Smaller but Tangible Bubble Pop
In a world filled with fear of trillion-dollar bubbles bursting, the U.K. decided to pop a smaller—but far more irritating for ordinary people—bubble. The government announced a ban on reselling concert tickets above their original price. After years of bot armies and scalpers buying tickets in seconds to resell at astronomical prices, this marks the end of an era in which attending a favorite band’s concert almost required taking out a loan. Pressure from artists like Dua Lipa and Coldplay, combined with fan outrage, finally bore fruit—a small but sweet victory for the ordinary person and proof that at least one bubble can be solved with a simple law.
About the Author
