Artificial Intelligence (AI) is the most talked-about technology in the world today. But recently, a major question debated by global economic experts and tech enthusiasts is whether this AI bubble is on the verge of bursting. Some market crashes in 2025 and 2026 have amplified these fears. For instance, in late June and across July 2026, South Korea’s KOSPI index crashed by 44% in just 40 days, wiping out $2.18 trillion in market value.

Let’s look at the reality of current AI investments and its future as of 2026.

1. The AI CapEx Supercycle and Massive Investments

Right now, the world’s leading tech companies—such as Microsoft, Alphabet, Meta, and Amazon—are investing hundreds of billions into data centers and AI infrastructure.

• Billions in Investments: Global AI investments are expected to exceed $2.5 trillion in 2026, with roughly half flowing directly into data centers and infrastructure. An estimate from Morgan Stanley also placed global spending on data centers between 2025 and 2028 at a staggering $3 trillion.
• Risk Asymmetry: Companies are investing heavily based on “risk asymmetry.” Tech leaders believe that underinvesting and falling behind in the AI race is far more dangerous than the financial risk of overinvesting right now.

2. Main Reasons for “Bubble” Fears

Many characterize the current market as a bubble due to the massive disconnect between current spending and actual revenue.

• High Costs and Lack of Profitability: Leading companies like OpenAI are burning through cash to sustain development. In November 2025, OpenAI projected it would hit $74 billion in operating losses in 2028 alone. Furthermore, the high development costs and the demise of projects like the Sora video model reflect deep vulnerabilities in companies trying to monetize AI products.
• Mounting Debt: The amount of debt taken on to build data centers has reached alarming levels. Analysts at Morgan Stanley estimated that debt used to fund data centers could exceed $1 trillion by 2028.
• Warnings from Financial Institutions: The Bank of England has warned of the growing risks of a global market correction due to the possible overvaluation of leading AI tech firms. Similarly, JP Morgan head Jamie Dimon stated that while AI is real, a lot of invested money will likely be wasted, raising the chances of a meaningful drop in stocks. Billionaire investor Ray Dalio has also noted echoes of the dot-com bubble in today’s overvalued tech stocks.

3. Why This Might Not Be the Next Dot-Com Crash

While some fear a crash as severe as the late 90s dot-com bubble, major institutions like Morgan Stanley and Goldman Sachs offer opposing views.

• Self-Funded by Cash Flow: A key difference compared to the dot-com era is that giants like Microsoft, Alphabet, Meta, and Amazon are funding their data center investments through ongoing cash flow, rather than relying strictly on debt or equity raises.
• Strong Cash Reserves: Morgan Stanley analysts point out that the median cash flow and capital reserves of the top 500 US firms are about three times higher today than during past bubble periods. Goldman Sachs’ chief equity strategist also argues that stock price gains are backed by actual profit growth, and forward price-to-earnings ratios remain well below dot-com era levels.

Final Thoughts

While a market correction is entirely possible, it is premature to definitively say the AI boom will violently burst exactly like the dot-com crash. As the technology continues to evolve, 2026 will serve as a crucial lesson for investors, tech companies, and consumers to think more realistically about the true, long-term value of AI.