Is the AI bubble going to burst? We don't think so.

As if AI as a technology alone wasn’t disruptive enough, the biggest upset may be to come, with an AI bubble looming and entire economies holding their breath. As we all brace ourselves, we’re asking the same question: will the bubble burst? And if so, when? What will the ripple effects be?

As part of this year’s Tech Forecast, we dove into this question with the help of a dozen industry experts.

What is the AI bubble?

The “AI bubble” is a stock bubble 17 times larger than the one created by the dot-com frenzy, valued at $1.5 trillion (with some valuing it all the way up to $46 trillion). A stock bubble forms when price rises far beyond the actual concrete value of an asset as determined by solid earnings. These bubbles are often driven by hype, as in the aforementioned dot-com bubble, and investors often jump in more due to FOMO than actual value.

In fact, the OECD recently reported that the massive investments in AI are buoying the world economy, creating a picture of resiliency despite tariffs and other economic challenges. The OECD report is a good microcosm for this entire situation: the spending in AI creates an illusion that circumstances are better than they actually are.

So will the situation evolve as the dot-com bubble did? In a spectacular burst that wiped out trillions in market value?

Is the AI bubble going to burst?

Despite the hype, there are some good reasons to believe that the AI bubble is not sustainable:

• GenAI companies continue to struggle to find a path to profitability, all while spending big on resource-hungry data centers.

• Enterprises are also struggling to generate returns on GenAI, spending $30 – 40 billion in GenAI in 2025 and 95% getting zero return. This will likely cause AI hype to cool down in the C-suite.

• Circular deals between AI companies are artificially inflating actual demand. One of the most prominent of these deals involved NVIDIA investing $100 billion in OpenAI to build data centers that will run on NVIDIA chips.

• While “superintelligence” and “artificial general intelligence” are compelling ideas with near-infinite potential—and therefore a powerful draw for bullish investors—that future does not appear as imminent as those investors would hope, with underlying AI models plateauing in advancement at the moment.

• Investors are likely overexcited about AI models, according to OpenAI CEO Sam Altman, and “someone will lose a phenomenal amount of money” as a result. 

Sure, that makes it sound like the AI bubble could be reaching critical mass, but instead of bursting, we predict that the AI bubble is more likely to slowly deflate. There are a few reasons why:

• The main drivers behind AI investment, like Microsoft, Google, Meta, and Amazon, are billion-dollar companies with solid earnings and who can absorb large losses.

• On top of these billion-dollar companies, governments too are deeply invested in AI, viewing successful adoption as a matter of national interest.

• Investors will bet that GenAI is advancing on a quick upward trajectory and therefore are willing to wait a few more years to achieve ROI.

• In many cases, AI spending across enterprises is being folded into existing IT budgets rather than being treated as an isolated speculative investment. This means that when expectations reset, these budgets will adapt and reprioritize rather than collapse outright.

• The AI market is fragmenting into uneven winners and quiet failures rather than forming into some kind of monolith. That divergence, from cloud hyperscalers to infrastructure vendors to application-level startups, disperses pressure so that some segments collapsing doesn’t cause a catastrophic burst across the market.

How to survive the AI bubble burst—or deflation

Numbers in the stock market are flashy abstractions for most of us, so what does the AI bubble—and its potential deflation or otherwise—actually mean for you?

If you’re a tech practitioner, focus on the skills that matter most for your role and the specific use cases your business needs to use AI for. Whatever happens with this investment bubble, you’ll need to continue learning about these new innovations and employing them in your role to prove how you are enhancing your own value through these tools. 

At times, it will fall on you to educate those around you about AI itself as well as how to use it to serve business objectives. You can help your leaders and business ground the hype in actual value and results.

If you’re leading a team at your organization, you’ll want to focus on practical AI use cases that actually foster business results, whether the AI bubble expands, contracts, or explodes spectacularly. 

“I think there will be a huge pullback on AI investments as most projects fail to achieve ROI,” says Pluralsight expert and software architecture specialist Kamran Ayub. “This will lead to hiring more humans. Rather than going all-in on AI, companies will instead sprinkle it in to improve processes and find where it fits.”

Mike McQuillan, Pluralsight Author and Head of IT at Halls, adds, “I think the rush towards AI is a massive risk for the tech industry as a whole. The solutions are to continue to train people to become world-class designers and developers, so the upcoming generation of tech people can deal with the fallout and continue to build great solutions.”

Conclusion

Again, no one knows exactly what will happen with the AI bubble. Whatever happens, while the result will certainly ripple through economies and businesses, both tech practitioners and tech leaders will succeed following the same philosophies they have for years: continuous learning and growth applied in specific business contexts that create value.

Check out the 2026 Tech Forecast to read up on more trends, predictions, and in-demand skills going into this year!