Is the AI Bubble About to Collapse?

Speculation is now rife that the AI bubble is about to burst. Several analysts have raised concerns about companies making billions of dollars in investments in artificial intelligence, with no clear path to any returns on these investments. It is believed that this level of overinvestment would lead to a bubble similar to that of the dotcom collapse.

This can be seen in sensational headlines such as the WIRED’s “AI Is the Bubble to Burst Them All.” According to an MSN report, a recent study by BofA Global Research revealed that a majority of investors believed that AI stocks were in a bubble (i.e., 54% compared to 38% who believed otherwise). There are several factors behind this sentiment. It has been said that AI has shown limited or no progress when taking into account the hype and investment surrounding the technology.

In the world of content writing, the limitations of AI have become obvious. At EminentEdit, we have already pointed out the tendency of the software to hallucinate and regurgitate generalized content without offering any novel perspective, and have given advice on how to deal with these issues. You can check out the article here: How to Edit AI-Written Content.

In addition, all sorts of ethical questions have been raised regarding using AI in academics for tasks such as determining originality or AI scores, that is, the likelihood of AI writing your essay. To learn more about the ethical use of AI in academic contexts, you can check out these two articles: Is It OK to Use AI Write Essays? and  AI Detection Reliability: A Thorny Issue. 

However, most of the current concerns regarding AI are related to overinvestment. The technology is seen as costing way too much both in terms of energy consumption and data usage, while appearing stuck in terms of progress, profitability, and productivity. Several studies have questioned the ability of AI to actually deliver on the promise of increased work productivity that can yield tangible results for companies, as well as the science behind it.

AI bubble fails to live up to its hype

One of the biggest promises of LLM-based AI is the idea that it would lead to a wave of automations that would rapidly increase productivity and profits for companies. So far, such a promise has not paid off. An MIT study revealed that 95% of companies that adopt AI have seen neither profits or productivity gains from it.

There is also the ethical issues regarding AI and the environment. AI relies on data centers that consume a huge amount of energy. According to another MIT study, the carbon intensity of electricity used by data centers was 48% higher than what is average in the US. Finally, another major complaint of AI is just how unprofitable it is. None of the major AI companies are seeing any net returns of their investments.

A Harvard Business Review article has even gone as far as to say that “AI Companies Don’t Have a Profitable Business Model.” The losses in 2024 alone have been eye opening — OpenAI, $5 billion and Anthropic, $5.3 billion in 2024. It doesn't stop there. It has been projected that OpenAI will lose over $8 billion and Anthropic $3 billion in 2025. This is despite the billions of dollars being invested by large tech companies such as Google, Nvidia, and Microsoft. 

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Cite this EminentEdit article

Antoine, M. (2025, November 16). Is the AI Bubble About to Collapse?

EminentEdit. https://www.eminentediting.com/post/ai-bubble-collapse