The “AI bubble” refers to the current period of explosive hype, investment, and valuation in artificial intelligence technologies—especially generative AI like large language models. A “burst” would mean a sharp correction where expectations crash into reality, much like the dot-com bust of 2000–2002. Below are the symptoms you’d likely see when (or if) it happens, grouped by category.
1. Financial & Market Symptoms
Symptom
What it looks like
Plunging stock prices
AI darlings (Nvidia, Microsoft, OpenAI investors, etc.) drop 50–90% in weeks. Market cap evaporates by trillions.
Venture capital drought
AI startup funding rounds dry up. Series A/B valuations collapse from $1B+ “pre-revenue” to sub-$100M.
Mass layoffs in AI companies
10,000+ engineers, researchers, and “prompt engineers” laid off in a single quarter.
IPO window slams shut
No more $10B+ AI IPOs. SPACs and public offerings canceled.
Crypto/NFT-style token crashes
AI-related tokens (e.g., FET, AGIX) lose 95%+ value overnight.
2. Corporate & Operational Symptoms
Symptom
What it looks like
“AI washing” backlash
Companies quietly remove “powered by AI” from marketing. Products rebranded as “automation” or “analytics.”
Failed ROI on AI pilots
80% of enterprise GenAI projects canceled after failing to show >5% cost savings.
Hardware glut
Millions of unused H100/A100 GPUs flood secondary markets at 30¢ on the dollar.
Talent exodus
Top AI researchers leave for academia or “stealth mode” startups; compensation packages shrink.
3. Technical & Product Symptoms
Symptom
What it looks like
Plateau in benchmark gains
SOTA models improve <1% on MMLU/GLUE despite 10× compute. “Scaling hypothesis” stalls.
User fatigue & churn
ChatGPT daily active users drop 70%. “Wow” moment replaced by “meh” (hallucinations, high costs).
Regulatory hammer
EU AI Act fines, US executive orders, or China’s crackdowns kill marginal use cases.
Energy backlash
Data centers blamed for blackouts; AI training clusters paused due to grid constraints.
4. Societal & Cultural Symptoms
Symptom
What it looks like
Meme stock reversal
r/WallStreetBets turns bearish; “AI to zero” becomes the new “GME to the moon.”
Media narrative flip
Headlines shift from “AI will replace lawyers” to “AI hype was the biggest scam since WeWork.”
Job market whiplash
“Prompt engineer” roles vanish from LinkedIn; CS graduates pivot to fintech or cybersecurity.
Investor PTSD
VCs swear off “pre-profit” AI bets for a decade (like biotech post-2002).