AI bubble watch: What has investors spooked right now

Not for the first time since ChatGPT debuted three years ago, anxiety is swelling about an AI bubble.

A steady stock sell-off and declines among some of AI’s biggest players—Nvidia, Microsoft, Meta—have made for the market’s most sluggish November since 2008. Tech execs have been fielding questions about dizzying numbers, and industry watchers are pondering the circularity of recent funding deals.

The stakes are higher than ever. The collective hundreds of billions that Silicon Valley is spending on AI infrastructure have accounted for most of the country’s economic growth this year, according to economists. Some experts warn the AI bubble is bigger than the speculative frenzy around the internet in the 1990s; it may even be multiple concurrent bubbles.

Bubble doubters say the technology is transformative enough to warrant the level of investment, and execs counter that business demand for cloud services remains strong. Nvidia may have also quelled some bubble fears this week with strong results for Q3 that sent its share price up around 4% as of Thursday morning.

In what may become a periodic series, we rounded up some of the news currently serving as tea leaves for AI bubble worries.

Nvidia dump: The chipmaker—the world’s most valuable company—has long served as the barometer for AI hype. So it hardly escaped our notice when three high-profile investors offloaded their shares in the company in recent weeks.

A recent regulatory filing showed that Peter Thiel’s hedge fund sold its entire stake in Nvidia—valued at $85 million as of the middle of the year—sometime in the third quarter. SoftBank also sold its nearly $6 billion stake in Nvidia, though the company said in an earnings call that the move was about funding its OpenAI investment, not about Nvidia itself.

And Michael Burry, the hedge fund investor of Big Short fame, bet against Nvidia earlier this month, arguing that its Big Tech customers are overstating the useful longevity of the company’s processors in their accounting. Burry also shared a warning over the weekend, comparing investment levels to past bubbles.

Execs weigh in: Google, which announced its flagship Gemini 3 model this week, is one of the only Big Tech companies to so far escape the November doldrums of its peers.

But Alphabet CEO Sundar Pichai told the BBC this week that “no company is going to be immune, including us,” to a potential AI bubble burst. The Google chief also said the level of investment is “both rational and there are elements of irrationality through a moment like this.”

Klarna CEO and AI investor Sebastian Siemiatkowski said he’s “very nervous” about the money that tech companies are spending on AI infrastructure. Hugging Face co-founder and CEO Clem Delangue said at an Axios event that “we’re not in an AI bubble, but an ‘LLM bubble,’” and that AI as a whole will continue to thrive.

Survey says: More than half of fund managers Bank of America polled this month already believe that AI is in a bubble, though the result was actually down 1 percentage point from the previous month. Nearly half (45%) viewed a bubble as the “top tail risk,” and for the first time in two decades, a majority of investors were worried that companies are overinvesting.