The astronomical investments in artificial intelligence may not be building a sustainable future and could lead to a crisis even greater than the dot-com bubble.
Torsten Slok, Chief Economist at Apollo Global Management, has warned that valuations of AI-focused companies have worryingly exceeded even the peak levels of dot-com companies. He suggests that a crash even more severe than the early 2000s downturn may be looming. According to Slok, the only real difference between today’s top 10 AI companies and the dot-com firms of the past is that the former are valued much higher.
Referring to the historical trajectory of the dot-com bubble, Slok recalls how investors in the late 20th century poured billions of dollars into internet companies—many of which, after experiencing dizzying growth, suddenly collapsed. Numerous firms disappeared entirely, and even giants like Amazon lost a significant portion of their market value.
Slok warns that tech giants such as Apple, Microsoft, Amazon, Alphabet (Google), Meta, and even OpenAI have seen astronomical stock surges fueled by a wave of investment in AI projects—a growth he argues is grossly out of proportion with their actual revenue-generating capacity. According to him, most of the current stock market growth is being driven by the overperformance of just a few companies, a trend that is unsustainable.
While no exact timeline for a potential crash has been predicted, some recent events indicate unstable investment behaviors. From Meta’s $100 million bonuses to attract AI talent to OpenAI’s $14 billion investment in ScaleAI—which ultimately led to 200 layoffs—many of these bold moves reflect a dangerous pattern. Major investments by CoreWeave and Amazon are also part of this troubling trend. Slok believes a possible collapse could severely reduce the influence of big tech firms and lead to the downfall of emerging AI startups.
Slok emphasizes that even if AI remains a useful tool, it won’t need to be used as a buzzword for every new product. Just as the dot-com crash didn’t mean the end of the internet, the bursting of the AI bubble won’t spell the end of artificial intelligence. However, it will certainly mark the beginning of a reckoning for excessive and unsustainable investments.
