--- title: "The AI Bubble Is Bursting, Experts Say" description: "If the trillion-dollar AI industry in the throes of a gold rush crashes in the face of slight unpredictability, how much is it really worth?" date: "2024-08-06" modified: "2024-08-06" authors: - name: "Maggie Harrison Dupré" job_title: "Senior Staff Writer" link: "https://futurism.com/authors/mharrison" url: "https://futurism.com/the-byte/ai-bubble-bursting" categories: - "Artificial Intelligence" tags: - "ai" - "ai industry" - "stock market" - "the digest" --- # The AI Bubble Is Bursting, Experts Say ![If the trillion-dollar AI industry in the throes of a gold rush crashes in the face of slight unpredictability, how much is it really worth?]() *\Image: Getty Images\* ## Boom Is AI hype bubble popping? Some experts say yes. The stock market has seen a rough week, with a mass selloff [caused in large part]() by Wall Street recession fears and still-high interest rates triggering a sharp downturn. One of the hardest-hit areas of the economy [was the AI industry](), which saw the stock prices of Big Tech behemoths and major AI players like Microsoft, Google, Nvidia, Meta and more lurch downward. Per [*The Wall Street Journal*](), as of Monday the class of tech giants known as the "Magnificent Seven" — a list that also includes Amazon, Apple, and Tesla — had lost a collective $650 billion. The AI industry's reaction to the market fallout is significant, given how much money companies and investors have poured into the tech. As it stands, [per *Vox*](), AI is a *trillion dollar industry* — and with that kind of investment pouring in, you'd maybe think that it would have the kind of economic output that could better weather a market downturn. Clearly, though, this wasn't the case — and [once again](), experts are ringing the alarm bells. "Over the last year or so, the continued stellar performance from the Magnificent Seven has justified" high valuations, wrote equity William Blair equity researcher Richard de Chazal in an analysis on Friday, [according to *Fortune*](). "Now, however, when activity is only slightly disappointing, those large tech companies are being taken to the woodshed." ## Make It Make Sense In other words, if a trillion-dollar industry in the throes of a gold rush crashes in the face of slight unpredictability, how much is that industry really worth? Even analysts at Goldman Sachs seem to agree that some of the hype around AI has been visible in this week's downturn. "You get these waves of both investment-digestion and hype-reality," Brook Dane, a Goldman Sachs portfolio manager, [said in a Monday report](). "And the two of them play out across a multi-year horizon." This isn't to say that AI — generative AI products like OpenAI's ChatGPT or Google's AI Overview included — will suddenly go away. But right now, AI companies are [burning through]() [mountains of cash]() and have yet to produce an easily monetizable product that doesn't *also* make [embarrassing]() [errors](). Not a confidence-inducing business model! At the end of the day, proponents argue that AI is the future, which broadly speaking may well be true. This week's cratering, however, seems to signal that in its nascency, the hype-powered AI industry is still more of a house of cards than anything solid. **More on AI's questionable business model:** [*Microsoft Is Losing a Staggering Amount of Money on AI*]() ## Author At Futurism, I've reported extensively on the rise of AI as a cultural and business force shaping the media industry, and more broadly how those dynamics are changing how we all consume and share information and relate to one another. I'm also fascinated by public health policy and ethics, the role of emerging tech in politics and governance — and the powerful people and forces at those intersections — climate change, and the environment. My investigation on Sports Illustrated's use of AI-generated authors with fictional biographies won a 2024 Mirror Award for "Best Story on Media Coverage of Artificial Intelligence in Journalism and the Media" from Syracuse University's SI Newhouse School, I contributed to Niemen Lab's 2025 Predictions for Journalism series, and I've discussed my work for Futurism during appearances on NPR, CNN, the BBC, the CBC, and more. I grew up in rural Pennsylvania and attended the University of Massachusetts Amherst, where I played Division I field hockey for the Minutewomen as a midfielder. Since then, I've lived in New Orleans, Louisiana and Manhattan, New York. I spend my free time running, reading, perusing archival fashion, and searching for the world’s best negroni. I also have a debonair tuxedo cat, Westley, who's named after "The Princess Bride." ### Author social links [Bluesky]()