AI bubble is popping, and big tech's wild stock swings show it
The AI bubble is popping; we just don't know it yet
Big tech's Q2 earnings reveal an AI bubble under strain: Apple's stock dropped 10% on a warning about component costs, IBM lost more value in a day than since Black Monday, and Meta's free cash flow collapsed due to massive data center spending. Investors are swinging wildly, with Amazon up 15% despite opaque accounting. The Register's editors dissect the numbers, noting that demand for AI is concentrated in a few labs, and advise IT teams to avoid going all in on frontier AI products.
The AI bubble pop is already here, we just don't realize it yet.
- cmiles8
Outside a relatively small world of circular investment and FOMO feeding FOMO the general consensus seems to be “let it burn.”
It appears very unlikely we will ever see an IPO of OpenAI. Anthropic appears less doomed, but still iffy at best. Tons of other large, but little discussed, AI startups are just dead-companies-walking at this point.
The likes of AWS are showing good headline numbers but are taking out massive debt to build infrastructure that looks increasingly unneeded. Those with capacity are looking to offload it, quickly. Yes AWS has “committed contracts” for this capacity but if those commitments are with shaky AI startups then it’s mostly just fluff PR and these hyperscalers will get left holding the bag on all this debt.
- digitcatphd
I would argue we still have not even really gotten started.
What do we have in the decade ahead? Robotics in every household, models 10x+ faster and more intelligent than today.
Really no significant impact in life sciences, R&D, and 'offline' world / robotics today as of yet, which is where most of the value will live.
- lluisantoni
There is something I have been pondering recently. If we compare the cost of AI subscriptions (let's say Claude's 100/month) to a median developer salary (let's say 100k/year to 200k/year), the difference is orders of magnitude. This fills like a gap that needs to close. I suspect llms are too cheap right now but will raise their prices to a point where only big companies will be able to afford subscriptions to use them. I think soon we will see models that are only sold at very high prices.
- Hoasi
Of course we know it. It’s been obvious since at least 2023. Everyone in AI oversells, except a few companies that built an actual business with revenue, like Midjourney.
There is no AGI coming anytime soon no matter how much hype is being thrown around. We are not in the singularity. However, peak bullshit is NEAR.
- feverzsj
It's obvious. Most people were expecting this.
- pu_pe
> And the fundamentals here are OpenAI and Anthropic, which are massively valued companies. They have humongous commitments and are generating real revenue on the order of twenty billion a year.
I think the size of their commitments is predicated on demand. Anthropic's annualized revenue run rate is now close to $50 billion, a fivefold increase from a year before [1]. They are making big investments, like $200 billion on Google's TPUs over the next five years [2], but those numbers seem justified by their expected revenue this year alone. If Anthropic cannot capture that revenue, someone else will.
Stock market valuations are a different beast, I personally think we have been due for a correction for ages now. But criticism of AI investment and particularly betting that it will all come crashing soon appears misguided to me. I can see a future where AI expenditures shifts around, not a future where everyone simply stops spending in AI all of a sudden.
[1] https://www.marketscale.com/industries/software-and-technolo...
[2] https://www.resultsense.com/news/2026-05-06-anthropic-200bn-...
- keeda
> If you look at most big tech earnings this quarter, with the exception of Amazon, almost all others lost significant value after reporting. Microsoft, Alphabet, Meta, and Apple did.
Microsoft spiked on earnings, and is now actually about ~24% above it's pre-earning level.
Alphabet did lose about 7% the day of the earnings, but it recovered and now, after MSFT earnings, is actually 9% above the pre-earnings level.
Meta dropped 10% on earnings but is now back to its pre-earnings level.
Apple dropped ~10% and has not recovered (yet) but it's also famously "sitting out the AI bubble", so not sure why it's included here other than a "tech stock that went down."
Oracle has been dropping forever but after Microsoft's earnings it's climbing again.
If you zoom out, the stories change, and as you keep zooming out, they keep changing all over again.
My point is, 1) reading stocks in isolation is like reading tea leaves, and 2) if you want to point to any stocks, you should make sure they support your narrative.
- welwala
Wow I hope this is true. This can only be good for the world.
I'm sure AI will still come but it is too disruptive now. It needs a slowdown. As usual all the greedy investors are to blame.