The launch of ChatGPT is November 2022 sparked a seemingly endless AI boom – but will the AI bubble burst?
It has become almost impossible for any technology company to not mention AI when marketing its products. AI feature wars have become a dominant trend among software companies whether that is CRM tools such as Salesforce or collaboration platforms like Microsoft Teams, Zoom, and Cisco Webex. Demand for AI-enabling GPUs has helped Nvidia’s value to surge peaking at around $1.3trn
AI market forecasts seem to back the hype. GlobalData’s AI Market Opportunity Forecast predicts strong growth over the next four years at an accelerating rate.
Yet, senior voices in the AI world, not least OpenAI chairman Sam Altman, and various financial institutions and investment companies have warned that, in their view, the AI market is a bubble that is at risk of bursting.
Gary Barton, Research Director for Enterprise Technology and Services at GlobalData, has highlighted reasons why there are warnings being sounded about an AI bubble burst.
Barton states: “AI is difficult to do well. Identifying where it can deliver value and creating the infrastructure and data lakes to support those use cases is not automatic. GlobalData’s conversations with enterprises highlight a failure rate of 90%-plus for enterprise AI proof of concept trials.
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By GlobalData“That means a lot of money is being wasted on AI. This can also be seen in the fact that enterprises are telling us that instead of wanting more AI features from their software platforms they are worried about paying multiple times for AI features that are included in various platforms that they do not in fact use. In addition, network operators are also of the view that AI has not yet had a significant impact on data traffic volumes or patterns.”
Inertia versus investment
This AI inertia is contrasted against a backdrop of heavy investment in AI. Nvidia’s share price growth is fueled by rapid build out of AI-ready data centers across the world. As well as investment by hyperscale cloud giants such as Microsoft, Google, and Amazon, a wave of ‘neocloud’ operators have also attracted significant investment in their AI-targeted, GPU-powered data center facilities. GlobalData’s research also reveals billions of dollars of investment in 2025 alone, in network infrastructure to provide connectivity to these new data centres.
Is this investment being wasted, or coming too soon? Is AI a busted flush that will go the same way as the Metaverse? Exact forecasts of exactly how AI will manifest are almost impossible because AI exists in many forms and is a fast-evolving technology. But the enduring value of AI means that even if there the current bubble bursts, AI will continue to be a mission critical technology for businesses and one that will impact all of our everyday lives.
Techno history backs against AI bubble burst
Barton continues: “After the Dot-com bubble burst the internet still remained an immensely powerful tool than enabled new ways of communicating and doing business. AI is at an early and uncertain stage. It faces technological, societal, and legal hurdles to its growth.
“However, although businesses are struggling to make AI work at the moment, the successes that have already been achieved mean that there is no doubt in its ultimate worth.
“AI has already delivered significant success in environments such as customer experience management. Most of us have used engaged with chatbots and while they are not universally loved, customer satisfaction surveys highlight that they are more popular than one might suspect. AI is delivering value in industrial contexts and is showing potential in medical applications. The more AI is experimented with the more value will be extracted from it. Businesses will learn from their mistakes and make the technological and structural changes needed to be more successful in the future. We are only at the beginning of AI.”
