AI companies admit they’re worried about a bubble
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LISBON, Portugal — Top tech executives told CNBC they are concerned about a bubble forming in the AI industry, underscoring growing unease in the sector over rising valuations.
In recent weeks, markets have been reckoning with the idea that too much capital has been poured into the AI boom, clouding the outlook for revenue and real profits and calling lofty valuations questionable.
So far, warnings about overstretched valuations have come mostly from investors and leaders in the financial world. Goldman Sachs’ David Solomon and Morgan Stanley’s Ted Pick warned of possible corrections as valuations of some major tech firms reached historic highs.
The concerns were made clear this week by famed “Big Short” investor Michael Burry, who accused major AI infrastructure and cloud providers, or “hyperscalers,” of understating depreciation expenses on chips. Burry warns Oracle and similar companies are profiting Meta It may be greatly exaggerated. Recently announced put options that bet against Nvidia And palantir.
But CEOs of companies that are themselves developing artificial intelligence voiced concerns in interviews with CNBC at the Web Summit technology conference in Lisbon this week.
“I think the valuations are quite exaggerated at some points, and I think there are signs of a bubble on the horizon,” Jarek Kutylowski, CEO of German AI firm DeepL, told CNBC on Tuesday.
This sentiment was echoed by Picsart CEO Hovhannes Avoyan.
“We’re seeing a lot of AI companies doing tremendous valuations without generating any revenue,” Avoyan told CNBC on Tuesday, adding that it was a “concern.”
The market values smaller startups with “some noise and excitement revenue,” he said, referring to companies that are backed despite having minimal sales.
Vibe income is a play on “vibe coding,” a term that refers to using artificial intelligence to code without the need for deep technical expertise.
Demand for artificial intelligence is increasing
Despite concerns about valuations, the tech industry remains optimistic about the long-term potential of artificial intelligence.
Lyft CEO David Risher said there are reasons for optimism given the potential impact of artificial intelligence, but he acknowledged the risks.
“Let’s be clear, we’re definitely in a financial bubble. There’s no doubt about it, right? Because this is an incredible, transformative technology. No one wants to be left behind.”
Risher went on to argue that there is a difference between the financial bubble and the industrial outlook.
“Data centers and all the modeling, these are all going to have a long, long life because they’re transformational. They make people’s lives easier. They make people’s lives better… On the other hand, you know, financially it’s a little risky right now.”
As investors look for clues about what this will look like, tech CEOs also weighed in on their perspectives on 2026 AI demand from businesses.
“I think there’s a lot of demand and there’s a lot of interest. I think everyone understands that AI can do magical things to businesses and…we can all operate on another level when it comes to efficiency,” Kutylowski said.
Yet businesses are finding it difficult to “adopt” AI. “We’ll go further, but I don’t think we’ll be at a place where we can say that every organization, every organization, has this completely figured out,” Kutylowski said.
DeepL’s core product is an AI translation tool, but it recently launched a more general-purpose “agent” designed to perform tasks on behalf of employees.
“The demand is definitely there,” Francois Chadwick, chief financial officer of Cohere, a company that also focuses on enterprise AI, told CNBC on Tuesday.
$4 trillion capital spending outlook
Despite concerns about overextended valuations and massive capital expenditures, investment in AI doesn’t seem to be slowing down. A report released this week by venture capital group Accel showed that new AI data center capacity is predicted to reach 117 gigawatts by 2030, translating to nearly $4 trillion in capital expenditures over the next 5 years.
Approximately $3.1 trillion in revenue is needed to pay back this capital expenditure, according to the Accel report.
This year, a series of multibillion-dollar deals have been announced by companies such as Nvidia and OpenAI, aiming to develop data center capacity around the world to meet demand.
Philippe Botteri, a partner at Accel, said three main factors will drive that revenue: more powerful AI models that require the capacity to be trained, the use of new AI services and “the agent revolution in the enterprise.”
“Agent” is a term often used to describe a type of AI tool that can automatically perform tasks on behalf of users.
But not everyone believes that it is necessary to spend a large amount.
Ben Harburg, managing partner of Novo Capital, says that the figures discussed by major technology companies for future investments may be exaggerated.
“We’re hearing these crazy headline numbers about how much energy is going to be needed, how many chips are going to be needed, but I still think there’s more of a bubble forming here on the front end than there is on the actual product front,” Harburg told CNBC on Tuesday. he said.
“I think we’re starting to realize there’s probably an over-exuberance around data centers. Even Sam [Altman]I think they’ll privately acknowledge that they need fewer chips than they did when they started out, they need less capital than what they started out with. “They need less energy than when they started out.”
