Investors Fear a Financial Bubble Due to Mutual Investments by AI Companies
Investors are concerned about circular financing in the AI sector: major companies invest in startups that then purchase services from them. Analysts fear that such interdependence could amplify the consequences of a possible crisis in the industry.
The largest technology companies are investing in AI startups that use the funds they receive to purchase computing capacity and other services from their investors. As The Wall Street Journal notes, such financial ties are raising questions about the sustainability of the rapidly growing AI market.
Last week, Google’s parent company, Alphabet, experienced the largest one-day decline in its market value in its history, losing about $475 billion in market capitalization. At the same time, shares of data-center operator CoreWeave, which purchases equipment from Nvidia and provides computing capacity for AI, also fell. Analysts call the company a “canary in the coal mine” for the AI infrastructure financing market.
Investor concerns are growing amid the large-scale expansion of data centers and the sector’s high debt burden. Separately, the Bank of Korea warned back in July of the risk of “semiconductor Dutch disease”—an excessive concentration of resources in a single industry. At the same time, South Korean President Lee Jae-myung proposed nearly doubling government spending on AI and related semiconductor projects in 2027.
