You’ve heard the “AI bubble” talk a thousand times by now. Every few weeks, someone compares AI hype to the late-’90s dot-com frenzy, investors get nervous, and then… nothing happens. Valuations keep climbing, the funding keeps flowing, and everyone moves on.
But UK analyst Julien Garran isn’t hedging his bets. He’s straight-up calling it: we’re in “the biggest and most dangerous bubble the world has ever seen.“ It is 17 times larger than dot-com, and four times bigger than the 2008 housing crisis. Woof.
Here’s his case (in brief):
- Ten AI startups with zero profits have gained nearly $1 trillion in market value over the past year.
- Meanwhile, the entire AI ecosystem runs on a funding treadmill — everyone except Nvidia is bleeding money, and there’s still no “killer app“ to justify the spending.
- In fact, he thinks there will never be a commercially successful app built on the back of a large language model (LLM) like ChatGPT.
- Garran’s most controversial take? AI can handle “bullsh*t jobs“ (his words) where nobody checks if you got it right.
So when does it pop?
Garran admits he can’t call the exact top; markets hit all-time highs just last week. But he sees warning signs: VC funding for AI startups is drying up because valuations are absurdly high. That leaves a shrinking pool of mega-investors (SoftBank, foreign governments, NVIDIA) to keep the party going.
Now what if he’s wrong? Garran sees two scenarios:
- The bubble lasts longer than expected, wasting more capital on projects that don’t generate real economic value. Future GDP suffers.
- Someone actually achieves “superintelligence,“ completely reshaping society. We either get utopia or dystopia, depending on who controls it.
For the record, he’s betting on option one.
The bottom line
Whether you think Garran is a prophet or a pessimist, his analysis highlights a real tension in AI: massive investment, limited profitability, and a lot of hope riding on breakthroughs that haven’t materialized yet. Even if AI doesn’t crash dramatically, a slow deflation could reshape the entire tech landscape and your job along with it.
If you want to compare Garran’s take to others in the industry, read our deep dive on the AI bubble (a long time coming) where we try to compile all the facts, figures, and angles of the AI bubble discussion and compare them head to head.
Editor’s note: This content originally ran in today’s newsletter send from our sister publication, The Neuron. To read more from The Neuron, sign up for its newsletter here.