Investors Question AI Boom’s Profitability as Market Frenzy Shows Signs of Fragility
The AI Gold rush faces mounting skepticism as sell-offs, volatile rallies, and overpriced deals reveal cracks in the narrative. Stephen Yiu of Blue Whale Growth Fund warns the market has failed to distinguish between genuine innovators and speculative capital. "Every company seems to be winning," he observes, noting retail investors' reliance on ETFs obscures fundamental weaknesses.
Three sectors dominate spending: private AI startups raised $176.5 billion in 2025's first three quarters, while tech giants like Amazon and Microsoft pour billions into infrastructure vendors. Nvidia and Broadcom emerge as key beneficiaries of this arms race.
The euphoria recalls past tech bubbles, with Yiu cautioning that indiscriminate investments may soon face reckoning. "It's very important to differentiate," he stresses, as the bill for AI's infrastructure boom comes due.
