The rapid rise of artificial intelligence has often been described as a bubble, but according to tech thought leader Faisal Hoque, it’s not just one bubble — it’s actually three. In a recent Fast Company analysis, Hoque argued that the AI market is inflating across financial speculation, infrastructure spending, and hype. This framework highlights both the opportunities and risks facing investors, businesses, and the public.
The First Bubble: Financial Speculation
The first of the AI three bubbles is financial. Investors are pouring billions into AI companies, often driving valuations far beyond what fundamentals can justify. Startups with limited products or customers are securing huge funding rounds, raising fears of a dot-com-style correction. When the hype cools, unsustainable business models could collapse, leaving investors exposed.
The Second Bubble: Infrastructure Spending
The second bubble involves infrastructure. Tech companies are investing heavily in GPUs, massive data centers, and energy resources to power AI models. While these investments are crucial, Hoque warns that they may run ahead of actual demand. Overcapacity risks wasting resources and could lead to financial strain for businesses betting too big, too early.
The Third Bubble: Hype and Expectations
The third bubble is the hype bubble. Media coverage, corporate claims, and public excitement sometimes exaggerate AI’s current capabilities. While AI tools like chatbots, image generators, and predictive systems are powerful, they still have limitations. Unrealistic expectations can cause disappointment, backlash, and declining trust if promises aren’t met.
Why the AI Three Bubbles Matter
Understanding these AI three bubbles helps stakeholders navigate the fast-changing industry:
- Investors should be cautious about speculative valuations and focus on companies with real, scalable products.
- Businesses need to balance infrastructure investment with actual demand to avoid overspending.
- Policymakers may need to regulate hype and ensure responsible messaging about AI’s potential.
- Public trust could erode if hype continues to overpromise while underdelivering.
Learning from History
Hoque compared today’s AI boom to historical manias like the tulip bubble and the dot-com crash, where over-excitement led to sudden collapse. The lesson: technology revolutions often create value long-term, but speculative bubbles around them can cause short-term volatility and harm.
Conclusion The expert’s warning about the AI three bubbles is a reminder that while AI has enormous potential, caution is necessary. Financial speculation, infrastructure overbuild, and overhype each carry risks that could disrupt the industry. To secure sustainable growth, stakeholders must stay realistic, invest wisely, and avoid being swept away by hype.
