The AI bubble: why markets are panicking about the future of artificial intelligence

Artificial intelligence company valuations are plunging amid fears that tech firms cannot build the vast data centres needed to deliver on their AI promises, sparking predictions of a major industry shake-up. The Nasdaq Composite fell 5.5 per cent this week, with Nvidia dropping 9 per cent. The sell-off follows Alphabet's 12 per cent share decline last week after reporting heavy AI spending without matching revenues, wiping $500 billion from its value. US midterm results favouring Democratic candidates skeptical of data centres and supportive of AI regulation have added pressure on operators like Applied Digital and Cipher Digital. The concerns are practical rather than technological, focusing on regulatory hurdles, power grid strain, and financial returns. Any slowdown in AI rollout could affect consumers through market instability and slower access to AI tools, though companies report continued progress in system performance.