on February 17, 2026
Over the course of the last few years, AI technology has grown exponentially and has completely dominated the tech world. If you’re using any piece of technology today, chances are high that AI features into it somehow. Many companies are investing huge amounts of money to either create proprietary AI tools, or to adapt to the AI trend. But are AI companies really as valuable as they seem to be? Are they actually generating as much profit as investors have hoped? Or is the AI bubble poised to pop?
This moment feels similar to the dot-com bubble of the late 1990s (which burst in the year 2000), although there are some differences. That era was defined by startups attempting to make a name for themselves in the budding internet landscape, while today’s primary AI investors are established companies that likely won’t go under if their investments don’t pay off. However, it is worth noting that those investments are substantial. A Morningstar article by Larry Swedroe summarizes this nicely, saying, “The artificial intelligence revolution has triggered unprecedented capital spending, with Big Tech firms planning to invest $5.2 trillion over five years. While markets have rewarded this spending so far, historical analysis reveals a concerning pattern: Infrastructure booms typically result in overinvestment, excess competition, and poor stock returns.”
Building data centers and other infrastructure, investing in research and development, and focusing on marketing efforts are all costly and time consuming. Additionally, few consumers are currently paying for this technology, and it’s uncertain whether they will be willing to do so in the future. Because of this the ROI is iffy, which is not a good sign for investors.
While poised on the brink of a potential bubble, other concerns about AI are being brought to light. One major concern is theft of intellectual property, writing, and art. AI models are trained on a wide body of work—whether images, writing, or other media—and the engineers of these models have not traditionally sought permission to use others’ works for this type of training. This has led to burgeoning class-action lawsuits and justifiably outraged creators. Additionally, the environmental cost of AI is quite high. New data centers are being built at a rapid pace, and those centers rely on water to keep their components from overheating. In fact, the Environmental and Energy Study Institute has found that, “Large data centers can consume up to 5 million gallons per day, equivalent to the water use of a town populated by 10,000 to 50,000 people.”
While all that seems worrying, any investors who are well diversified and thinking long-term should have nothing to fear. These types of investors do not need to worry much about a bubble bursting or a certain technology flopping. The key is to develop and maintain a portfolio that is focused on your objectives and is robust enough to survive many different market environments. That means diversification, relying on evidence-based strategies, and frequently checking in with a trusted financial advisor to reassess and, if necessary, rebalance your portfolio.
In short, the AI industry may experience some turmoil in the near future, but any investor who is prepared and thinks long-term should have nothing to worry about.