The major U.S. technology companies — including Microsoft, Alphabet, Amazon and Meta Platforms — are set to report their July-September earnings this week, and one of the key market questions is whether the recent AI-investment boom has spun into a speculative bubble.
On the one hand, these companies continue to pour massive sums into AI infrastructure—together expected to spend about US $400 billion this year on cloud, data-centres and AI hardware. However, the returns for many AI initiatives remain uncertain: one study cited found that of over 300 projects only around 5 % delivered measurable gains, and many projects stall at the pilot stage.
Compounding the concern are complex deal structures and financing arrangements reminiscent of the late-1990s dot-com era: for example, circular investments (companies both being vendors and customers of each other), large debt-funded infrastructure deals, and valuation growth decoupled from current earnings.
In summary, while revenue growth remains solid for the tech giants and balance sheets generally healthy, the market is increasingly questioning whether the current enthusiasm for AI is fully justified by near-term fundamentals. How these companies articulate the monetisation of AI, and whether they can deliver the promised gains, will be pivotal in whether this phase becomes a lasting transformation — or echoes a bubble burst scenario.
