2026 Outlook What's next for technology companies

AI bubble unlikely to burst next year even as doubt seeps into financial markets

- Krist Boo

Singapore investors have heard it before - warnings that a bubble is about to burst.

The hypothetical artificial intelligence (AI) bubble, tied to a rise in stock prices of Al-related firms, eager investors and feverish enthusiasm for data centres, has been compared to 1999 dot.com days, when hype outran real profits.

It started in late 2022 with the overnight fame of OpenAl's ChatGPT, and culminated in a year of frenzied deal-making in 2025: Firms such as Oracle, Nvidia, AMD and Amazon each pledged billions of dollars to OpenAl in anticipation of orders to fulfil the startup's yet-to-materialise demand.

But here is the problem: OpenAI expects to burn through billions of dollars before it turns in a profit US$115 billion (S$148 billion) until 2029, in fact before cash comes in, according to The Information in September. The tech news outlet did not cite a source.

These are all classic signs of froth, say some. But there are good arguments on why it is not. Here's a list.

AI IS A NARRATIVE THAT IS PLAYING OUT

Bears are worried that the world will be a glut of data centres when enterprises find insufficient compulsion to pay for this shiny new technology.

But people forget that the world is made up of parts other than enterprises that dare sit out what their competitors might effectively deploy.

Governments are pushing for connectivity, plans are under way for robots and autonomous buses and cars, and consumers are demanding more services and goods on the go, as well as lots of videos, songs and games. All that needs compute infrastructure.

In its report on the state of Al in 2025, consulting firm McKinsey wrote that while organisations have yet to show bottom line lifts from AI and many have yet to integrate the technology, 68 per cent of them are piloting, scaling or have fully scaled AI.

So, enterprise use of AI is moving.