Artificial Intelligence How to spot an AI bubble

Artificial intelligence has moved from the sidelines to center stage, with Super Bowl ads and record debt issuance underscoring just how fast capital is flowing into the space. Unlike the dot-com and crypto booms, today’s leading AI players are generally profitable hyperscalers with strong cash flows, tapping long-dated, investment-grade debt and creative financing structures to fund massive data center and infrastructure build-outs. That said, risks are rising around frothy pre-IPO valuations, circular vendor financing arrangements, potential overbuilding of capacity and real-world constraints such as power availability and grid expansion.

For advisors and investors, this suggests a market that is still early in its AI adoption curve but increasingly vulnerable to bouts of volatility if growth expectations reset or funding conditions tighten. The opportunity lies in selectively backing durable business models across equity, credit and utilities while remaining disciplined on structure, valuation and balance sheet strength as this cycle continues to play out.