AI bubble bursts

The AI market faces significant turmoil, with the combined market capitalization of seven major tech companies plummeting by nearly $1 trillion amid concerns about economic slowdown and overvaluation. Analysts suggest that this downturn signifies the potential bursting of the AI bubble, echoing historical patterns of market exuberance followed by collapse, as seen in past investment bubbles involving railways, radio stocks, and internet companies. Recent earnings reports from tech giants highlight the disparity between lofty AI promises and actual financial returns, raising investor skepticism. Additionally, geopolitical tensions and disappointing economic data from both the U.S. and China contribute to market instability. Concerns regarding synthetic data use in AI development have also emerged, with studies indicating risks of model collapse when relying heavily on recursively generated data. The ongoing market challenges underscore the broader implications for the tech sector and its future growth trajectory.