The AI bubble may not be bursting, but tariff chaos is sure helping to deflate it

The ‘AI bubble’ isn’t bursting, but tariff chaos is helping deflate it

Anxieties about an artificial intelligence bubble on Wall Street are as old as ChatGPT itself. (Which is to say, those anxieties are firmly in their toddler years.) Is AI the new tulip mania/dot-com boom/collateralized debt obligation? Or is all the hype about the hype itself … overhyped? It depends (of course). The AI enthusiasm is certainly frothy, to borrow a bit of analyst jargon. A lot of smart people have found themselves on opposing sides of an increasingly partisan debate about the value of generative AI — the tech underlying chatbots like OpenAI’s ChatGPT, Google’s Gemini and, yes, even Apple’s hilariously useless text summaries. Semantics around the word “bubble” aside, it’s becoming clear that Wall Street may have gone too hard in funneling money toward the shiny new object out of Silicon Valley over the last few years. And if the technology’s shortcomings and questionable consumer applications weren’t enough to bring down the temperature? Just wait until tech investors are smothered by the ultimate wet blanket: the uncharted territory of Trump tariffs. The first quarter of this year has been a bruiser for tech stocks, dragged down by broader market uncertainty from tariffs. But there are specific concerns about AI, too — starting with the DeepSeek upheaval in January and rounding out with an absolute dud of an IPO last week from CoreWeave, an AI cloud computing startup backed by Wall Street darling Nvidia, which itself has shed $1 trillion in market value. The Nasdaq 100 index, which is disproportionately focused on tech, is down 10.5% this year — more than double the slump of the broader S&P 500.