AI Bubble Concerns Grow as Tech CEOs Warn of ‘Vibe Revenue’ and Overheated Valuations
Top technology executives are sounding fresh alarms about AI bubble concerns, noting that valuations in the artificial intelligence sector are rising far faster than real revenue. Speaking at the Web Summit in Lisbon, CEOs from DeepL and Picsart told CNBC that investor enthusiasm may be outpacing the industry’s ability to deliver sustainable profit. Their comments underline a growing unease within the tech world as massive capital continues to pour into AI infrastructure and startups.
In recent weeks, financial leaders such as Goldman Sachs’ David Solomon and Morgan Stanley’s Ted Pick have warned that AI valuations could soon face a correction. Those concerns intensified after “Big Short” investor Michael Burry accused major cloud providers of understating chip depreciation costs, suggesting profits at companies like Oracle and Meta may be inflated. Burry has reportedly taken positions betting against giants such as Nvidia and Palantir, signaling deep skepticism from one of the market’s most prominent contrarian voices.
AI executives themselves now appear to share these worries. DeepL CEO Jarek Kutylowski said signs of a bubble are becoming more visible, while Picsart CEO Hovhannes Avoyan criticized the rise of startups securing multimillion-dollar valuations despite producing what he called “vibe revenue.” This term, a spin on “vibe coding,” refers to companies gaining investor support based on AI buzz rather than real financial performance. Yet, despite the uneasy environment, CEOs maintain that the long-term value of AI remains undeniable.
Industry leaders like Lyft CEO David Risher say the distinction between a financial bubble and a technological revolution is important. While the money flowing into AI may be overheated, he argues that the underlying technology will continue transforming businesses with increased efficiency and automation. Demand forecasts for 2026 remain strong, though executives acknowledge that enterprises are still struggling to adopt AI smoothly. Many organizations have yet to fully integrate AI at scale, despite understanding its massive potential.
Even with warnings of over-exuberance, investment in AI infrastructure continues accelerating. A recent Accel report projects that AI data center capacity will require roughly $4 trillion in capital expenditure over the next five years. Some investors, however, believe those requirements may be exaggerated, with experts like Novo Capital’s Ben Harburg suggesting the industry may not need as many chips, as much energy, or as much capacity as previously claimed. For now, the debate continues between the promise of AI and the risk of an overheated market driven more by excitement than earnings.
source: cnbc