The AI bubble debate is slowly making its way to Washington

"Are we in the middle of an AI bubble? Ask a lawmaker, and they probably won't have a definitive take for you. "If I knew that, I'd be in a different line of work," Rep. Ro Khanna, a Democrat who represents much of Silicon Valley, told Business Insider. The AI bubble debate has been raging in the tech world since August, when OpenAI CEO Sam Altman said that investors had grown "overexcited" about the technology."

"There are also concerns about circular spending patterns among tech companies investing in AI technology, and fears that companies won't be able to recoup the billions of dollars they're spending on data centers and other AI infrastructure. Bill Gates has explicitly compared it to the dot-com bubble of the late 1990s. However, many in the tech world remain confident that there's no bubble, citing continued high demand for AI products."

"Democratic Sen. Elizabeth Warren of Massachusetts said that while she was unsure whether there's a bubble, she's concerned by "how much of the economic activity in the stock market and across the country is driven by this one sector." "If it is overvalued, when that bubble pops, it's going to be felt everywhere," Warren said. "The concentration makes the economy far more vulnerable than it otherwise would be.""

Lawmakers and tech figures disagree on whether current AI investment levels constitute a speculative bubble. Some, including Bill Gates, draw parallels to the late-1990s dot-com bubble due to massive spending on data centers and AI infrastructure. Others in tech point to sustained high demand for AI products as evidence against a bubble. Concerns include circular spending among tech companies and the risk that firms will not recoup billions invested. Several lawmakers say they lack definitive answers, while some warn that concentration in the sector could amplify economic fallout if valuations collapse. One lawmaker called the situation a possibly "massive economic bubble" and opposed bailouts.

Read at Business Insider