Indicators of an artificial intelligence investment bubble have begun to emerge more clearly, amid warnings from economists that the scale of “excessive” spending on this sector now exceeds even what the world witnessed after the famous “Black Tuesday” that paved the way for the largest economic crisis in the industrial age.

Despite Taiwan's TSMC (the world's largest semiconductor manufacturer) reporting record profits exceeding $40 billion for the second quarter of 2026, investor reaction was the opposite; the company's shares fell by 4%, leading to a 1.4% drop in the Nasdaq 100 index on Thursday, amid consecutive losses reported by Bloomberg.

Has the AI bubble actually burst?

Analysts believe the reason is the company raising its capital expenditure forecast for 2026 to between $60 and $64 billion, compared to previous expectations of between $52 and $56 billion, as companies like Nvidia—the cornerstone of the AI boom—continue to rely on TSMC for manufacturing their chips.

This massive spending push raises serious questions among investors about the sector's ability to achieve real and sustainable returns, especially with AI investments reaching about $1.6 trillion over the past decade without tangible returns commensurate with this level of risk.

The market reaction reflects a shift in global investment sentiment; positive financial news is no longer sufficient to maintain full confidence in the tech sector's ability to translate AI promises into real profits.

Is Nvidia in a financial bubble?

Fears of an “AI bubble” have become widespread views that go beyond individual warnings, turning into a growing collective conviction amid a state of anticipation and anxiety about the future of this “promising” sector, which, according to many, still sells illusions more than it achieves real accomplishments.

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