singapore – Investors in Singapore have heard warnings before that the bubble is bursting.
The virtual artificial intelligence (AI) bubble, coupled with rising stock prices for AI companies, eager investors, and a frenzy for data centers, has been compared to the dot-com era of 1999, when hype outweighed real profits.
It started in late 2022 with the overnight fame of OpenAI’s ChatGPT, and culminated in 2025 with a frenzied year of deal-making.
Oracle, Nvidia, AMD, and Amazon each pledged billions of dollars to OpenAI
In anticipation of orders to meet the unrealized demand of start-ups.
But here's the problem. According to The Information in September, OpenAI expects to burn through billions of dollars (actually US$115 billion (S$148 billion) by 2029) before turning a profit, with cash coming in. The high-tech news outlet did not reveal the source.
Some say these are all classic signs of bubbles. But there are plenty of arguments as to why this is not the case. Here is the list.
Bears worry that if companies decide there isn't enough enforcement to pay for this shiny new technology, the world could end up with a glut of data centers.
But people forget that the world is made up of more than just businesses, and that they deliberately ignore what their competitors might effectively introduce.
Governments are pushing for connectivity, plans are underway for robots and self-driving buses and cars, and consumers are demanding more services and goods on the go, as well as more videos, music and games. All you need is a computing infrastructure.
Consulting firm McKinsey says in its 2025 State of AI report that organizations have not yet shown revenue improvements from AI and many have not integrated the technology. Of these, 68% are piloting, expanding, or have fully deployed AI.
Therefore, the use of AI in companies is progressing.
In fact, marketers are leveraging this technology to disseminate content, drive programmatic media buys, and generate personalized leads around the clock.
Physicians point to AI enhancements in diagnostic imaging, predictive analytics, and operational automation to reduce clinician burnout and wait times.
in Note As of December 11, Goldman Sachs Research analysts predict that AI will become part of the overall data center. The market is expected to double to 30% over the next two years, taking share from traditional and cloud workloads.
“We think (data center) occupancy will remain tight through the medium term until the market loosens,” said Jim Schneider, senior equity analyst at the investment bank.
This means data centers will still be in demand in 2026.
OpenAI is at the center of this story, a private reputation built more on possibility, surrounded by governance drama and high expectations.
Throughout 2025, tech companies including Oracle Cloud Infrastructure and chipmakers Nvidia and AMD signed forward-looking deals with the startup totaling $1.3 trillion without dizziness.
Critics of “circular trading” say OpenAI's backers funnel billions of dollars into startups, hoping that the money will then be returned to them to buy chips, cloud and data centers to supplement “artificial profits.”
Analysts point to low interest rates and the coffers of cash-rich tech giants that have flooded AI startups and infrastructure projects with cash.
In the next fiscal year, Meta, Alphabet, Microsoft, and Amazon are expected to collectively spend more than $400 billion in capital spending, primarily in AI infrastructure.
However, these companies have strong military funds.
In the last fiscal year, we generated a total net income of over US$300 billion and had combined cash reserves of over US$200 billion.
As an example, NVIDIA ended fiscal year 2025 with more than $43 billion in cash, cash equivalents, and marketable securities, and virtually no net debt. This provides a huge cushion against a single customer hard landing.
The talk of interest rate increases has somehow eased.
In December, the Federal Reserve lowered its target range for the federal funds rate by 25 basis points to 3.5% to 3.75%, marking the third rate cut in 2025.
US President Donald Trump has indicated that he will nominate his own candidate to replace Federal Reserve Chairman Jerome Powell in 2026.
Will be a believer in lower interest rates
“pretty”.
Americans face midterm elections in November 2026, and observers expect the president to seek easy monetary policy to boost growth.
So the bets are: The money will keep rolling in.
Nvidia spent much of 2025 trading at price-to-earnings (PE) multiples in the high 40s to low 50s, well above both the S&P 500 average and the company's history before the AI boom.
If that’s not the rise of AI, what is?
But it's useful to note that much of Big Tech is at less extreme levels. As in December, PE multiples for Meta, Alphabet, Microsoft, and Amazon primarily hovered in the 20s to mid-30s.
As of late 2025, the average 12-month P/E ratio for the S&P 500 is actually around 30x.
Compare this to the dot-com boom of 1999, when companies like Cisco, Intel, and Oracle traded at multiples ranging from 40x up to over 200x.
Microsoft, Meta, Nvidia, Amazon, and Alphabet had a market capitalization of about $16 trillion as of December, or about 30% of the global market. Total value of S&P500.
these Big 5 companies have established a high degree of diversification and integration across their AI stacks to protect against single points of failure.
For example, Google and Amazon use their respective models to both build and power their infrastructure cloud layers.
Both companies are also developing their own chips.
These players dominate in their core businesses, such as Google in search, Amazon in cloud and e-commerce, Meta in social media, and Microsoft in cloud and enterprise tools.
Nvidia's business spans an ecosystem of data center, networking, software, and gaming businesses, and even hard landings with OpenAI can be mitigated.
Therefore, even if demand for AI slows, the stock market is unlikely to reach ground zero.
The rise of China's AI models, robotics, and related technologies threatens to fall on the Party in 2026, but these big tech companies have enough influence to absorb the shock.
Retail investors in Singapore are most likely to buy US stocks compared to retail investors in Hong Kong, Japan, China, Taiwan and Australia, according to investment management firm Fidelity International. Note issued in June.
They like tech stocks the most in their portfolios, followed by healthcare and financial services.
What these investors need to worry about is volatility, investment experts say.
Sean Ng, who writes the Al for Allocators blog, told The Straits Times that there is too much focus on frontier research labs and technology companies, even though traditional industries are likely to power the next wave of the AI cycle.
In 2026, companies continue to move AI agent proof-of-concepts into real-world workflows.
“As productivity gains spread, their value is likely to accumulate disproportionately in capital rather than labor, providing a permanent tailwind for stock markets. There will be some big winners, and there will also be notable losers, so investors should still expect increased volatility and dispersion among companies,” the former said. executive From the Cleveland Clinic Investment Office.
In research Note Analysts at Standard Chartered said in December they expected the debate to be intense. About stock prices and valuations in 2026.
And they will be disproportionately focused on US stocks and its technology sector.
“This debate is expected to continue into 2026, with a bout of volatility likely if high expectations are not conclusively exceeded,” they wrote.
Analysts added that stock prices will rise in 2026 as companies report better profits, especially in the US and Asian markets outside Japan.
At JP Morgan Wealth Management, Outlook 2026 Reportwrites that while the performance of recent AI models has stalled, the next breakthrough could come from agent AI.
The report's authors believe that growth will continue.
“We believe adoption will continue. A survey of U.S. companies shows that AI integration is steadily increasing, with 10% of companies reporting that they are currently using AI to produce goods and services,” the report said.
“I don't think the bubble is about to burst,” he said, adding that he believes tech stocks will continue to drive the market's rally.
