In brief
- The Monetary Authority of Singapore has warned that AI-linked valuations had reached “relatively stretched” levels.
- Companies like OpenAI and Anthropic have seen their valuations skyrocket over the past year.
- Analysts have compared current conditions to the late-1990s dot-com bubble.
The Monetary Authority of Singapore has warned that technology and artificial intelligence companies are trading at inflated valuations. In its annual Financial Stability Review released Wednesday, the regulator said that equity markets are seeing “relatively stretched valuations concentrated in the technology and AI sectors.”
The MAS said much of the recent rise in global equity markets has been driven by investments linked to AI, leaving many investors heavily exposed to the sector. It also warned that some large technology firms were relying on opaque financing structures that could mask leverage and amplify risks.
“Some Big Tech firms (primarily hyperscalers) have also turned to the use of novel and potentially circular private financing arrangements to fund their expansions,” the MAS wrote. “These include the use of special purpose vehicles, private credit structures and novel accounting treatment that could mask leverage and increase funding dependencies.”
The AI industry has grown at a breakneck pace, with valuations for private and public companies alike soaring. OpenAI, creator of ChatGPT, recently hit a $500 billion valuation and is reportedly targeting a $1 trillion figure ahead of a possible 2026 IPO. Anthropic has nearly tripled its value since March, from $60 billion to $170 billion.
An AI bubble?
The frenzy has drawn comparisons to the dot-com bubble, when speculative optimism inflated tech stocks beyond their earnings potential. Regulators and economists have warned that the current AI boom may be fueled as much by hype as by genuine productivity gains.
Jordi Alexander, CEO of trading firm Selini Capital, told Decrypt the economy needs a high rate of growth to sustain the elevated levels of government debt—and with most other sectors unable to keep up the pace, the AI sector has seen massive amounts of investment and attention.
“With the game-altering productivity gains from AI expected still in the distant horizon, questions of a temporary AI bubble are fair to ask,” he said.
“Many major AI companies will be financially exposed if the compounding revenue story for them does not play out. We see this as a possibility, though there is enough progress being made on the technology side that there is still hope it will live up to expectations.”
Nirav Murthy, co-founder and co-CEO of Camp Network, agreed that valuations have outpaced fundamentals. “We’re in a phase where capital intensity, circular deal structures, and opaque accounting can make growth look inevitable when it’s really just well-financed,” he told Decrypt.
But that doesn’t mean AI is a bubble. “It means the next leg has to be earned with real unit economics,” he said.
He added that if investor sentiment cools, the pain will show first in long-duration equities and private credit linked to data-center buildouts.
Despite the risks, Murthy noted that parts of the AI stack—particularly chipmakers and major platforms—remain profitable. That said, he also warned that unresolved intellectual property disputes could weigh on the sector. “We’re seeing models trained on questionable datasets, rights disputes kicked down the road, and legal risk treated as a line item,” he said.
“If the big players want durable profits, they need to lock in rights-clean, clearly licensed, provenance-verified data as core infrastructure.”
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