Investors warn of global ‘hype bubble’ in AI

Investors warn of global ‘hype bubble’ in AI


AI start-ups are attracting record sums of venture capital, but some of the world’s largest investors warned that early-stage valuations are starting to look frothy, senior investment executives said on Friday.

“There’s a little bit of a hype bubble going on in the early-stage venture space,” said Bryan Yeo, group chief investment officer at Singapore sovereign wealth fund GIC, as part of a panel discussion at the Milken Institute Asia Summit 2025 in Singapore.

“Any company start-up with an AI label will be valued right up there at huge multiples of whatever the small revenue is,” he said. “That might be fair for some companies and probably not for others.”

Any company start-up with an AI label will be valued right up there at huge multiples of whatever the small revenue is

In the first quarter of 2025, AI start-ups raised US$73.1-billion globally, accounting for 57.9% of all venture capital funding, according to PitchBook. The surge was driven by funding rounds like OpenAI’s $40-billion capital raising, as investors raced to catch the AI wave.

“Market expectations could be way ahead of what the technology could deliver,” Yeo said. “We’re seeing a major AI capex boom today. It is masking some of the potential weaknesses that might be going on in the economy.”

‘Fear of missing out’

Todd Sisitsky, president of alternative asset manager TPG, said the fear of missing out is dangerous for investors, though he added that views were divided on whether the AI sector had formed a bubble.

Read: Crypto’s next bubble will be politically motivated

Some AI firms are hitting $100-million in revenue within months, he said, while others in early-stage ventures command valuations at between $400-million and $1.2-billion per employee. He said that was “breathtaking”.  — Yantoultra Ngui, (c) 2025 Reuters

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