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"I wouldn't touch this stuff now," warned one financial analyst about the AI industry.
Several analysts are sounding alarms about the artificial intelligence industry being a major financial bubble that could potentially tip the global economy into a severe recession.
MarketWatch reported on Friday that the MacroStrategy Partnership, an independent research firm, has published a new note claiming that the bubble generated by AI is now 17 times larger than the dot-com bubble in the late 1990s, and four times bigger than the global real-estate bubble that crashed the economy in 2008.
The note was written by a team of analysts, including Julien Garran, who previously led the commodities strategy team at multinational investment bank UBS.
Garran contends that companies have vastly overhyped the capabilities of AI large language models (LLMs), and he pointed to data showing that the adoption rate of LLMs among large businesses has already started to decline. He also thinks that flagship LLM ChatGPT may have "hit a wall" with its latest release, which he said hasn't delivered noticeably better performance than previous releases, despite costing 10 times as much.
The consequences for the economy, he warns, could be dire.
"The danger is not only that this pushes us into a zone 4 deflationary bust on our investment clock, but that it also makes it hard for the Fed and the Trump administration to stimulate the economy out of it," he writes in the investment note.
Garran isn't the only analyst expressing extreme anxiety about the potential for an AI bubble to bring down the economy.
In a Friday interview with Axios, Dario Perkins, managing director of global macro at TS Lombard, said that tech companies are increasingly taking on massive debts in their race to build out AI data centers in a way that is reminiscent of the debts held by companies during the dot-com and subprime mortgage bubbles.
Perkins told Axios that he's particularly wary because the big tech companies are claiming "they don't care whether the investment has any return, because they're in a race."
"Surely that in itself is a red flag," he added.
CNBC reported on Friday that Goldman Sachs SEO David Solomon told an audience at the Italian Tech Week conference that he expected a "drawdown" in the stock market over the next year or two given that so much money has been pumped into AI ventures in such a short time.
"I think that there will be a lot of capital that’s deployed that will turn out to not deliver returns, and when that happens, people won’t feel good," he said.
Solomon wouldn't go so far as to definitively declare AI to be a bubble, but he did say some investors are "out on the risk curve because they’re excited," which is a telltale sign of a financial bubble.
According to CNBC, Amazon CEO Jeff Bezos, who was also attending Italian Tech Week, said on Friday that there was a bubble in the AI industry, although he insisted that the technology would be a major benefit for humanity.
"Investors have a hard time in the middle of this excitement, distinguishing between the good ideas and the bad ideas," Bezos said of the AI industry. "And that’s also probably happening today."
Perkins made no predictions about when the AI bubble will pop, but he argued that it's definitely much closer to the end of the cycle than the beginning.
"I wouldn't touch this stuff now," he told Axios. "We're much closer to 2000 than 1995."
The synthetic performer, says SAG-AFTRA, is "a character generated by a computer program that was trained on the work of countless professional performers—without permission or compensation."
Screen actors and their union are among those who on Tuesday condemned a computer-generated "actress" created by a newly launched artificial intelligence studio as "not a replacement for a human being," while urging talent agencies to eschew signing synthetic performers.
Billed as Hollywood's first artificial intelligence actor, "Tilly Norwood" was introduced by Particle 6 founder and CEO Eline Van der Velden, who has launjched a new venture called Xicoia, the "world's first AI talent studio."
One of over 40 digital personalities Xicoia says it aims to develop, Norwood has attracted the attention of real-life talent agents—a development that has drawn condemnation from the powerful Screen Actors Guild–American Federation of Television and Radio Artists (SAG-AFTRA) union, which represents more than 160,000 performers in film, television, voice acting, video games, and other media.
“SAG-AFTRA believes creativity is, and should remain, human-centered," the union said in a statement Tuesday, adding that it is "opposed to the replacement of human performers by synthetics."
The union continued:
To be clear, "Tilly Norwood" is not an actor, it’s a character generated by a computer program that was trained on the work of countless professional performers—without permission or compensation. It has no life experience to draw from, no emotion, and, from what we’ve seen, audiences aren’t interested in watching computer-generated content untethered from the human experience. It doesn’t solve any “problem”—it creates the problem of using stolen performances to put actors out of work, jeopardizing performer livelihoods and devaluing human artistry.
"Additionally, signatory producers should be aware that they may not use synthetic performers without complying with our contractual obligations, which require notice and bargaining whenever a synthetic performer is going to be used," SAG-AFTRA added.
Individual actors also slammed Norwood's rollout, with Melissa Barrera—who has starred in films including Scream and In the Heights—taking aim at any agent who might be tempted to represent the AI character.
“Hope all actors repped by the agent that does this, drop their a$$," Barrera said. "How gross, read the room."
Natasha Lyonne, star of Russian Doll and director of Uncanny Valley, said: "Any talent agency that engages in this should be boycotted by all guilds. Deeply misguided and totally disturbed. Not the way. Not the vibe. Not the use.”
Veteran television actor Chris McKenna addressed those who think Norwood "will only replace actors," writing on social media that the AI creation "needs no hairstylist, makeup, wardrobe, lighting, direction, transportation, rest, or lunch... the trickledown will be devastating."
Van der Velden defended her creation in a Sunday Instagram post, writing, “To those who have expressed anger over the creation of my AI character, Tilly Norwood, she is not a replacement for a human being, but a creative work—a piece of art."
“Like many forms of art before her, she sparks conversation, and that in itself shows the power of creativity," she added.
SAG-AFTRA has long opposed the use of AI performers, making the issue a key part of its 2023 strike against the Alliance of Motion Picture and Television Producers and last year's video game strike. The union has also backed legislation at the federal and state level to regulate AI.
The 2023 strike, which lasted 118 days, ended with SAG-AFTRA winning concessions including explicit consent, notification, and bargaining for the use of AI replicas of performers and safeguards against digitally generated characters replacing human actors.
"Instead of bending over backwards to appease Trump in an attempt to avoid his tariff bullying, it’s time for Starmer to show real leadership and stand up to him," said one campaigner.
Critics of the artificial intelligence pact signed Thursday by US President Donald Trump and UK Prime Minister Keir Starmer warned that the deal sacrifices the climate, data privacy, creators' copyrights, and British sovereignty on the altar of Silicon Valley profits.
Speaking at Chequers—the Buckinghamshire country estate of UK prime ministers in Buckinghamshire—Trump said that "we're taking the next logical step with a historic agreement on science and technology partnerships, and this will create new government, academic, and private sector cooperation in areas such as AI, which is taking over the world."
Laughing, Trump turned to tech bosses gathered for the event and—singling out Jensen Huang, CEO of chip-maker Nvidia—said: "And I'm looking at you guys. You're taking over the world, Jensen. I don't know what you're doing here. I hope you're right."
Along with Huang—who heads the world's largest publicly traded company—the CEOs of Apple, and ChatGPT creator OpenAI joined Trump on his UK trip.
Starmer said the deal involves more than $200 billion in total US investments and will create 15,000 jobs over the next decade. The prime minister named US companies including Amazon, Blackstone, Boeing, Citigroup, and Microsoft, and UK firms like AstraZeneca, BP, GSK, and Rolls Royce as being part of the deal.
Other companies involved in the agreement include Google and its AI laboratory DeepMind, OpenAI, Oracle, Salesforce, and ScaleAI in the United States and AI Pathfinder, DataVita, NScale, and Sage in Britain.
DeSmog UK deputy director Sam Bright reported Thursday that the investment bank led by Warren Stephens, Trump's ambassador to London, owns hundreds of millions of dollars in shares of tech companies involved in the AI deal, including Google parent company Alphabet, Microsoft, and Nvidia.
Like Amazon, Google, Meta, and Nvidia, Stephens—who is a billionaire—made a seven-figure donation to Trump's inauguration fund.
Prominent critics of the agreement include former UK Deputy Prime Minister Nick Clegg, who is also Meta's former president of global affairs. Speaking Wednesday at a Royal Television Society conference in Cambridge, Clegg said the deal leaves Britain with "sloppy seconds from Silicon Valley" and "is just another version of the United Kingdom holding on to Uncle Sam’s coattails."
Opposition to the tech deal was also widespread Wednesday at a central London protest against Trump's visit organized by the Stop Trump Coalition.
Nick Dearden, director of the campaign group Global Justice Now and a spokesperson for the Stop Trump Coalition, noted in an interview with Wired senior business editor Natasha Bernal that the details of the pact have not been made public.
"We have not seen the text of the deal. We don’t know what we have given away," Dearden said. "We know that some of the tech barons accompanying Trump want us to drop parts of our regulation, want us to drop the digital services tax, want us to make it easier for them to acquire and merge with each other to become even bigger monopolies, so we are worried about that.”
So Trump swept into the UK to be wined and dined by the King.Big Tech bosses came too, bearing pledges of huge UK investments (mostly for data centres).Our govt, desperate for good economic news, is boosting this as a win for the UK.But the *point* of US Big Tech is to monopolise the data.
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— Critical Takes on Corporate Power (@criticaltakes.bsky.social) September 18, 2025 at 5:14 AM
Gobal Justice Now trade campaigner Seema Syeda said in a statement:
This toxic technology pact that favors the interests of US tech bros and rich corporations over ordinary people must be opposed at all costs. It’s a democratic scandal that the public and Parliament have been left in the dark as to its contents to date, but what we do know should ring alarm bells. Instead of bending over backwards to appease Trump in an attempt to avoid his tariff bullying, it’s time for Starmer to show real leadership and stand up to him. We can’t let an egomaniac like Trump hold our rights and democracy hostage.
Clive Teague—who was at the London rally supporting Extinction Rebellion Waverley and Borders in Surrey—told Bernal that he does not oppose AI if it is powered by renewable energy.
"We can’t keep burning fossil fuels to keep feeding into these data centers, because it’ll swamp the requirements for the rest of the world," Teague said.
Global Justice Now also warned that the tech deal could expose National Health Service (NHS) patient data to exploitation, wweaken digital privacy protections, thwart regulation of AI, and limit the government's taxation options.
Also sounding the alarm on the US-UK AI deal are scores of creators and creative groups including Elton John, Paul McCartney, and the Writers' Guild of Great Britain, who decried what they say is the Starmer government's failure to adequately protect copyrighted works from unauthorized use by AI companies.
As the Prime Minister prepares to meet President Trump during the state visit, WGGB has joined over 70 of the UK’s leading creators + creative orgs in signing an open letter demanding the Government explains its failure to protect the rights of UK copyright holderswritersguild.org.uk/creators-ai/
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— Writers' Guild of Great Britain (@writersguildgb.bsky.social) September 16, 2025 at 2:44 AM
"Artificial intelligence companies have ingested millions of copyright works without permission or payment, in total disregard for the UK’s legal protections," they said in an open letter. "The first duty of any government is to protect its citizens—not to promote corporate interests, particularly where they are primarily based abroad."