IS a AI and chip economic bubble forming?

IS A CHIP ECONOMIC BUBBLE FORMING ? 

 In recent years, we can see that the AI Hype has become unprecedented and seen as much hype as possible. First off, AI demands have driven semiconductor and chip stocks like NVIDIA or TSMC into highly valued stocks. This also means for companies like Microsoft, Google and Meta pouring trillion of dollars in "advanced AI". Some of these promises are simply exaggerated because it is the “narrative momentum”, where newspapers would write to trigger many investors to invest in a particular industry. When risks are high, these newspapers would push the agenda of chip markets as the “future of AI doing everything for human”. This would make everyone excited about AI, “growth will keep going forever” but nothing lasts forever. This is parallel to the Internet Dot Com Bubble in the 2000s. 

The semiconductor and AI industry has a cycle of itself; the demand of chips surge around the world and the stock prices would increase massively, pulling much hype with it; but when the supply exceeds the demand for it, stock prices get pushed down. This is very risky because the whole chip market is basically high-tech companies owning most of the industry. If you just remove Nvidia, AMD, TSMC and Intel, you’re basically left with nobody that has that precise skill to design great chips. The market is almost empty without those big four companies. The AI tools right now we use are basically for free so when the income shuts down, these companies will sit on a pile of debt. 

In this situation of the world (written in September 15, 2025), export controls and tariffs between China and the US would also emphasize the riskiness of the chip market and Nvidia. For example, Nvidia lost around $600 million in one day, marking the most loss for an US company in one day, as competitors like Deep Seek, which is free to use and using less than 6 million dollars to build, were branded as “cheaper and more efficient”. With also the disruption of prices for the raw materials because of Trump Tariffs, these are risky moves and chip companies must carefully calculate their next move because their supply chains might break down.

Similarly, Meta, Nvidia, Microsoft, Google and OpenAI are telling the news that they are investing more than 155 billion dollars in 2025. They promises "futuristic, replacing human jobs AI". When we look at the reality, when you ask CHATGPT or Gemini a basic question, it would still get wrong and incorrect sometimes. It's a massive bubble where people are hyping it, yet it doesn't as efficient as the promises said. 

Yet, I must say the bubble hasn’t burst. The demand is still there. AI centers, EVs and electrics would still be produced so that it would drive the demand for semiconductors. However, there is still a risk that the AI industry is overvalued. To spot them, I think we should ask ourselves two questions to ourselves; are the orders slow ? Are those backlogs shrinking? We know them very least yet hype them up like new gold mines.