Market Insight: AI Bubble Risk And Capital Cycles
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Executive Summary
This report examines the formation of the AI capital system, analysing how capital flows, infrastructure build-outs and market expectations may currently outpace verifiable productivity gains and cash flows. It defines the four distinct phases of this economic cycle, tracing the trajectory from the initial investment supercycle and hidden accumulation of structural stress, to visible market fracturing and inevitable systemic rebalancing. The analysis explores critical tension points – such as valuation concentration, the inference utilization gap and the enterprise return on investment (ROI) wall – revealing how current reinforcing loops may trigger a sharp correction in asset prices and capacity. It also highlights strategic playbooks for vendors and buyers, outlining how market participants can transition from narrative-led expansion to evidence-based deployment, to capture durable value in a post-bubble economy.About the Authors
Henry Kirkman
Industry Analyst
Henry is an Industry Analyst at Verdantix. His current research agenda focuses on quality management, field service management and industrial applications of AI, including Gen...
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Chris Sayers
Senior Manager
Chris is a Senior Manager at Verdantix. His current research agenda targets enterprise AI integration and adoption, AI market trends and agentic AI. Chris joined Verdantix in ...
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