🫧 Has The AI Bubble Already Burst?

In today’s newsletter I discuss if the AI bubble has already burst, Paramount Skydance wins the bidding war to acquire Warner Bros. Discovery beating Netflix, Zendaya and Tom Holland may have gotten married in a secret ceremony, Microsoft signed a $50 billion dollar deal with SpaceX’s Starlink, Anthropic lost their $200 million dollar contract with the Department of War and then Sam Altman’s OpenAI sold out and signed a new contract with the Department of War, over $10 million dollars a week in cryptocurrency wallets are lost when people die without sharing their passphrases with their loved ones, DJI just sued the FCC, and the sport of Curling is on the come up thanks to the recent 2026 Milan-Cortina Winter Olympics.

Let’s get into it!

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🫧 Has The AI Bubble Already Burst?

A lot of people lately have been asking if we’re in an AI bubble? The truth is it’s notoriously difficult to know if you’re in a bubble until it’s burst. Remember the dot-com bubble? Everyone thought those good times would last forever….until they didn’t. Now some of the biggest names in AI, like Nvidia and Palantir, and AI data center hyperscalers like Amazon, Meta, and Microsoft, are off their highs by as much as 15%-30%, so it’s safe to ask the question: Has the AI bubble already burst?

The excitement around AI has led to some insanely high stock prices for nearly any tech company that has even a tiny bit to do with AI. Those companies saw huge runups in their stock price; in some cases they saw their valuations more than double in the last few years. Now many of those same AI-related companies are trading well below their record highs. Most AI chipmakers have seen their stock prices drop by double-digits in recent weeks as investors are questioning if the pace of AI growth justifies those stock’s earnings projections and valuations. Then we have software companies, whose very existence is being threatened by the rise of AI. They’ve seen their stock prices drop by an average of 20% in the last year including Adobe, whose stock is down 27%, SalesForce whose stock is down 25%, and Chegg whose stock has dropped by 36%. Now some stock analysts are even asking if these companies will be made completely obsolete by AI in the next few years.

Let that sink in for a minute. 

Adobe reached its highest ever market cap of $322.20 billion dollars back in 2021. Today, Adobe’s valuation has fallen to approximately $112.05 billion dollars, representing a 65.22% drop from its all time high. Salesforce reached its peak valuation of $330.66 billion dollars in 2025, and now has a market cap of roughly $185.44 billion dollars, representing a 43.92% percent drop in a little over a year. Then we have Chegg, which even though they’ve recently tried to pivot from a textbook rental company to a digital learning company, they’ve seen their market cap drop 99% from a high of $13.99 billion dollars in 2021 plummet to approximately $71 million dollars today.

A 99% drop in market valuation! Are you serious? This is a company that is one step away from bankruptcy and being sold for pieces. That’s what AI has done to a single company in this market.

The astronomically high costs of everything AI-related is starting to weigh on the entire technology sector. This has led to a lot of uncertainty for people who are holding some of the once highest flying stocks in their portfolios and retirement accounts.

Scary stuff!

So you can understand why some people on Wall Street are questioning whether the AI bubble has already burst.

Now let’s take a look at some of those AI companies like Nvidia, AMD, and Palantir. There’s a lot of concern about the demand for AI chips going forward, and the massive cost of building AI data centers. Nvidia was trading at $108 this time last year in February 2025. It hit a high of $212 back in October 2025, and since then it’s fallen $29 from its peak, or 13.68% drop from its high to its current price around $183.

Advanced Micro Devices, or AMD (because who has time to say their whole name?) was trading at $98 in May 2025, before it rallied through the Summer and hit a high of $267 in October 2025, a rise of 172% in less than 6 months. Today AMD is trading at around $197, which is a fall of $70 or 26% from its high.

Palantir Technologies was trading at $83 back in February 2025, before it rallied to $207 in November 2025, up 150% in 10 months. Today Palantir is trading around $147, for a drop of $60 or 29%.

These figures show that the massive growth seen in AI companies like Nvidia, AMD, and Palantir in the past year, and how much their valuations have dropped as enthusiasm for AI stocks has begun to slow. Now let’s look at the so-called hyperscalers, which can be defined as large cloud services that provide state of the art AI chips from companies like Nvidia and AMD to companies like OpenAI and Anthropic who are building the Large Language Models, or LLMs, that are powering this AI revolution. Some great examples of hyperscalers are Meta Compute, Microsoft Azure, Alphabet/Google, and Amazon’s AWS.

Meta was trading at $655 last year before it rallied to $796 in August 2025, up 22%. Today Meta is trading back down around $656, for a drop of $140, or 18 percent from its peak.

Microsoft was trading at $388 last year before it peaked at $555 in October 2025, representing an increase of 43%. Microsoft is now around $400, which is a decrease of $155, or 28% from its high.

Alphabet, or as I’m always calling them Google, was trading at $167 back in June 2025 before they reached a high of $349 just a few weeks ago on February 3, 2026, for a gain of 109% in just 8 months. Alphabet is now trading around $308, off $41 from their high or 12%.

Amazon was trading at $205 dollars in June 2025 before peaking at a 52-week high of $258 in November 2025, up 26% in 6 months. Now Amazon is trading around $208, off $50 from its high, or down 19%.

As you can see, with some of the highest flying software stocks off their highs by as much as 20 percent, there’s a lot of fear in the markets that AI is going to eat software companyies lunch. The thinking goes that AI could replace the need for these software companies, and the services they offer, completely.

I’m, shall we say, skeptical!

People thought the same thing would happen during the dot-com bubble. There was no way that Pets.com was going to get all pet owners to shop at their newly launched website on that new-fangled Internet, when 95% of households weren’t even online yet. They were decades ahead of the market. Even today you have a company like Chewy, which I’ve used and love, and they only control around 41% of the online pet market. Just like dog food during the dot-com bubble, companies are either overly enthusiastic about their AI growth plans, or consumers and investors are highly skeptical of AI company’s promises and projections. Just because AI can do some things much cheaper and faster than humans or existing software companies, doesn’t mean it will replace them overnight….or ever. It just doesn’t work like that.

Jensen Huang has made a counter argument that agentic AI will use existing software companies and services instead of replacing them. He believes that AI can be plugged in and used as a tool by businesses to improve their existing workflows. This would make AI something that enhances existing companies rather than destroys them. You’d ask your AI agent to go out and do something for you, like book tickets to a concert, and it’d handle the entire process drawing on its knowledge that you like indoor seating instead of lawn tickets, and that $350 a ticket is too much, but you’d be willing to pay up to $200.

Then we have Jamie Dimon, CEO of JPMorgan Chase. He doesn’t think AI will replace people in the workforce, but don’t ask the 40% of people, or roughly 4,000 people, who used to work at  Jack Dorsey’s company Block. He just laid them off claiming “that AI tools now allow fewer employees to accomplish the same work.” Jamie Dimon said that he believes that AI will change how people do their jobs every day in various industries, and he sees that happen at his company JPMorgan Chase today, but AI isn’t replacing his employees or making them obsolete. Instead AI is making JPMorgan Chase’s workforce more efficient and productive. Jamie Dimon said that JPMorgan Chase is using AI to automate jobs that are time consuming and repetitive for employees, and they are reassigning employees who are affected by these changes to new roles within the firm where they can be more productive and boost the company’s bottom line. Many other companies are looking at how they can use AI to improve their own efficiency and profitability without having to resort to laying off employees. By focusing on growth and human productivity, rather than cutting costs through job layoffs, it shows that the technology can be a positive force for workers if it is managed correctly by leaders like Jensen Huang and Jamie Dimon.

So while some of the top stock market darlings of the AI revolution may be off their highs set back at the end of 2025, and some software company’s stocks may have sold off by as much as 20% out of fear for their viability in the new era of AI, I think it’s good for us to ask if the AI bubble already burst. I don’t think the answer is a simple yes or no solely based on the stock price of a few dozen companies at the forefront of AI. Like the dot-com bubble’s burst, I think it’ll be a while until we can definitively say the bubble has burst, but in the meantime never underestimate Wall Street’s ability to get behind an industry’s stock market rally….or sell-off.

Quick Hits

🏦 Business

Paramount Skydance won the bidding war to acquire Warner Bros. Discovery for $110.9 billion dollars, when Netflix dropped out on Friday right after an ominous visit to President Donald Trump’s White House. Hmm, I wonder what they discussed?

Paramount Skydance CEO David Ellisonhas said in an interview they plan on merging HBO’s app into the Paramount+ streaming service with 79 million subscribers, while keeping the HBO brand fully intact, and onboard all of Warner Bros. Discovery’s 123 million subscribers to create a single streaming platform with more than 200 million subscribers. A combined streaming service could bring in as much as $4.6 billion dollars in monthly revenue, and $55.2 billion dollars in annual revenue. Nice acquisition!

💍 Entertainment

The rumor is that Zendaya and Tom Holland have married in a secret ceremony. Where did this scoop come from? None other than Zendaya’s celebrity stylist Law Roach (Hollywood stylists have all the juicy gossip). The news of their potential nuptials resulted in a massive surge across all social media platforms.

So why’s this big business news? Both Tom Holland and Zendaya have earned massive paydays through their acting careers. Tom Holland has a total career box office gross of $10.7 billion dollars, and a reported net worth estimated to be $25 million dollars. Zendaya has a total career box office gross of $5.2 billion dollars, and a reported net worth estimated to be $40 million dollars. Together this power couple has brought in $15.9 billion dollars at the box office, and are worth an estimated $65 million dollars. Talk about a power couple!

📡 Tech

Microsoft has signed a $50 billion dollar partnership agreement with SpaceX to utilize their Starlink satellite network to bring high-speed internet access to millions of people around the world in global community hubs. The collaboration involves integrating Microsoft’s Azure cloud infrastructure  into SpaceX’s satellite constellation to provide download speeds of 100 megabits per second for thousands of schools and hospitals. Microsoft’s goal is to help bridge the digital divide for underserved populations in more than 75 different countries that currently lack reliable access to the Internet. We need more good news like this. I believe more people around the world deserve access to the Internet if it helps to lift them up out of poverty.

🐊 AI

On Friday, February 27 after a showdown at the Pentagon with Pete Hegseth, the Secretary of the Department of War (formerly and forever to be called by me the Department of Defense), Anthropic lost their $200 million dollar contract with the Department of War because the leadership of Anthropic, including co-Founder and CEO Dario Amodei, wouldn’t agree to the demands by the Department of War to remove Anthropic’s safeguards against mass domestic surveillance and autonomous lethal weapons. Following this news, downloads of Anthropic soared to the top spot on the Apple App Store as soon as the public learned about the ethical stance against the Department of War that Anthropic had taken.

Never one to miss an opportunity to speed up humanity’s demise, Sam Altman quickly signed a deal with the Department of War for OpenAI to integrate their technology into the Pentagon’s military systems. Following the news of OpenAI being awarded a new contract by the Department of War that didn’t guarantee the same safeguards that Anthropic was fighting for, customers of ChatGPT began canceling their monthly subscriptions to protest OpenAI’s new military partnership. This drop in revenue comes hot on the heels of OpenAI’s new $110 billion dollar funding round, which included capital from Nvidia, Softbank, and Amazon. Wonder if people will begin protesting them next?

🪙 Crypto

In a recent analysis by Robert Rhodin’s team over at KeychainX, they estimate that families lose roughly $10 million dollars every week because owners of digital assets, like Bitcoin, pass away without sharing their seed phrases and passcodes for self custody wallets that control. That adds up to around $365 million dollars a year in lost cryptocurrency. One of the best examples of this is James Howells, who lost a hard drive containing roughly 3.7 million Bitcoin when he threw it out while cleaning his office. Today his wallet would be worth more than $543.4 million dollars. And the biggest loss of Bitcoin belongs to the anonymous creator of Bitcoin Satoshi Nakamoto, who holds 1.1 million Bitcoin worth roughly $74.7 billion dollars. The wallets containing those Bitcoins have remained dormant for the last 15 years. It’s unknown if Satoshi Nakamoto lost access to the wallets, or if they just walked away from the billions of dollars in Bitcoin stored in the wallet. You can just chalk that up to the estimated 20 percent of the total supply of Bitcoin that is considered permanently lost. Ouch!

🚁 Drones

DJI just filed a lawsuit in the Ninth Circuit court against the Federal Communications Commission (FCC) to argue against the inclusion of DJI on the federal government’s Covered List, which prevents the sale of new equipment by DJI. DJI argues that the FCC acted without evidence, and that the decision harms 80% of the 1,800 law enforcement agencies in the U.S. that use DJI drones for police work.

Global revenue for DJI were expected to reach $63.6 billion dollars, with DJI controlling roughly 77% of the market. If DJI loses access to the U.S. market they could see a significant drop in revenue, to the point of possible bankruptcy. Talk about crashing.

🥌 Sports

The sport of Curling is on the come up thanks to the recent 2026 Milan-Cortina Winter Olympics. More than 1 billion people worldwide have been exposed to Curling, and it’s having a moment. Curling has been growing steadily for the last decade since mixed doubles Curling teams were introduced in the 2018 Pyeongchang Winter Olympics in South Korea.

In the 2026 Milan-Cortina Winter Olympics mixed doubles Cory Thiesse and Korey Dropkin competed earned the Silver medal for Team USA, becoming the first mixed doubles medalists for the United States, while Cory Thiesse became the first female American to win an Olympic medal in the history of Curling. That’s cool! (sorry for the Dad joke)

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The Business Behind The News is written, edited, and published by Chris Thompson.