The AI boom won't burst all at once. It will pop in 'rolling bubbles': Macquarie
The AI investment boom is unlikely to end in a single dramatic crash; instead, Macquarie argues it will deflate through a series of “rolling bubbles”
The AI investment boom is unlikely to end in a single dramatic crash; instead, Macquarie argues it will deflate through a series of “rolling bubbles” as different parts of the AI ecosystem surge and then lose steam.Global AI-related investment is now running at about $850 billion in 2026, roughly $500 billion above the pre-AI trend, making it larger and faster than historic manias such as railways, canals, and the dot‑com boom, said Macquarie analyst Viktor Shvets in a report.Corporations, especially US hyperscalers, are rapidly exhausting internal cash, with debt issuance expected to reach around $180 billion and cape to-revenue ratios climbing above 50%, underlining how aggressively AI is being funded. Yet, annualised AI revenues are already estimated at close to $175 billion, enough to cover current operating expenses and depreciation, and growing roughly three times faster than previous IT waves, suggesting the boom is not purely speculative.Also Read | Chris Wood’s big warning: The specific risk that will finally trigger the end of AI tradeBIS warning: overextended but not emptyThe Bank for International Settlements has warned that AI now exhibits classic bubble characteristics, with extremely rapid capital deployment and increasingly complex off‑balance sheet vehicles and circular investment structures, which Macquarie says likely make current investment figures understated and more fragile than they appear.
“AI is a bubble that could suddenly derate, with considerable consequences for markets and economies,” the note cautions, framing the current cycle as historically extreme in both scale and speed.However, Macquarie stresses that adoption is running ahead of typical bubble patterns, with a $2 trillion contract backlog and heavy spending on data centres, memory and logic chips already visible in hard orders rather than just hype.Economic impact still small, labour strains risingDespite its market prominence, AI still accounts for a relatively modest share of overall economic activity, even as it increasingly shapes expectations for GDP growth and productivity. Macquarie warns that the real pressure points are emerging in labour markets, where lower hiring rates, declining education premia and signs of rising social polarisation point to early evidence of AI-related disruption that is not yet fully captured in official statistics.The report argues that AI risks driving “declining marginal utility and compensation of labor,” with job insecurity and wage pressures likely to intensify as automation scales.China’s cost shock: commoditisation is comingMacquarie sees a major structural threat in China’s push to commoditise the AI stack, much as it did in solar, electric vehicles and batteries.
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