The AI bubble isn’t about to burst, Forrester reckons, although businesses should prepare for a correction that could upend their suppliers, contracts, and prices. Spending on infrastructure has raced ahead of measurable returns, the analyst says, yet the financial strength of the companies funding the build-out is what keep Forrester from predicting an imminent crash. "Fears that an AI bubble is about to burst are premature," said Forrester emerging technology veep Brian Hopkins. "About nine-tenths of the money building today’s AI computing infrastructure comes from large, healthy technology companies paying out of their own cash flow. The risk is concentrated in a few places: a small number of builders under real financial strain, and circular financing deals with the AI labs." Conveniently, Forrester has developed an AI Bubble Model to help technology leaders monitor the risks and prepare. Its latest report, " An AI Bubble Burst Is Not Imminent ," notes what many in the IT industry, including The Register , have been saying for a while: that the hyperscale operators are committing a record share of revenue into capital expenditure to bring online more infrastructure to support AI development and use. At the same time, the boost in productivity doesn’t justify this supplier capacity build-out. Forrester calculates that the infrastructure investments break even only if AI raises US GDP by 5 percent by 2035. Published estimates suggest productivity improvements could provide about two percentage points of that uplift, leaving roughly $1. 3 trillion to come from other sources of value. A recent report from management consultants Bain & Company came to similar conclusions, estimating the AI industry needs to generate $6 trillion in annual revenue by 2031 to keep funding all the infrastructure it needs, and this will require new uses beyond simply enhancing employee productivity…
