Professional investors are increasingly concerned about a potential AI bubble, with a particular worry around software firms, Robocap has found.
The firm’s latest global research with institutional investors and wealth managers managing $513bn in assets found that 30% said they are concerned about a possible AI investment bubble, while a further 70% said they are quite concerned.
However, the fund manager revealed that these investors are nearly three times more worried about a bubble in AI software than in hardware such as data centres.
More than four out of five (84%) of those surveyed said there is a potential investment bubble around software, such as frontier models, compared to 29% saying the same about data centres.
Jonathan Cohen, founder and CIO at Robocap, said: “The AI bubble debate has been running for a long time and will continue to do so as the sector continues to outperform.
“Institutional investors and wealth managers are clearly concerned about the risk of an AI bubble but the research shows the debate is becoming more nuanced with professional investors discriminating between different types of AI firms and concerns focusing more on software than hardware.
Robocap found that 66% of the professional investors based in the UK, US, UAE, Saudi Arabia, Singapore, Hong Kong, Germany and Switzerland believe that the debate around whether today’s AI stock prices are a bubble in five years’ time will depend on the sector.
Twenty per cent believe that today’s prices will be seen as a bubble, while 14% expect they will be seen as a bargain.
Furthermore, 99% of those surveyed believe that companies are spending too much on AI infrastructure, which has been a dominant theme in the record performance of US tech stocks.
However, the same proportion believes that the main US hyperscalers will increase (34%) or maintain (65%) spending on AI data centres in 2027.
Cohen concluded: “The bubble or bargain debate clearly has a long way to run with investors increasingly looking past the generalised AI hype to look for stocks which will genuinely reap the benefits of the AI revolution.”
