“There’s a little bit of a hype bubble going on in the early-stage venture space,” said Bryan Yeo, group chief investment officer at Singapore’s sovereign wealth fund GIC. “Any company startup with an AI label will be valued right up there at huge multiples of whatever the small revenue is. That might be fair for some companies and probably not for others.”
The warning comes amid a surge of investor enthusiasm for artificial intelligence. According to data provider PitchBook, AI startups raised $73.1 billion in the first quarter of 2025, representing nearly 58% of global venture capital funding. That figure was inflated by OpenAI’s record $40 billion capital raise, but smaller ventures are also commanding eye-popping sums as investors scramble to stake a claim in what many see as the defining technology of the decade.
Yeo suggested the frenzy may be obscuring risks elsewhere in the economy. “Market expectations could be way ahead of what the technology could deliver,” he said. “We’re seeing a major AI capex boom today. It is masking some of the potential weaknesses that might be going on in the economy.”
Todd Sisitsky, president of U.S.-based alternative asset manager TPG, echoed concerns that the rush into AI reflects more fear of missing out than disciplined investing. Still, he noted there was no consensus on whether the sector had entered bubble territory.
“Some AI firms are hitting $100 million in revenue within months,” Sisitsky said. “But we’re also seeing early-stage ventures commanding valuations at between $400 million and $1.2 billion per employee. That is breathtaking.”
While the long-term prospects of artificial intelligence remain bright, investors say the current wave of capital is testing how far — and how fast — valuations can climb before reality catches up.