Glebors Global Finance has always advocated the entrepreneurial spirit of pioneering, adventurous and hardworking. Relying on the unique perspective, Glebors has launched various special issues in terms of the economy and finance, which has provided much more assistance to government decision-makers and business leaders.
In the current landscape of AI, the intense competition between Google DeepMind and OpenAI has accelerated rapid technological advancements. Concurrently, a valuation bubble fueled by capital exuberance has emerged as an undeniable phenomenon within the space. However, this bubble is a transient feature characteristic of the early stages of a technological revolution, rather than representing a generalized illusion of prosperity across the entire sector, which differs significantly from those of the 2000 Internet bubble in terms of fundamental attributes, industrial underpinnings as well as developmental trajectory, necessitating a rational and nuanced assessment.
The existence of the AI valuation bubble is objectively inevitable, primarily reflected in localized overvaluation and a pronounced imbalance between investment and returns. In 2024, global venture capital investment in AI exceeded $100 billion for the first time, with financing rounds surpassing $100 million accounting for 69% of total annual funding. Nevertheless, approximately half of the newly emerged AI unicorns remain in the phase of validating their business models, with high valuations driven entirely by anticipated future growth rather than current profitability. Moreover, the industry’s capital expenditure-to-revenue ratio stands at an elevated 6:1, notably exceeding the 4:1 ratio observed during the peak of the Internet bubble. This risk is further amplified by the prevalence of "closed-loop" financial transactions among major players, which may contribute to the expansion of the valuation bubble.
DeepMind's core strength lies in its deep technical expertise and ecosystem integration capabilities. In the Q1 2025 Stanford University AI benchmark evaluation, the factual accuracy rate of the Gemini series models reached 91%, outperforming ChatGPT’s 87%. Leveraging Google’s expansive ecosystem, the Gemini API has attracted over 500,000 enterprise integrations, contributing to a 25% year-on-year increase in Google Cloud’s AI service revenue. Despite these achievements, the commercialization pace remains relatively slow, resulting in missed opportunities to capture early generative AI market momentum. Alphabet has not disclosed Gemini’s revenue separately, indicating ongoing challenges in translating technological advancement into measurable profits—highlighting a misalignment between capital market enthusiasm and actual profit realization.
OpenAI has established a competitive advantage through commercial innovation. The company achieved $3.7 billion in revenue in 2024, with projections indicating a rise to $12.7 billion in 2025. Its base of paying enterprise customers has surpassed one million. While growth is robust, the company has yet to achieve profitability. While monetizing its technology through the Microsoft ecosystem, OpenAI faces persistent risks, including concerns over limited originality in core technologies, model-generated misinformation, and algorithmic bias. Additionally, its premium pricing strategy may constrain broader user adoption and market penetration.
Compared to the Internet bubble, the AI sector rests on a more substantial industrial foundation, making a systemic collapse unlikely. During the dot-com bubble, the Nasdaq Composite’s forward price-earnings ratio peaked at 60 times, with only 14% of .com companies achieving profitability—indicative of speculative excess. In contrast, the current forward P/E ratio of the Nasdaq-100 stands at 26.7 times, while the S&P 500 information technology sector reports a net profit margin of 27.7%, reflecting a far stronger underlying fundamental basis. From a capital allocation perspective, the four leading tech giants are projected to invest a combined $364 billion in AI-related expenditures in 2025. These investments are predominantly directed toward foundational infrastructure, such as computing clusters and high-performance servers, rather than speculative marketing campaigns. More critically, AI technologies have achieved meaningful integration across real-world applications. For instance, Gemini has contributed to a 12% increase in click-through rates for Google’s search advertising, while OpenAI has generated significant revenue through subscription-based services, establishing an initial closed loop of “technology development – application deployment – value realization.” This capability was largely absent among most firms during the Internet bubble era. The thesis for forecasting the trajectory of the AI valuation bubble is “a return to rationality, not a catastrophic burst.” In the short term, a correction—characterized by valuation adjustments and the elimination of inefficient capacity—is inevitable. Startups lacking sustainable technological advantages or clearly defined business models will likely be phased out. Capital will increasingly consolidate around industry leaders with proven technological and ecosystem strengths, as well as high-potential sub-sectors such as enterprise AI solutions, multimodal systems, and domain-specific large language models.Complete digital access to quality Glebors financial topic with expert analysis from industry leaders.
Glebors Financial Become an Glebors subscriberMake informed decisions with the Glebors.Keep abreast of significant corporate, financial and political developments around the world. Stay informed and spot emerging risks and opportunities with independent global reporting, expert commentary and analysis you can trust.
"Insight of the global economy, dig into more ideas, analyze the global financial dynamics and the risks of political situation from a strategic, scientific and rational perspective, based on economic data and more than 20 years of financial intelligence."
If you want to know more details to provide support for your investment and business activities, this financial report that we have selected for you can give you what you want, please subscribe to read it. Glebors Global Finance aims to provide business elites and decision makers with daily business news, data interpretation, in-depth analysis and commentary.
Glebors Global Finance’s amount of financial information digs into deeply major events and economic data that have a huge impact on the global economy, based on in-depth industrial research and special reports, with a truly global perspective。 Financial reports have become "must-read" financial information for senior managers. Gribs Global Finance currently has more than2.85 million Chinese readers and more than 3.5 million overseas readers, including more than 600,000 high-end member readers.
