AI  - The Next Economic Boom or the Next Tech Bubble?

For advertisers and ad-tech leaders, the rapid ascent of artificial intelligence has opened a new frontier of promise - and risk. Behind the hype, more and more experts are warning that the AI surge could carry echoes of the dot com bubble, with fallout that would reverberate through global markets and reshaping economies globally and impacting how advertisers spend on media and engage consumers. For both advertisers and ad-tech companies, the stakes are enormous. An overheated AI market is not good for anyone.  When the fanfare around AI is all consuming and not all solutions are truly AI driven, an over-hyped market could destabilize not just tech stocks, but also the tools and systems agencies and platforms integrate to drive better results. Many are betting their futures on AI driven metrics, personalization, and creative automation - but, consumers and brand safety could suffer as inflated valuations/market momentum push platforms toward aggressive monetization schemes. Alternately, the industry could contract abruptly, limiting competition and creating big gaps to make up in inventory and performance.

A recent MIT report revealed that 95% of companies investing in generative AI have yet to see any financial returns, a sobering number when valuations of AI firms are climbing into the stratosphere. OpenAI’s Sam Altman himself has called some valuations “insane,” and the markets have already shown jitters. Palantir dropped nearly 10% in one week, while Nvidia, Oracle, and AMD all lost ground. Since most major pension funds and ad-tech investors are entangled in these stocks alongside giants like Amazon, Google, and Meta, even small corrections could ripple into media budgets, performance metrics, and consumer engagement costs.

There is precedent for these concerns. As Forbes noted, the 1990s telecom buildout fueled e-commerce, but also triggered catastrophic bankruptcies when demand didn’t immediately meet supply. Sometimes it takes years for the market to truly embrace new technologies; mobile advertising is a great example of this dynamic. Optimists say building out AI capabilities are tomorrow’s utilities, critical for powering on-demand AI services. Yet, skeptics wonder if we’re building against the right infrastructure or flooding the market with too many notions that can’t fulfill their promise. The risk is that the future may not pay off fast enough, if at all.

On a positive note, the AI economy already contributed 20% of U.S. GDP growth in Q3 2024, according to BuiltIn. That’s a staggering short-term figure, but it risks obscuring whether the long-term growth will prove durable or speculative. Business Insider points out that half of all venture dollars spent in the first half of 2025 went to AI startups, a pace eerily reminiscent of the dot-com frenzy. Traders, according to CNN, are already rushing to buy “disaster puts” to hedge against a crash.

The most troubling signal, however, is political. The U.S. has declared it will not regulate AI for the next decade - a mask for the intentional manipulation of AI on a global scale.  Lax regulation of AI empowers some to make great business strides and profit handsomely as the bar is strategically lowered for few to succeed greatly.  This is dangerous – and as we can see in this excerpt from a report on the U.S. AI Action Plan, brand safety approaches will suffer greatly when all marginalized communities are deliberately erased before our eyes.

Without proper guardrails, advertisers risk building their strategies on politically shifted grounds, without foundations. Additionally, consumers could be left exposed to both predatory practices and systemic isolation. Lobbyists representing ad-tech and brand interests must lead-by-example to push Washington to revisit and strengthen its stance before a lack of AI regulation leaves us too entangled to unwind safely. While the AI revolution may indeed be the next phase of economic transformation, the hype needs to cool and oversight needs to catch up, or risk a sobering financial cocktail in the marketplace. The advertising ecosystem could inadvertently find themselves in hot water when they simply intended to move business forward with the “next” technology. May your choices be wise.