Are we in the middle of an AI bubble? Ask a lawmaker, and they probably won’t have a definitive take for you.
“If I knew that, I’d be in a different line of work,” Rep. Ro Khanna, a Democrat who represents much of Silicon Valley, told Business Insider in November.
The AI bubble debate has been raging in the tech world since August, when OpenAI CEO Sam Altman said that investors had grown “overexcited” about the technology.
There are also concerns about circular spending patterns among tech companies investing in AI technology, and fears that companies won’t be able to recoup the billions of dollars they’re spending on data centers and other AI infrastructure. Bill Gates has explicitly compared it to the dot-com bubble of the late 1990s.
Those concerns have made their way to Wall Street, with stock prices of major tech companies beginning to wobble.
However, many in the tech world remain confident that there’s no bubble, citing continued high demand for AI products.
“Are we in an AI bubble? I have no idea,” Democratic Sen. Brian Schatz of Hawaii told Business Insider in November. “Even the AI people don’t know.”
Democratic Sen. Elizabeth Warren of Massachusetts said that while she was unsure whether there’s a bubble, she’s concerned by “how much of the economic activity in the stock market and across the country is driven by this one sector.”
“If it is overvalued, when that bubble pops, it’s going to be felt everywhere,” Warren said. “The concentration makes the economy far more vulnerable than it otherwise would be.”
One of the few lawmakers who’s been outspoken about the potential for a bubble is Democratic Rep. Alexandria Ocasio-Cortez of New York, who said at a hearing in November that we may be in a “massive economic bubble” that could pose “2008-style threats to economic stability.”
“Should this bubble pop, we should not be entertaining a bailout,” Ocasio-Cortez added. “We should not entertain a bailout of these corporations, as healthcare is being denied to everyday Americans, as SNAP and food assistance is being denied to everyday Americans, precipitating some of the very mental crises that people are turning to AI chatbots to try to resolve in themselves.”
The debate began making its way to Capitol Hill as the Trump administration and some Republicans in Congress look for ways to make it easier for the AI industry to do business.
President Donald Trump, when asked, has largely shrugged off questions about whether he’s worried about a bubble.
“I guess. I worry about everything,” Trump said in an interview with CBS’s “60 Minutes” earlier this month. “I hope it’s gonna be very good. But if it’s not so good, we’re protected.”
Trump signed an executive order in December aiming at restricting the ability of states to regulate AI, tasking the Department of Justice with suing states that have “onerous” AI laws on the books.
That executive order is likely to see legal challenges, and it’s ultimately less strong than a law passed by Congress would have been. But Republicans have been at odds with one another over the policy, beginning over the summer as Congress considered the “Big Beautiful Bill.”
That bill originally included a provision that would have blocked states from enacting some regulations on AI for 10 years. It was strongly supported by Sen. Ted Cruz of Texas, the chairman of the Senate Commerce Committee who’s positioned himself as an ally of the AI industry on Capitol Hill. It was later stripped out of the megabill in a 99-1 vote.
When asked last week whether he sees a bubble in the AI industry, Cruz was circumspect.
“Will there be uncertainty? Will there be economic challenges? Of course,” Cruz told Business Insider. “But for technology of this magnitude, it’s in our interest that America win the race, and not China.”
Ocasio-Cortez argued that there’s a connection between the potential bubble and financial incentives to make AI technology more exploitative.
“People’s deepest fears, secrets, emotional content, relationships can all be mined for this empty promise that we’re getting from these companies to turn a profit,” Ocasio-Cortez said at the November hearing.
Other lawmakers have also raised concerns. In November, Democratic Rep. Bill Foster of Illinois led a group of 21 lawmakers on a letter to Treasury Secretary Scott Bessent asking his agency to evaluate the risks of AI investment in light of concerns about a bubble.
But for some of those who want to see stronger regulation of AI, the question of a bubble is largely beside the point.
“Bubble, no bubble, whatever,” Sen. Josh Hawley of Missouri said. “We need to focus on the effect on working people.”
