Is the AI bubble bursting just as Anthropic goes public?

2026 was meant to be the year Wall Street's trillion-dollar artificial intelligence bet started paying off. Instead, it's turning into a test of nerves as the AI sector faces unprecedented volatility.

In the first half of the year, many AI stocks hit record highs as US hyperscalers like Google's Alphabet, Meta and Microsoft recorded bumper earnings. Two of the largest AI players — Anthropic and OpenAI — announced plans for public listings, following SpaceX's much-hyped IPO in June, which briefly made Elon Musk the world's first trillionaire.

Market Turmoil

The second half of 2026, however, has brought a lot more uncertainty. While Nvidia's stock pushed higher last month, many hyperscalers and chip firms have seen their stock prices gyrate wildly. After the Democrats secured control of the United States Congress in the midterm elections, technology stocks sold off dramatically, with the Magnificent Seven losing more than $1 trillion in value in a single trading day.

The AI sector took another hit this week as Nvidia shares plunged nearly 10% over two days. The sell-off followed news that Nvidia's board — alongside the FBI — is investigating CEO Jensen Huang's ties to a woman suspected by US intelligence of being a Chinese spy. On Thursday, Huang resigned from the chipmaker when a second alleged affair was revealed, sending Nvidia's shares lower still.

Investor Skepticism

Wall Street is growing increasingly cautious about the sheer size of the AI outlay, amid warnings that future earnings may not justify the huge spending. Growing pressure on US lawmakers to curb the expansion of AI data centers has added to those doubts.

In September, investment bank Goldman Sachs estimated that hyperscalers need around $300 billion in annual AI revenue to break even on their spending, leaving a gap of roughly $230 billion.

Anthropic's Risky IPO

While OpenAI has delayed its public listing until next year, Claude-maker Anthropic still plans its IPO later this month. On Tuesday, the company said it would offer 825 million shares at between $70 and $78 per share. While Anthropic had originally targeted a valuation of over $2 trillion, it now thinks the firm could be worth around $1.2 trillion to $1.3 trillion.

Dick said Anthropic's decision to go ahead amid the market sell-off left him questioning the timing. 'Is this the best timing?' he asked. The valuation depends on whether Anthropic can deliver on a forecast by Goldman Sachs of more than $600 billion in revenue by 2030.

Other analysts, like Vivek Seth, CEO of Shaires Holdings, are more bullish about Anthropic's prospects. 'Anthropic is a once-in-a-generation company,' Seth told Bloomberg, noting how it has grown rapidly and has strong institutional backing.

Bubble Concerns

With many investors already running for the hills, Rees isn't convinced the AI bubble will burst in the way skeptics expect. She thinks they should watch for stronger signs that the AI trade is maturing, such as 'a slowdown in AI-related revenues for companies, or signs of less demand or less appetite for financing companies' AI plans.'

There are early signs that investors have less appetite for AI-related debt. Borrowing costs for AI infrastructure firms like CoreWeave and Oracle have soared recently. Even the cost of insuring Nvidia's debt against default has risen 76% in a month.

Economist Gary Smith compares the AI boom with earlier frenzies around railroads, automobiles, television and the internet, warning of a 'frightful crash' when the AI bubble eventually pops. Joachim Klement, head of market strategy at Panmure Liberum, believes a reckoning could happen as early as next year.