A new narrative of skepticism is emerging regarding the hundreds of billions of dollars being poured into computing infrastructure. Sebastian Siemiatkowski, the chief executive of fintech giant Klarna, has voiced a specific and chilling concern: the unchecked spending on data centers may be creating a massive financial bubble. Speaking on the rise of AI companies and chipmakers like Nvidia, which recently hit a $4 trillion valuation, Siemiatkowski admitted the trend makes him “nervous” due to the lack of “thoughtful thinking” behind the capital allocation.
This skepticism comes at a time when the crypto market has already capitulated, losing $1 trillion in six weeks, and stock markets are sliding globally. The core fear is that the demand for AI, while real, cannot possibly justify the astronomical costs of the hardware currently being built. If the returns on these data centers fail to materialize, the companies building them—and the banks financing them—could face catastrophic write-downs.
The “automatic” nature of modern investing is exacerbating the risk. As Siemiatkowski pointed out, most wealth today flows through passive index funds. This means that ordinary people’s pensions are blindly buying into the AI infrastructure thesis simply because companies like Nvidia constitute a large portion of the index. If the bubble bursts, it is not just venture capitalists who will suffer, but retirees and retail investors as well.
Echoing these concerns, Daniel Pinto of JP Morgan stated that booming AI valuations are due for a reassessment. He predicts a correction that will ripple through the S&P and the wider industry. This view is supported by a Bank of America survey, where 45% of fund managers cited an AI bubble as the biggest risk to the market. The consensus is shifting from “growth at any cost” to a demand for profitability and utility.
As stocks in the UK, Europe, and the US tumble, the market is signaling that the infrastructure spending spree may be nearing its limit. Even Google’s Sundar Pichai has warned of irrationality. For investors, the message is clear: the hardware boom has been lucrative, but the fundamentals are now being questioned by the very people leading the industry.