As the world’s leading tech giants prepare to release their quarterly earnings, one major question hangs over Silicon Valley: is the artificial intelligence (AI) boom heading for a bubble?
According to market data from LSEG, Microsoft, Alphabet (Google), Amazon, and Meta are all set to report strong revenue growth for the July–September 2025 quarter. Each company has poured billions into AI innovation — and plans to keep spending — despite growing concerns that AI returns remain uncertain.
Massive AI Spending, Modest Returns
Industry estimates suggest major cloud companies will collectively invest over $400 billion in AI infrastructure this year alone. But studies reveal the payoff isn’t matching the hype.
A recent MIT report showed that only 5% of over 300 AI projects studied delivered measurable results, with most stalling at the pilot phase due to weak integration and scalability issues.
Even AI experts are voicing skepticism. OpenAI co-founder and former Tesla AI chief Andrej Karpathy remarked earlier this month that many AI models “are not there yet” and that the industry is “trying to pretend like this is amazing — and it’s not.”
Since ChatGPT’s launch in November 2022, AI optimism has added nearly $6 trillion to Big Tech’s market value — but analysts warn this growth may not be sustainable if AI-driven productivity fails to materialize soon.
Circular Deals Raise Eyebrows
Another concern fueling the AI bubble debate is the rise of “circular deals” between tech firms — where companies invest in and buy from one another to reinforce growth expectations.
For instance, Nvidia is reportedly considering a $100 billion investment in OpenAI, one of its biggest customers, while OpenAI itself has signed AI compute agreements worth $1 trillion, including a $300 billion deal with Oracle.
Debt financing is also increasing. Meta recently secured a $27 billion loan from Blue Owl Capital to fund data center expansion — a notable shift from the cash-rich spending cycles of past years.
“When the same companies are both funding and relying on each other, decisions may no longer be based on real demand or performance,” said Ahmed Banafa, a professor at San Jose State University. “It increases systemic risk.”
Cloud Units Still Powering Growth
Despite these risks, many investors remain confident. They argue that strong balance sheets and rising cloud demand could sustain Big Tech’s momentum.
“Adoption may be low right now, but that’s not a forward indicator,” said Eric Schiffer, CEO of Patriarch Organization. “With greater investment and innovation, adoption will grow. I don’t think we’re at a bubble stage yet.”
LSEG data backs that optimism:
- Microsoft Azure revenue likely rose 38.4% in Q3 2025.
- Google Cloud is expected to grow 30.1%, while Amazon Web Services (AWS) sees around 18% growth.
- Overall, Microsoft’s total revenue is projected to increase 14.9%, with Alphabet up 13.2%, Amazon 11.9%, and Meta leading at 21.7%.
However, profit growth may slow across the board due to soaring AI infrastructure costs.
Microsoft, Alphabet, and Meta will announce results on Wednesday, followed by Amazon on Thursday.