What concerns AI investors most regarding their own investments

The Shifting Landscape of AI Investment

Over the last two years, the main focus in the world of artificial intelligence has been on the sheer scale of its potential. Recently, however, concerns about possible pitfalls have come to the forefront. As 2025 progressed, apprehensions about an AI investment bubble became increasingly difficult to dismiss, with volatile markets, soaring company valuations, and self-reinforcing funding cycles drawing comparisons to the dot-com crash. Despite these warning signs, capital continues to flood into the AI sector.

This puts investors in a precarious situation. Artificial intelligence is evolving too rapidly and is too significant to ignore, but if the current surge falters, those who have invested heavily could face major losses. Looking ahead to 2026, we spoke with leading investors to uncover their biggest concerns.

Potential Threats to AI’s Growth

Guru Chahal, a partner at Lightspeed Venture Partners, which oversees roughly $35 billion, admits that the possibility of another global crisis keeps him awake at night. The past five years have already been shaped by events like the Covid pandemic, the conflict in Ukraine, and trade disputes initiated by President Trump.

Yet, Lightspeed’s recent moves show continued confidence. The firm, which was an early supporter of Anthropic, Elon Musk’s xAI, and French AI startup Mistral, raised a record $9 billion in December to fuel further investments in AI innovation.

However, the sector’s dependence on cutting-edge semiconductors makes it vulnerable to disruptions far outside Silicon Valley. A key risk lies in Taiwan, a hub for manufacturing the world’s most advanced AI hardware, where ongoing tensions with China pose a significant threat.

Chahal explained to Quartz, “If anything interrupts the construction of data centers or the supply of GPUs—whether it’s a crisis in Taiwan, another pandemic, or new trade barriers—the entire AI expansion could come to a standstill. Our investments in AI, from applications to infrastructure, rely on uninterrupted growth. A single major supply disruption could stall progress due to insufficient computing resources.”

Intense Competition and Its Consequences

In San Francisco, a flood of startups are scrambling to launch nearly indistinguishable AI products. Inaki Berenguer, managing partner at LifeX Ventures, which targets AI solutions for climate and health, observed, “Competition is fierce. Any successful idea is quickly replicated. When a new concept gets funding and shows promise, within three months, dozens of other teams are pursuing the same thing.”

This issue is compounded by the fact that many startups are building on the same foundational AI models. As a result, it’s easy for them to launch, secure pilot projects, or win small contracts, making it difficult to distinguish truly innovative companies from those simply riding the AI wave.

Berenguer added, “Most of these startups lack a real competitive edge beyond how quickly they can execute. That’s a worrying prospect for investors.”

Payton Dobbs, a partner at Hoxton Ventures, echoed this sentiment: “Investing in AI might seem straightforward, but it’s not. The abundance of apparent momentum can be misleading.”

With industry giants like OpenAI and Google releasing new features and updates at a rapid pace, innovations that once set startups apart—such as AI-powered shopping—can quickly become commonplace.

Lexi Novitske, general partner at Africa-focused fund Norrsken22, remarked, “We’re cautious about supporting something that seems unique now but could soon become just another commodity. That’s why we rigorously assess commercial viability and whether localization truly offers a path to scale.”

The Risks of a Bursting Bubble

Worries about the sector overheating are becoming more pronounced. Analysts are especially concerned about a complex network of deals worth around $1.4 trillion involving OpenAI and major players like Nvidia, Oracle, and Microsoft. Despite this massive investment, OpenAI’s projected revenue for the year is less than one-thousandth of that figure.

Even Sundar Pichai, CEO of Alphabet, recently cautioned that the tech sector can overextend itself during investment booms, and that no company is immune if the current spending spree collapses.

In such a downturn, timing becomes critical. Companies that raised funds at lofty valuations may find it difficult to attract new investment on similar terms, and those seeking to exit could be left stranded. This could quickly turn a promising investment into a liability.

Mikael Johnsson, co-founder and managing partner at Oxx, warned that a sharp drop in public company valuations could eventually “ripple through to the value and exit prospects of private AI firms.”

Novitske added, “We’re mindful of the risk of a broader market correction, so we diversify our investments and maintain a strong focus on business fundamentals.”

Concerns about a bubble were underscored last month when Oracle’s stock plunged by up to 16% after its earnings revealed AI-related spending far outpacing returns, erasing about $70 billion from its market capitalization.

Some experts argue that, while comparisons to the dot-com era are understandable, today’s environment is more complex. Dobbs noted, “Like the dot-com boom, there’s a rising tide lifting all companies, but this time, more firms are generating real revenue and the largest tech players are being held accountable in public markets.”

Still, this offers little reassurance for most investors. The flow of money into AI shows no sign of slowing, and the technology continues to advance rapidly. As investments grow larger, so too do the risks if the market turns.