COURTKUTCHEHRY SPECIAL ON RULES FOR SAFE INVESTMENTS IN CONTEXT OF AI RELATED CRAZE
AI Debt Bomb: Why Global Investments in Artificial Intelligence Could Trigger a Crisis Worse Than 2008
Economic Survey warns of risks in leveraged AI spending
Safe investing rules for navigating the AI boom
By Our Business Reporter
New Delhi: January 30, 2026:
Artificial Intelligence has become the buzzword of the decade. From Silicon Valley to Bengaluru, investors are pouring billions into AI startups, infrastructure, and applications. Governments are promoting AI as the future of productivity, innovation, and national competitiveness. Yet the Economic Survey 2025–26 has sounded an alarm: the world may be heading toward an AI-driven financial bubble.
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The report warns that the mad rush to invest in AI, often funded by debt and speculative capital, could trigger a global crisis worse than 2008. This article explores why AI investments could create a bubble, the scale of money already invested, and the safest rules investors should follow to protect themselves.
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Why AI Could Create a Bubble
- Excessive Hype: AI is seen as the next big revolution, leading to inflated valuations of startups and companies with little proven revenue.
- Debt-Fueled Growth: Many AI infrastructure projects are financed through leveraged debt, creating systemic risks if returns fail to materialize.
- Unrealistic Expectations: Investors expect AI to transform every industry overnight, but adoption takes time.
- Historical Parallels: Like the dot-com bubble, where internet companies raised billions without sustainable business models, AI could face a correction once reality sets in.
- Concentration Risk: A handful of companies dominate AI infrastructure, meaning any failure could have cascading effects across global markets.
Investments Made till Date
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- Global AI Spending: Analysts estimate that over $200 billion has been invested in AI globally by 2025, including infrastructure, cloud computing, and startups.
- India’s AI Push: India has committed billions through government-backed initiatives and private sector investments, aiming to make AI a growth engine.
- Big Tech Dominance: Companies like Microsoft, Google, Amazon, and OpenAI have invested tens of billions in AI research and infrastructure.
- Startups: Venture capital funding in AI startups crossed $50 billion globally in 2024–25, with many firms valued at unicorn levels despite limited profitability.
Safest Rules of Investing in the AI Era
- Diversify Investments: Do not put all money into AI stocks or startups. Spread across sectors like healthcare, energy, and consumer goods.
- Avoid Over-Leverage: Stay away from debt-driven investments. High leverage magnifies risks.
- Focus on Fundamentals: Invest in companies with proven revenue streams, not just hype.
- Long-Term Perspective: AI adoption will take years. Avoid chasing short-term gains.
- Regulatory Awareness: Monitor government policies on AI, data privacy, and taxation.
- Emergency Funds: Always keep liquidity for downturns.
- Ethical Investing: Consider sustainability and governance while investing in AI firms.
Broader Implications for India
- India’s IT and services sector could face stress if the AI bubble bursts, as many firms are heavily invested in AI-driven transformation.
- Policymakers must balance innovation with financial stability, ensuring that AI investments are backed by real productivity gains.
- The Indian economy, though resilient, could face shocks in employment and capital flows if global AI markets collapse.
Conclusion
The AI boom is real, but so are the risks. The Economic Survey’s warning of an “AI debt bomb” should not be ignored. While AI promises to reshape industries, the mad rush of speculative investments could create a bubble that destabilizes global markets. Investors must follow safe investing rules—diversification, focus on fundamentals, and avoiding leverage—to protect themselves.
AI is the future, but only sustainable, balanced investments will ensure it becomes a driver of growth rather than the cause of the next global financial crisis.
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