US president Donald Trump’s military actions have given investors something more immediate to worry about than an AI bubble.
For much of 2025, investors fretted over AI, and those fears continued into 2026. An AI bubble was viewed as the biggest tail risk in markets in Bank of America’s February fund manager survey, while 30 per cent flagged big-tech AI spending as a potential trigger for a credit crisis.
One month on and those fears have receded, with geopolitical conflict taking the spotlight and just 10 per cent now seeing an AI bubble as the main tail risk. Asked if AI stocks are in a bubble, 51 per cent say no, 38 per cent say yes.
Rising prices invariably go hand in hand with rising bubble fears, but there’s been little of that lately, with each of the so-called magnificent seven stocks down in 2026.
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The market is a fickle beast, so that could change again, but it brings us back to a point that portfolio manager and researcher Dr Owen Lamont Owen has repeatedly emphasised: where are all the initial public offerings (IPOs)?
A classic bubble is typically characterised by a rush of companies selling stock to a ravenous public, but the AI boom has been more marked by share buy-backs than flotations.
Lamont admits that could change quickly if three private giants – OpenAI, Anthropic, and SpaceX – proceed with mooted IPOs that would rank among the largest on record, potentially injecting trillions into public markets.
“If the big three go public”, writes Lamont, “we’d also probably see hundreds of small fry joining in,” and accompanying first-day price pops would be a strong sign that the market has entered bubble territory.
For now, though, the absence of such activity suggests the bubble – if it comes – still lies ahead.
