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Hello reader,
The first half of the year is over, and AI bubble fears are bubbling up. Whether AI startup founders, investors, users, and enthusiasts admit it or not, AI as an industry has the makings of a bubble.
Let’s go with the clear definition of it: It is a marked rapid acceleration of valuation, often due to speculative behavior, followed by an accelerated drop.
Image credit: Ulla
We have probably seen the first half of that definition come to life with the likes of OpenAI and Anthropic getting eye-watering private valuations. SpaceX, meanwhile, secured a record IPO before seeing its stock dip, despite having a prospectus filled with hopes and dreams. Sure looks like a bubble!
Closer to home in Southeast Asia, the hype train rolls on, as evidenced by how VCs are doubling – even tripling – down on the tech.
One of our top stories this week explores how Southeast Asia’s VC firms are rewriting their investment theses to get on the AI train. Those that were previously sector-agnostic are now investing solely in AI startups or those related to it, like semiconductors.
In all fairness to VCs, they are walking the walk, too. In this issue, you will find a feature on a VC firm that has begun using AI agents in its operations, outsourcing tasks like screening deals and analyzing company financials.
Of course, there’s money to be made while a bubble expands, but the “pop” is what we all should fear. A recent US Treasury report puts that fear in simple terms.
It estimates that an AI collapse would be harder for the US economy to recover from than the dot-com collapse. It makes sense, given how entrenched the AI industry is in various sectors – from energy to data centers.
Where the US economy goes, much of the world follows. If the AI bubble bursts stateside, Southeast Asia’s own AI bets – and the VCs intensifying their commitment in them – won’t be spared.
Elyssa Lopez, journalist
TOP AI READS FROM OUR DESK
1️⃣ Two paths, one goal: AI fever grips SEA’s VCs
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