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Translated from Japanese:
By Seki Obata, Professor of Keio University Business School
**The collapse of the IT bubble and the AI bubble will follow the same pattern**
The bursting of the bubble does not mean that every company will go bankrupt. One of the core AI companies—Anthropic or OpenAI—will certainly disappear (and it’s highly likely that both will, with a new third-party rival emerging, just as Anthropic rose to prominence), and SpaceX (SPCX) will likely be reduced to space dust, but the shrewd companies providing AI services will likely survive. Palantir Technologies may simply see its stock price plummet, but the business itself may survive. So-called SaaS companies have also seen their stock prices crash temporarily, but as ordinary businesses, many will likely settle into stable price levels and continue to operate.
However, the revenue models of AI companies—in their purest form—are extremely weak. I wouldn’t go so far as to call SpaceX a scam, but it’s little more than a pipe dream and therefore out of the question; similarly, OpenAI and Anthropic—whose combined market capitalization is projected to reach 300 trillion yen—have absolutely no prospect of establishing a revenue model commensurate with that valuation. Palantir Technologies, a player on the periphery, is making money shrewdly, but its long-term sustainability is questionable; moreover, if its stock price were to reflect its actual earnings, it would have to be a fraction—perhaps one-tenth—of its current level. Therefore, even if a business model exists, a price correction is inevitable.
**Semiconductors will also disappear amid a scramble for them, prices will plummet, and stock prices will crash.**
Certainly, the demand from surrounding semiconductor companies is driven by actual needs, and they are generating real revenue; in fact, profits have increased more than tenfold amid the scramble for semiconductors. However, once the AI companies have sorted out the winners and losers, only one or two will remain, and demand from other competing firms will plummet. Furthermore, even for the surviving companies, investment levels will decline because they had been overinvesting to overwhelm their rivals. Once that happens, the semiconductor market will no longer be a scramble, and prices will plummet.
Consequently, semiconductor companies’ profits will plummet. Stock prices will crash accordingly. Furthermore, the massive tech companies—the hyperscalers—that support AI firms, such as those providing data center infrastructure, will drastically cut their investments. This will cause a sharp decline in both demand and prices for suppliers of semiconductors, semiconductor components, and data center equipment; however, the hyperscalers’ own financial foundations are rock-solid, and their risk of bankruptcy is virtually nonexistent.
However, massive investments—such as the data centers they’ve built—will become a complete waste, leading to large-scale write-downs and a significant drop in stock prices. There will also be excess power supply, and related companies will face similar fates. In short, the current revenue models are completely out of line with stock prices in the medium to long term. While all of these companies are reputable and massive, their stock prices will either crash or fall sharply, and some of those that overinvested for the sake of current profits will likely go bankrupt.
**What Are the “Many Similarities” to the Tech Bubble Burst?**
The trigger for the decline was nothing more than a trivial news item. No one remembers the news from March 10, 2000, and it’s likely that no one will remember the news from June 23, 2026—the current “leading candidate”—a few months from now either. The event cited as the trigger is the “Korea Shock.” One report mentioned that the semiconductor company SK Hynix was delaying the shift of its production lines from general-purpose memory to semiconductors used in AI data centers. This reportedly raised questions about the profitability of AI semiconductors—and AI itself—triggering the market crash.
Another factor was a report that a South Korean official made remarks expressing regret over having approved the listing of what are known as single-stock ETFs (exchange-traded funds). In other words, while SK Hynix and Samsung Electronics account for more than 50% of the KOSPI (Korea Composite Stock Price Index), individual leveraged ETFs tracking these two companies were used by retail investors for speculative trading. The volatility of these stocks rose sharply after the ETFs were approved, which in turn led to a significant increase in the volatility of the KOSPI itself.
These patterns are always the same. Factors that were fueling the bubble are suddenly reinterpreted as negative news, as if the market had done a complete about-face, and even trivial news is blown out of proportion. This indicates that investor sentiment has become extremely nervous—a classic sign of a bubble collapse. Although the market’s nervous volatility is likely to continue into July, it is clear that it's the "beginning of the end.”