You Won’t Believe What Happened When the AI Bubble Burst

Wed, 06 May 2026 12:11:45 +0000

# You Won’t Believe What Happened When the AI Bubble Burst In the mid-2020s, the world watched as artificial intelligence reshaped industries, ignited a tech frenzy, and fueled multibillion-dollar investments. Startups raced to develop breakthrough models, investors poured funds into AI ventures, and headlines proclaimed the dawn of a new era. But behind the glitz and promise, a sharp reality soon emerged: the AI bubble burst. From sky-high valuations crashing to layoffs sweeping tech giants, the fallout was dramatic. But what really happened when the AI bubble burst? This article reveals the shocking events, real impacts, and lasting lessons from one of tech’s most dramatic market corrections. ### How the AI Bubble Swelled to Unsustainable Heights The path to the crash began with unprecedented optimism. Advances in large language models, generative AI, and deep learning captured global attention. Tech firms, especially startups and established tech players, rushed to secure AI breakthroughs, promising transformative applications across healthcare, finance, advertising, and customer service. Massive venture capital and corporate funding poured in—billions poured into AI startups, while public markets celebrated soaring valuations, often at sky-high multiples disconnected from revenue or profit.