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Artificial intelligence startups are raising unprecedented sums of venture capital, but some of the world’s biggest investors say valuations in the sector are running dangerously hot.
Speaking at the Milken Institute Asia Summit in Singapore on Friday, Bryan Yeo, group chief investment officer at Singapore’s sovereign wealth fund GIC, said enthusiasm for early-stage AI deals has outpaced fundamentals.
“There’s a little bit of a hype bubble going on in the early-stage venture space,” Yeo told the audience. “Any company startup with an AI label will be valued right up there at huge multiples of whatever the small revenue is. That might be fair for some companies and probably not for others.”
The comment comes as global investors continue to funnel extraordinary sums into artificial intelligence. According to PitchBook, AI startups raised $73.1 billion in the first quarter of 2025, accounting for nearly 58% of all venture funding worldwide. Much of that total was driven by blockbuster transactions such as OpenAI’s $40 billion capital raising, which has helped fuel a rush by other investors eager not to be left behind.
Yeo said the surge in spending on AI projects was feeding into a broader investment boom. “Market expectations could be way ahead of what the technology could deliver,” he said. “We’re seeing a major AI capex boom today. It is masking some of the potential weaknesses that might be going on in the economy.”
The remarks highlight growing concern that the sector could be caught in a speculative cycle. While some AI companies are already generating meaningful revenues, others are attracting lofty valuations despite unproven business models.
Todd Sisitsky, president of alternative asset manager TPG, said investor psychology was at risk of being driven more by fear of missing out than by fundamentals. “The fear of missing out is dangerous for investors,” he said, adding that views remain divided on whether AI has already entered bubble territory.
Sisitsky noted that some AI firms are producing astonishing growth rates, hitting $100 million in revenue within months of launch. But he cautioned that others at an early stage were commanding valuations that looked detached from reality. “We’ve seen companies valued between $400 million and $1.2 billion per employee,” he said. “That was breathtaking.”
The debate over whether AI is in bubble territory echoes earlier cycles in technology investment, from the dot-com era of the late 1990s to the more recent boom and bust in cryptocurrency ventures. For now, however, the money keeps flowing in, with global capital piling into everything from AI model developers to semiconductor suppliers and cloud infrastructure.
For long-term investors like GIC, the question is whether the current enthusiasm will translate into lasting returns or if valuations will eventually need to be reset. “That might be fair for some companies,” Yeo said, “and probably not for others.”
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