AI Bubble Risk: Funds Take Profits, Investors Face Losses

Charles Gasparino says hedge funds and institutions have started taking profits from AI investments as concerns grow about the data, valuations and Wall Street’s sales pitch. Small investors could face losses if the market turns, he writes, comparing the situation with the dot-com collapse, which swept up speculative firms and established technology companies alike.

Who Takes Profits, Who Faces Risk

In his New York Post column, published Oct. 17, 2026, Gasparino says investors who do their own research, rather than relying on financial television promoters, sense that something isn’t right with AI and the market’s sales machine. He identifies their profit-taking as the likeliest explanation for current concerns. The column names no particular funds or institutions and gives no figures for their sales.

Gasparino says the AI boom’s pitch resembles that of the internet boom: groundbreaking technology paired with promises that investors could get rich. The technology may eventually deliver, he writes, but the path could be far off and messy. What triggered the earlier shift in sentiment remains hard to identify, he says, as does what might spark a reversal in AI.

Markets have already moved. Rates rose after a bad inflation report, followed by a selloff in AI stocks. Gasparino says he can’t tell whether those moves amount to the market’s final statement on AI. More enthusiasm could still arrive.

The Dot-Com Warning

Gasparino recalls that dot-com stocks, including shares in companies that weren’t making money, were promoted as investments able to defy common sense and gravity. He calls the era’s promise a “new paradigm,” describing irrational exuberance in which emotion, not metrics, drove valuations.

On Jan. 1, 2000, the feared Y2K crisis proved not to be a crisis. A threat, however, loomed in the stock market. In March 2000, Gasparino writes, the historic run-up stood exposed as one of history’s great investment bubbles. Many companies at the center of the frenzy had “outright insane” business models, he says; most others were overvalued. A few had real promise, but still had to survive the correction.

The losses were staggering. A generation of investors took a beating, and the technology market needed years to recover. Pets.com, presented as a possible next Microsoft, was among the speculative companies caught in the crash. Microsoft fell, along with nearly any public company connected to the internet business. Gasparino says small investors lost everything, while many considering AI now either don’t remember the dot-com era or are unaware of it.

Borrowing, Spending and Possible IPOs

Gasparino says AI competes with the federal government’s substantial borrowing needs, and interest rates will rise. He predicts a correction for AI and for companies adopting the technology through heavy spending, much of it funded by debt. The column gives no spending figures and identifies none of the companies involved.

Initial public offerings by hyperscalers such as Anthropic and possibly OpenAI could arrive in the coming weeks and months, Gasparino writes, potentially bringing another wave of enthusiasm. His advice: take profits and avoid greed, or hope the AI company you back survives a crash. The column describes investor exposure and market risk, but offers no proposal to change the borrowing, spending or ownership structures it discusses.