Artificial intelligence (AI) has been hailed as the engine of a new economic boom, driving innovation and investment across the globe. But as excitement grows, so do warnings the sector may be heading for a bubble – and that its potential burst could have serious consequences for businesses around the world and in Germany.
Warnings that AI could be a bubble is no longer confined to fringe voices. Leading figures in tech and finance from Sam Altman (OpenAI) to Mark Zuckerberg (Meta) have publicly discussed the possibility of a market correction.
Banks and analysts are also sounding alarms. Among them is Germany's largest, Deutsche Bank, which has expressed concerns the AI boom is masking economic stagnation in the US.
According to a new study by Germany-based insurance giant Allianz, if AI euphoria were to come to an abrupt end, around 4,000 insolvencies could be expected in Germany alone.
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This scenario would hit start-ups and tech-driven companies hardest, but the ripple effects would be expected to impact the broader economy.
Insolvencies already on the rise in Germany
Allianz expects a global increase in corporate insolvencies in 2026, marking the fifth consecutive year of rising bankruptcies.
In Germany alone, insolvencies are forecast to reach 24,500 cases next year – a level not seen in twelve years.
Allianz expects the number of insolvencies in Germany to begin declining in 2027 but warns that the bursting of an AI bubble is just one of a number of possibilities which could trigger a much larger wave of insolvencies.
Other threats include trade conflicts and the high number of start-ups in Europe and the US, which have a disproportionately high risk of becoming insolvent.
In comments to the German Press Agency, Allianz Trade CEO Aylin Somersan Coqui said the risk of domino effects is increasing.
Why is AI so fragile?
A number of extremely high-valued AI companies are not yet profitable. OpenAI, for example, is valued at $500 billion but does not expect to be profitable until at least 2029.
Consulting firm Bain & Company has estimated that annual revenues of a staggering two trillion US dollars would be required to finance the computing power needed to meet the AI demand expected by 2030.
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Established giants like Meta and Google are better positioned to weather a downturn, as they can fund AI development from their core businesses. Zuckerberg, for example, has indicated that a bubble burst could allow Big Tech to cheaply acquire start-ups, ideas and experts.
Not everyone is so enthused by the prospect of a period of massive disruption, however. Least of all being German business leaders who have struggled to stay afloat in recent years as Europe's largest economy has slowed significantly.
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