One AI bubble has already burst. The next one—a 'rare' kind—is still growing, economist warns

Jensen Huang looks to his right while onstage at Nvidia GTC. (Credit: David Paul Morris/Bloomberg—Getty Images)

The AI stock bubble, much debated through the back half of 2025, has already burst. That’s the conclusion of John Higgins, chief markets economist at Capital Economics. He’s more worried about what’s still brewing. 

A bubble typically refers to when assets have valuations that far exceed their intrinsic worth, usually seen when share prices soar despite solid evidence of strong financial results. “If you’re judging whether a bubble exists or not in relation to how stretched or otherwise its valuation is, then there’s an argument that the bubble has burst,” Higgins told Fortune.