'Of course it's a bubble': AI startup valuations soar in investor frenzy (www.ft.com)

Investors are pouring capital into AI startups at breakneck speed, pushing private valuations to levels many founders and VCs admit look detached from fundamentals. The rush spans seed rounds to late-stage deals and draws nontraditional backers — hedge funds, crossover investors and public-market players — chasing exposure to generative AI, ML platforms and automation tools. That enthusiasm is lifting companies with little or no revenue to unicorn status, compressing diligence and inflating expectations about near-term monetization and product-market fit. For the AI/ML community this creates both upside and risk: more funding accelerates hiring, compute procurement and commercialization of research, but it also skews incentives toward rapid scaling and headline-grabbing demos rather than rigorous evaluation, reproducibility and sustainable business models. Technically, the frenzy fosters faster deployment of large-model stacks, greater demand for GPU/TPU capacity, and consolidation pressure that could prioritize short-term growth over open research. If valuations reprice, the sector could face down-rounds, layoffs and a pullback in experimental funding — a classic boom‑and‑bust dynamic that could reshape how AI research and startups are financed for years.